Military Synthetic Training and Simulation Markets Europe

Military Synthetic Training and Simulation
Markets in Europe
B884-16
#B884-16 2007 Frost & Sullivan www.frost.com January 2007
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#B884-16 2007 Frost & Sullivan www.frost.com January 2007 iii
Table of Contents
C h a p t e r 1
Introduction to Military Synthetic Training and Simulation Markets in Europe
Introduction 1-1
Introduction to the Market 1-1
Market Analysis Methodology 1-2
Introduction 1-2
Identification of the Area of Analysis 1-2
Secondary Research 1-3
Primary Research 1-3
Market Analysis 1-3
Market Forecasts 1-4
Recommendations 1-4
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C h a p t e r 2
Executive Summary
Market Overview 2-1
Market Trends 2-1
Joint Programmes in Europe 2-1
The Game Industry Has a Role to Play in Military Synthetic Training 2-2
What Image Generation? 2-3
Technology Trends 2-3
Distributed Mission Trainers 2-4
Embedded Technologies 2-4
PC-based Simulators 2-4
Summary of Main Findings 2-5
Market Growth Opportunities and Total Forecasts 2-5
Market Dynamics 2-6
About the Competitive Environment 2-6
Country Analysis 2-7
C h a p t e r 3
Industry ChallengesMarket Drivers and Restraints
Introduction 3-1
Introduction to the Industry ChallengesMarket Drivers and Restraints 3-1
Industry Challenges 3-1
Introduction 3-1
Dominance of Joint Programmes in Europe 3-2
Maintenance of Capability 3-3
How to Meet Specific Military Needs and Defence Budget Restrictions? 3-3
Designing Simulators with High Adaptability 3-4
Difficulty for Companies to Define Basic Scenarios Due to New Conflicts 3-4
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Market Drivers 3-5
Introduction 3-5
Need for Collective Training in Europe 3-5
Strong Technological Performance 3-6
Availability Contracts Offer More Extensive Programs 3-7
Benefits of Cost and Time Efficiency by Simulated Training 3-7
Market Restraints 3-8
Introduction 3-8
High Technical Competitiveness 3-9
High Outlays Faced by Specialised Companies 3-9
Complex and Long Implementation Time for Joint Programmes 3-9
Shrinking European Defence Budgets 3-10
Potential Constriction of the Market Due to Increased European Integration 3-10
Reluctance from Militaries to Adopt Sophisticated Simulators 3-11
Simulators Seen Only as a Complimentary Tool 3-11
Limitation of Market Value due to Intensive Use of COTS Products 3-11
C h a p t e r 4
Segment Analysis and Forecasts
Total Forecasts 4-1
Forecasts by Military Segments 4-2
Air 4-4
Revenue Forecasts 4-4
Land 4-6
Maritime 4-8
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C h a p t e r 5
Market Share Analysis
Market Shares by Country 5-1
Introduction 5-1
Investment of Key European Countries in Synthetic Training 5-2
Joint Training Programmes 5-2
Market Shares by Company 5-4
Market Share Analysis 5-4
C h a p t e r 6
Competitive Landscape
Introduction 6-1
Competitive Environment 6-1
Competitive Structure 6-1
Market Participants 6-3
Adacel 6-3
Agusta Westland 6-3
Barco 6-4
BAE Systems 6-4
BVR Systems 6-5
CAE 6-5
Christie 6-6
Coel 6-6
Concurrent 6-6
Cubic 6-7
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EADS 6-7
Evans & Sutherland 6-8
ETC-PZL Aerospace Industries 6-8
Indra 6-8
KMW 6-9
Kongsberg 6-9
L-3 Link 6-10
Lockheed Martin 6-10
Qinetiq 6-10
Quantum3D 6-11
Oerlikon Contraves AG 6-11
Pennant Training Systems Ltd. 6-11
Rheinmetall 6-12
Rockwell Collins 6-12
RUAG 6-13
Saab 6-14
Sogitec Industries 6-14
Thales 6-14
Simulators 6-15
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C h a p t e r 7
Key Country Analysis
Introduction 7-1
Regional Analysis 7-1
Countries 7-1
Austria 7-1
Introduction 7-1
Air 7-3
Land 7-3
Maritime 7-3
Belgium 7-4
Introduction 7-4
Air 7-5
Land 7-6
Maritime 7-6
Czech Republic 7-6
Introduction 7-6
Air 7-6
Land 7-7
Denmark 7-7
Introduction 7-7
Air 7-8
Land 7-8
Maritime 7-8
Finland 7-8
Introduction 7-8
Air 7-9
France 7-9
Introduction 7-9
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Air 7-10
Land 7-10
Maritime 7-11
Germany 7-11
Introduction 7-11
Air 7-12
Land 7-14
Maritime 7-15
Greece 7-16
Air 7-16
Land 7-16
Maritime 7-16
Italy 7-16
Air 7-17
Land 7-17
Maritime 7-17
The Netherlands 7-17
Introduction 7-17
Maritime 7-18
Norway 7-18
Air 7-18
Land 7-19
Poland 7-19
Air 7-19
Maritime 7-20
Romania 7-20
Introduction 7-20
Air 7-21
Spain 7-21
Introduction 7-21
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Air 7-21
Switzerland 7-21
Introduction 7-21
Air 7-22
Land 7-22
The United Kingdom 7-22
Introduction 7-22
Air 7-24
Land 7-26
Maritime 7-28
C h a p t e r 8
Strategic Recommendations
Recommendation on the European Market 8-1
Strong Awareness of Joint Training 8-1
Recommendation on Company Strategy 8-2
Diversification 8-2
Necessity to Win a Segment of Contracts as Prime or Subcontractor 8-2
Positioning of Companies in the Market 8-2
System Design 8-3
Standardisation of System Design 8-3
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List of Figures
C h a p t e r 3
Industry ChallengesMarket Drivers and Restraints
3-1 Military Synthetic Training and Simulation Market:
Impact of Top Challenges (Europe), 2007-2015 3-2
Market Drivers Ranked in Order of Impact (Europe), 2007-2015 3-5
Market Restraints Ranked in Order of Impact (Europe), 2007-2015 3-8
C h a p t e r 4
Total Revenue Forecasts (Europe), 2006-2015 4-1
Total Revenue Forecasts by Segment (Europe), 2006-2015 4-3
Air Segment Revenue Forecasts (Europe), 2006-2015 4-4
Land Segment Revenue Forecasts (Europe), 2006-2015 4-6
Maritime Segment Revenue Forecasts (Europe), 2006-2015 4-8
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C h a p t e r 6
Competitive Structure (Europe), 2006 6-2
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List of Charts
C h a p t e r 2
Executive Summary
2.1 Military Synthetic Training and Simulation Market:
Market Engineering Measurements (Europe), 2006 2-5
C h a p t e r 4
Total Revenue Forecasts (Europe), 2006-2015 4-2
Total Revenue Forecasts by Segment (Europe), 2006-2015 4-3
Air Segment Revenue Forecasts (Europe), 2006-2015 4-5
Land Segment Revenue Forecasts (Europe), 2006-2015 4-7
Maritime Segment Revenue Forecasts (Europe), 2006-2015 4-9
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C h a p t e r 5
Key Country Investment (Europe), 2006 5-2
NH90 Joint Air Programme (Europe), 2006 5-3
Joint Air Programme (Europe), 2006 5-3
Eguermin Maritime Joint Programme (Europe), 2006 5-4
Company Market Shares by Revenue (Europe), 2006 5-4
#B884-16 2007 Frost & Sullivan www.frost.com January 2007 1-1
1
Introduction to Military Synthetic Training
and Simulation Markets in Europe
I n t r o d u c t i o n
Introduction to the Market
Ever since the last decade, European militaries have always been second to the United States
in the development of training systems and programmes and the trend is likely to remain so.
Nevertheless, new challenges have emerged in Europe in these last few years: it is undeniable
that European countries need to cooperate in joint training programmes for training effi-
ciency and cost reductions in net-centric warfare (NCW) environments. This analysis on the
European training and simulation market is intended to provide strategic positioning and
recommendations for those competing in the market. Frost & Sullivan aims to address the
competitive structure of the market; identify market participants in terms of their core
competencies, including their market shares; provide a regional analysis and forecast
covering the period 2006 to 2015; deliver strategic business recommendations and present
the market dynamics which are likely to dominate during this time frame. The structure of
this research is as follows:
Segment 1 provides a brief introduction to the European training and simulation market
Segment 2 provides the summary of the main findings
Segment 3 details the market drivers, restraints and industry challenges
Segment 4 analyses all three Segments of the market
Segment 5 provides the market share analysis
Segment 6 details the market forecasts
Segment 7 is a study of the competitive landscape in Europe
Segment 8 is a regional analysis, country by country
Ma r k e t A n a l y s i s Me t h o d o l o g y
Introduction
Frost & Sullivan is a leading international growth consultancy involved in market and
competitive intelligence. The Aerospace & Defence unit focuses on eight different core areas
of expertise and training and simulation is one core. The objective of the market analysis of
training and simulation in Europe is to provide a state-of-the-art in 2006, but most impor-
tantly, it is intended to provide forecasts and trends as a decision making tool for a better
positioning on the highly competitive market. Analysis has identified key market challenges,
drivers and restraints and recommendations in light of such challenges.
The analysis covers the timeframe of 2006-2015 with 2006 as a base year.
The methodology of market intelligence utilised in the case of this specific study is rigorous.
It is characterised by six main stages which are detailed.
Identification of the Area of Analysis
The identification of the subject of analysis is mainly defined according to the needs of the
market participants and significant evolutions in the defence sector. A focus is then made on
the main market dynamics of the identified area. As the market for military training and
simulation is highly competitive and evolves fairly rapidly, Frost & Sullivan has identified the
need to analyse this market to provide a significant tool for business improvement to the
market participants. There are three factors that define this analysis region, time frame and
technologies. Europe has been identified due to its current trend for collective training and,
as such, for the significant market demands and opportunities. The base year is 2006 and the
analysis presents a forecast for a decade in order to provide a significant understanding of
the particular market. As simulators are implemented for long-term usage and contracts take
a long time to be awarded, the coverage of a decade is important and provides a proactive
stance for simulator providers as well as the defence industry. In terms of technologies, the
main simulators examined in the analysis are those which offer the most efficient military
training and the ones which are likely to be the most demanded in the years to come.
Secondary Research
As training and simulation includes a broad array of activity, the identification stage allows
to define the research that is to be conducted. The research methodology employed is charac-
terised by a combination of 'bottom-up' and 'top-down' approaches to platforms and
simulator systems. The 'top-down' approach complements this method by adjusting the final
forecast according to specific information or intentions that are gathered from other sources.
Frost & Sullivan analysts have a methodology to apply in order to obtain the most useful
data in a limited time frame. Too large an amount of information can saturate knowledge
and devaluate the analysis. Therefore, specific research sources, such as diverse specialised
electronic and print resources, have been recommended. The data is collected by the exhaus-
tive assessment of those available secondary resources and provide a deep understanding of
the market to Frost & Sullivan analysts.
Primary Research
The knowledge base is then enhanced in value by extensive discussions with industry partici-
pants, from equipment suppliers to end users and those involved in scientific or academic
research and specialised organisations. These discussions result from an interview strategy
which is designed to collect relevant data from correspondents while preserving high confi-
dentiality. The data is intended solely for Frost & Sullivan research, as a third consulting
party. After collection, the extensive content is analysed and inferred. This process of
primary research is continuously reinforced by ongoing contacts and builds on the extensive
consulting experience of Frost & Sullivan.
Market Analysis
The dual process of theoretical and practical assessment enables a deep analysis of the Euro-
pean military training and simulation market in its current state and provides an assessment
of how it will develop over the next decade. It highlights the market trends, the drivers and
restraints for the market and the challenges the industry will have to face.
Market Forecasts
This data allows analyst to draw a significant forecast. Forecasts are made for the training
and simulation market based on the costs of units, length of programmes and service provi-
sion such as maintenance and Mid-Life Upgrades (MLU) which, because they are a relevant
source of revenues, must be considered in the estimations. The results are reviewed for
quality control: analysis is verified for accuracy. Feedback from clients and market partici-
pants serve to enhance the analysis made. Moreover, all analyses benefit from internal market
intelligence within Frost & Sullivan as analysts confront their viewpoint according to their
area of focus. The whole process of market intelligence and market analysis is therefore an
iterative one as it constantly nurtures the collected data with updates as the analyst continues
to track the market dynamics.
These stages of analysis enable the analyst to draw strategic recommendations to facilitate
decision making for the market participants in their businesses, thus representing the best
value of the analysis.
Recommendations
After extensive data collection and analysis of the market, Frost & Sullivan analysts are able
to draw in-depth conclusions and therefore deliver bespoke recommendations to the market
participants. This phase of analysis is one of the most valuable as it supports decision making
with new strategic orientations for companies. The analysis of the military training and simu-
lation will market will provide strategic recommendations to market participants.
2
Executive Summary
Ma r k e t Ov e r v i e w
Market Trends
J o i n t P r o g r a m m e s i n E u r o p e
The whole defence environment has undergone changes in the last few years and which are
complex to identify. Warfare has shifted from conventional combat to asymmetric
combat.With this transition, the threats have become different and hence training activities
need to follow these new trends to increase and maximise the efficiency and readiness of
forces. Combat responses need to be really different and European countries are increasingly
demanding innovation in training.
In net-centric warfare (NCW) or in some network enabled capability (NEC) commands, it is
a key necessity to have modelled simulators in order to train personnel and generate a high
flow of complex and different data. Therefore, it can be inferred that simulation is an indis-
pensable tool for modern military training.
European countries show an increasing interest towards joint training programmes in order
to reach the best military efficiency and to share practices between them. Cost efficiency is
also a reason as some of the countries are sharing the costs of training. The budgetary restric-
tion related to defence spending is also a concern. Countries do need to cooperate in all areas
of military training: air, land and sea.
While the United Kingdom, France and Germany are leading the trend towards cooperation,
Belgium is showing increased interest, with the country conducting a joint air training exer-
cise with France.
Switzerland is also very dynamic and has a demand for future joint training modalities.
Northern countries such as Finland, Sweden, Norway and the Netherlands are also taking
initiatives to join European training programmes. Eastern European countries such as
Bulgaria and Romania have been looking at buying western aircraft for over ten years in
anticipation of joining NATO programmes, but have accorded priority to re-equipping and
reforming their armies and navies.
The standards of architecture will have to be open and reflect the principles of High Level
Architecture (HLA) in order to have the greatest accessibility to common training databases.
As observed in the United States, interoperability is driven between the two segments Land
and Air, but the main challenge is the variety of architectures.
T h e G a m e I n d u s t r y H a s a R o l e t o P l a y i n Mi l i t a r y
S y n t h e t i c Tr a i n i n g
Serious games started during the period 1989-1990. Serious games have always been consid-
ered as an optional training device and might play a role in future synthetic training
programmes. The militaries have realised the importance of using games as a medium for
more efficient training. They are perceived as a low-cost solution for training. It is defined
that the content engages the trainee and not specifically the technology itself. Games can
offer a very efficient immersion in interactive and three dimensional environments while
being inexpensive off the shelf. The cost of the right kind of right game is approximately
about $100 and fulfils many of the features that virtual reality fails to fulfil. Among some
games, Alchemy II offers training for the new generation of unmanned aerial vehicles. Never-
theless, the main problem encountered with serious games is the cost of integrating and
transforming them into a form of military training medium. The game industry does not have
the specific military culture. To draw a simplified comparison between games and simulation
in general, games require rules, interaction and a short-term goal whereas simulation must
represent an environment as good as possible. Games are designed to entertain and have
difficulties understanding what the specific military requirements are and their triviality does
not take into account human factors in combat warfare. They might teach wrong tactics
according to a feasibility study published in 2005. Moreover, a consumer video game
presents a very small, contained straight-ahead view of the virtual environment on a
computer or television screen. A military simulation environment, however, contains more
than just visual mapping, as it also has to correspond to a pilot's full sensor suite, including
infrared, radar and electro-optical cues. As a consequence, they must comprise a prior defini-
tion which would facilitate their integration in military programmes and this is not likely to
be a current trend in the game industry. However, in the opinion of the industry, games are
open, flexible and easy to modify. While some games have proved to be successful for the use
of military training, they did not manage to be sustainable because of the reasons cited. A
project called REVVA was implemented in 2003-2004 and lasted for 18 months at the cost of
some 2 million Euros and included France, Denmark, Italy, the Netherlands and Sweden.
Project REVVA 2 is now being implemented. The objective is to produce a set of documents
which will be proposed as a standard for a verification, validation and accreditation method-
ology of data, models and simulations submitted to an appropriate international
standardisation body. The time frame is January 2006 to December 2008 and includes coun-
tries such as France, Canada, Denmark, the Netherlands, Sweden, and some industries in the
United Kingdom. The total project cost is estimated to be 1.9 million Euros.
Wh a t I m a g e G e n e r a t i o n ?
The topic of image generation is of prime importance in the simulation industry.
It is important to question what fidelity is indispensable in military training. A recurrent
discussion on the effect of enhanced simulator realism on cost-effective training underlines
that, on the one hand, trainees only need the minimum of realism on cost-effective training.
Those who advocate this approach believe that too much realism can saturate concentration
and reproduce too much of details which would confuse visibility. Only some basic objects
need to be reproduced without the necessity to gather all unnecessary objects for training. On
the other hand, some believe that the effect of augmented realism in simulation is a major
factor, particularly for young trainees who have been brought up in the generation of video
gaming and who expect a good visual resolution. In any case, with the evolution of more
features within existing brands of visual imagery, new improvements may be possible at
lower costs. Most importantly, there is often much confusion in the use of the terms 'resolu-
tion' and 'fidelity'. It has become common to misuse those two concepts in the sphere of
discussion on simulated training in the defence sector. An emphasis has to be made on the
difference between resolution and fidelity. Resolution is what the screen displays and what
reality looks like and fidelity is the amount of details provided.
Careful attention must be paid to low fidelity hidden by a multi-resolution and good resolu-
tion which can be a misleading source of technical information for the trainee.
Technology Trends
To get a better understanding of the market of military training and simulation in Europe,
Frost & Sullivan has chosen to examine the following training types and provide market
potential estimates for each main type. The military training and simulation market
comprises the following key computer-based simulators:
With regards to air training, there are flight simulators (embedded or ground based), air
combat simulators, crew trainers, helicopter part task trainers and helicopter simulators. As
for land training, the types are mission simulators, part task trainers, system trainers,
weapon trainers, battlefield simulators, driving simulators, gunnery & artillery simulators,
mine simulators, MOUT (Military Operations on Urbanized Terrain), small arms trainers
and weapon effects simulators. Training devices for maritime training include command team
trainers, mine hunting trainers, naval tactics trainers, submarine training systems and
weapons trainers.
The main types of simulators are defined as follows:
D i s t r i b u t e d Mi s s i o n Tr a i n e r s
At present, and over the next decade, hundreds of millions of dollars are being invested in the
development of the distributed mission trainer (DMT). It is a maturing technology that has
been driven by the much larger commercial telecommunications Internet market. It is in the
process of continuous improvement as governments in Europe are increasingly opting for
joint programmes. The DMT allows forces having separate simulators to train together in the
same virtual environment from a remote location. As a feature to be considered, interopera-
bility of systems is crucial as each trainee benefits from a remote training from different
locations in different simulation systems. Nonetheless, they will be networked using shared
and standardised data. In the development of a DMT, It is imperative to design the simulator
as upgradeable as possible in order to integrate it in some joint programmes if required. The
United States is ahead of European nations in terms of the development of distributed simu-
lation. However, Europe is catching up despite the technological complications required for
an efficient installation and use of DMT.
European militaries aim at developing similar training programmes for platforms and
systems in all the three segments of air, land and sea and aim at integrating them at a later
point. The ultimate objective is to allow all these segments to train cooperatively on the same
missions in one real-time synthetic battle space in net-centric environments.
E m b e d d e d T e c h n o l o g i e s
An embedded system is a simulation device which is directly installed on the trainee's equip-
ment to be performed on mission. Both the training data and the general data are presented
on the combat vehicle operational displays and controlled in a manner similar to current
vehicle operations. The advantage with this technology is that it provides an autonomous
training device that allows the soldier to train as he fights. This on-board technology would
allow mission rehearsals and sustainable training to occur whether at a home station or while
deployed on a combat theatre. One of the cutting edge embedded technologies is in the area
of motion sensing and tracking. In simulated training, one of the most complicated issues is
to track all the objects so that there is a correct spatial relationship in the environment.
P C - b a s e d S i m u l a t o r s
Parallel advanced advances in micro processing technologies and graphic developments are
slowly making commercial-off-the-shelf (COTS) personal computers increasingly competitive
with the high-end host and image generator computers. Personal computers are gradually
replacing many of the legacy systems used to run training systems as they have become inevi-
table and inexpensive.
S u m m a r y o f Ma i n F i n d i n g s
Market Growth Opportunities and Total Forecasts
Chart 2.1 shows the market engineering measurements for the military synthetic training and
simulation market in Europe in 2006.
C h a r t 2 . 1
Military Synthetic Training and Simulation Market: Market Engineering Measurements
(Europe), 2006
Market Engineering Drives Market
Strategy and Planning
Market
Engineer
Challenge
Identification
Market
Research
Market
Engineering
System
Implementation
Market
Planning
Market
Strategy
Note: All figures are rounded. Source: Frost & Sullivan
Measurement Name Measurement Trend
Market age Development stage ---
Revenues (2006) $1.1 billion Up
Potential revenues (2015) $1.8 billion Up
Base year market growth rate (2006) 0.40% Up
Forecast period market growth rate (CAGR) 3.70% Down
Saturation (current/potential users) 20.00% Stable
Price sensitivity Medium Stable
Customer demographics (product site number and types) 2,350 sites Stable
Number of products 80 Up
Average product development time 3 years Stable
Competitors (active market competitors in base year) 150 Stable
Companies exiting the market (2006) 3 Up
Degree of competition 6 Up
Degree of technical change High Up
Market concentration (percent of base year market controlled by
top three competitors)
40.0% N/A
Annual revenues do fluctuate because of the particular features of the market, such as length
of procurement phase, length of training programmes and updates on systems.
In fiscal year 2006, the European military training and simulation market accounted for
some $1.18 billion in revenues.
In fiscal year 2015, the market will have a Compound Annual Growth Rate (CAGR) of
4.8 per cent corresponding to some $1.820 billion in revenues. This high growth rate means
that the market is likely to expand considerably and market opportunities are likely to occur
for business participants.
Market Dynamics
Frost & Sullivan has identified market drivers, restraints and industry challenges which are
of primary concern as these factors highly influence the market trend and serve as key indica-
tors for market participants. The challenges seem to have changed recently due to the
restriction of defence budgets and new strategies adopted by governments. Although some
factors drive the market, restraints to market growth are persistent and are more numerous
due to the new trends in doctrines.
About the Competitive Environment
The study on the European military training and simulation market considers four basic
types of market participants: prime contractors, subcontractors, independent contractors and
a consortium of firms. Primary contractors are those who assemble contracting teams for
major programmes that focus on training and simulation functions, such as the Eurofighter
or the Tiger helicopter, or on other major programmes that focus on training and simulation,
such as Combined Arms Tactical Trainer (CATT) and Combat Training Centres (CTC). The
former programme type is usually awarded to a single primary contractor whereas the latter
type is often awarded entirely to a team of primary contractors.
Subcontractors, often smaller companies with a particular specialisation, are those that meet
requirements which primary contractors cannot perform themselves or would find strategi-
cally profitable to purchase. Subcontractors provide Commercial-On-The-Shelf (COTS) or
Military-Off-The-Shelf (MOTS) solutions.
Independent contractors are those who obtain smaller contracts from European militaries.
The range of companies in this category covers all types of market participants.
A consortium is a grouping of contractors who share a particular contract with their respec-
tive shares awarded in a common project.
The market is highly competitive. In the last two years, new entrants from the civil sector
have penetrated the market providing high technological advances. Frost & Sullivan has
identified more than 100 competitors in the field. The approximate number of competitors in
the European market is estimated to be about 150 as of 2006. A large number of these firms
includes subcontractors and manufacturers of video games who occasionally win contracts.
Thales is the dominating market participant with a market share of 36 per cent in 2006. The
second largest participant is CAE with an approximate share of 11 per cent. These two
companies combined account for a market concentration of 47 per cent. As for civil partici-
pants, those who can generate the most significant revenues are the visual display providers
or software integrators.
The competitive structure is quite complex. The identifying factors are procurement size and
length (joint programmes), number of competitors, types of technologies, size of contracts
and military restraints. All these factors analysed together result in the conclusion that
market participants need to find a segment where they can win contracts. Civil participants
need to integrate into the military culture to be able to enter the market.
Country Analysis
According to Frost & Sullivan's estimations, the United Kingdom and France will continue to
dominate the market in Europe and control slightly more than half of the European market
between them. However, all the countries in Europe show an overall increase in demand for
joint training programmes. In addition to the cost efficiency that can be realised, the reasons
motivating such a trend are better military efficiency and sharing of practices between
different countries. With defence budget restrictions being a major issue, countries are inter-
ested to share the cost of training as they can save money on current expenditure.
3
Industry ChallengesMarket Drivers and
Restraints
Introduction to the Industry ChallengesMarket Drivers and
Restraints
This section of the analysis presents the industry challenges, market drivers and restraints for
the market of military synthetic training and simulation in Europe over the time frame
2006-2015. This section is intended to allow market participants to address these factors in
order to facilitate business strategy and reactivity.
I n d u s t r y C h a l l e n g e s
Introduction
Figure 3-1 shows the market challenges for the market of military synthetic training and
simulation in Europe during the period 2007-2015.
Source: Frost & Sullivan
D o m i n a n c e o f J o i n t P r o g r a m m e s i n E u r o p e
In Europe, the trend is towards joint simulated training programs. Such a programme is
considered to be good but complex and very much based on knowledge and assumption as
opposed to a pragmatic standpoint. The complexity of multinational joint programs arises
frpm the point from which the information is approached and exploited as the number of
different data is very high. However, joint simulated trainings are more efficient in terms of
coalitions and more cost effective for governments. Hence, the challenge for the military
simulation industry is to be able to consider the factors and requirements from all the partner
countries. The simulators manufacturers must then consider a wide range of different data
and must be prepared for a long period of agreement before they can sign the contract and
commence the manufacturing process. The companies must fully understand all the difficul-
ties of joint doctrine which can be a long and tedious task. On the other hand, joint programs
facilitate a stable income as they are likely to last over several years encompassing multi-tier
countries and companies. This long-term partnership enables smaller market participants and
countries to have a regular and measurable income that is stabilised by the joint programme.
The company must also be able to match its business models to the business model require-
ments of the joint procurement authorities.
F i g u r e 3 - 1
Military Synthetic Training and Simulation Market: Impact of Top Challenges (Europe),
2007-2015
Challenge 1-3 Years 4-6 Years 7-9 Years
Dominance of Joint Programmes in Europe High High High
Maintenance of Capability Medium High High
How to Meet Specific Military Needs & Defence Budget Restrictions? High Medium Low
Designing Simulators with High Adaptability Medium High High
Difficulty for Companies to Define Basic Scenarios Due to New Conflicts Medium Medium Medium
Ma i n t e n a n c e o f C a p a b i l i t y
European militaries are subject to restricted acquisition budgets and therefore are examining
other methods to reduce costs on simulated training devices. They tend to require a whole
package, including services such as maintenance or repairs, from the supplier. This would
also reduce costs in terms of personal management, maintenance and time on the customer
side. As a consequence, in addition to their well designed training systems, companies would
have to include service provision and a strong client-oriented policy to sell their products and
service skills. In fact, as more and more companies are increasingly aware of this prospect,
there is a need for companies to diversify their core competencies. As such, they can no
longer concentrate on their core expertise such as designing training systems engineering, but
must also diversify to providing maintenance services and therefore they can lose concentra-
tion on their core business. If these types of companies wish to concentrate on their core
business such as technology engineering, they can proceed to acquire other companies
specialised in logistic support. Predictably, they would have to compete in the market in
terms of service provisioning and anticipate their customer needs and requirements for a
better quality of service provision.
H o w t o Me e t S p e c i f i c Mi l i t a r y N e e d s a n d D e f e n c e
B u d g e t R e s t r i c t i o n s ?
About 20 years ago, it was indispensable to purchase a simulator with the system. However,
at present, simulated systems are bought only when there is a definite need. In the last few
years, Armed Forces have not resorted to systematic purchase of simulated training systems.
They do not purchase in advance and have the simulators ready when necessary, but instead
procure simulators at the specific moment when there is a need of training. Moreover, they
tend to detail any criteria for which they need a simulated system. These can be factors such
as: what purpose, how many, how long, what types of trainees, in what manner and in what
context. Companies must therefore deliver a customised training system and must compre-
hend the real need so as to deliver these systems in a short time and respond to an immediate
need from the militaries.
D e s i g n i n g S i m u l a t o r s w i t h H i g h A d a p t a b i l i t y
As the training and simulation market is based on IT technologies, technological innovation
becomes a major market driver. The capability of the systems to be easily at lower cost
upgraded is the key to satisfy the customer requirements and sustain their credibility. The
higher the upgrade capability of a system, the more the product will stay in service and
remain sustainable. Companies offering sustainable training systems would hence retain their
customers and would have a higher probability to win potential contracts in the market.
There is a considerable trend towards joint training programmes, as in European countries
tend to enhance the doctrine of such programmes. Simulators geared towards specific plat-
forms also need to connect to allow a section of the forces to train with other components.
For instance, the US Distributed Mission Operations (DMO) programme is intended to even-
tually link simulators over the continent, although at present only a few simulators in the US
are linked. This requires a database of terrain (in this case, the Common Environment
Common DataBase), which can be applied to numerous scenarios.
Interoperability plays a major role as systems are increasingly involved in joint programmes
and increased collaboration between forces. Therefore they necessitate a good exposure to
networking together with a strong standardisation of data capability and a high degree of
interoperability. Systems must also be modified in real time.
D i f f i c u l t y f o r C o m p a n i e s t o D e f i n e B a s i c S c e n a r i o s D u e
t o N e w C o n f l i c t s
A challenge that the simulator manufacturers may face is the complexity of designing new
basic scenarios. Companies specialised in virtual environments, such as the serious game
companies may face difficulties in creating military scenarios capable of addressing battle or
homeland security threats. Thus, situational awareness really becomes a key consideration.
European countries tend to evolve in net centric environments as a response to the nature of
conflicts which have changed considerably in the past few years. Their new outlay is not
simple to understand as stakes and threats do not involve classical bilateral conflict fields but
are rather asymmetrical conflicts, remotely operated. Therefore, it is not an easy task to
design virtual highly complex scenarios that are credible and as realistic as possible to train
the forces for those new kinds of conflicts.
Ma r k e t D r i v e r s
Introduction
This section shows the main factors which are likely to drive the market over the period
2006-2015.
Figure 3-2 shows the market drivers ranked in order of impact for the market of military
synthetic training and simulation in Europe during the period 2007-2015.
N e e d f o r C o l l e c t i v e Tr a i n i n g i n E u r o p e
Traditional military training approaches have become outmoded therefore European coun-
tries are now finding the need to train jointly with one another. Therefore, they seek to
procure a whole series of networked simulation devices. The combination of reduced cost of
training systems compounded by the development of networking capability has opened up an
entirely new range of applications for synthetic training. The switch to joint training means
that current systems will have to be either upgraded, networked or replaced with distributed
trainers.
F i g u r e 3 - 2
Military Synthetic Training and Simulation Market: Market Drivers Ranked in Order of
Impact (Europe), 2007-2015
Rank Driver 1-3 Years 4-6 Years 7-9 Years
1 Need for Collective Training in Europe High High High
2 Strong Technological Performance High Medium Low
3 Availability Contracts Offer More Extensive Programs Medium High High
4 Benefits of Cost and Time Efficiency by Simulated Training Medium Medium High
S t r o n g T e c h n o l o g i c a l P e r f o r m a n c e
The need for more realistic and higher fidelity military simulation has enabled simulated
training to extend to a wide range of military applications and technologies. This includes
the use of PC-based image generators (PC-IGs), which have enabled the simpler usage of a
new generation of simulation programs.
A number of leading simulation companies and large defence prime contractors have recently
introduced new programs into the market, which are likely to define the industry standards
for the next decade. These have included PC-based offerings from Flightsafety International,
CAE, Sogitec (a subsidiary of Dassault), Saab and Indra. PC-based systems were initially
viewed with skepticism by market participants regarding their viability as a low-cost,
low-end solution.
Sogitec's Apogee 6 system, which is used as a training aid for the Rafale, includes real-time
self shadowing of terrain, 3D shadows from moving models and self shadowing of cloud
layers. It is thus relatively advanced for a military simulator; however, all of these innova-
tions are based on Commercial Off-The-Shelf (COTS) applications already available on the
PC-based platform. A further advantage is that these systems can be monitored from
standard PCs or workstations or can be projected on to liquid crystal on silicon screens, such
as those manufactured for this purpose by Barco.
COTS technologies can also be exploited in a number of other areas, including
helmet-mounted displays and binocular vision aids. PC-based programmes are particularly
useful in desktop environments to teach skills which can be learnt with reduced access to
airframes. At the Royal Air Force (RAF)'s Defence College of Aeronautical Engineering
(DCAE), cadets are trained using desktop Windows XP-based solutions. Windows-based
desktop solutions are likely to be easier for use by trainees, who will probably be familiar
with PC-type applications because of their widespread use in domestic and office environ-
ments. As a result, these will be more user friendly than specifically designed learning aids.
The new version of Advanced Cockpit Trainer (ACT) has also been progressively remodelled
from DOS platforms through the various Windows packages to keep it contemporary, thus
demonstrating the ease with which programmes based on COTS technologies can be
upgraded with improvement in technology.
However, these programmes have proved popular for a number of reasons, particularly the
fact that basing simulation programmes on PC applications can make use of COTS products
as opposed to proprietary systems, thus reducing costs. A further advantage of producing
simulation products based on COTS systems is that these then have easier upgrade paths and
are more able to keep up with frequent technological advances in the simulation industry.
Due to advances in technological networking, remote and distributed synthetic training has
evolved and has seen more applications to enable trainees to learn from remote sites and in a
reduced cost and logistical arrangement.
A v a i l a b i l i t y C o n t r a c t s O f f e r Mo r e E x t e n s i v e P r o g r a m s
Training approaches of the US military have a high influence on European simulation
programmes and some US practices are likely to be adopted amongst other NATO partners.
One particularly important programme which is likely to influence European partners is the
US Army's Flight School XXI programme. This programme involves the purchase of some
57 simulators for a variety of helicopter training requirements. One particular aspect of the
programme that is likely to be of interest is that the simulators are purchased on an availa-
bility basis, whereby the contractors (primarily CSC, but also L-3 and Rockwell Collins)
continue to own the simulators and are responsible for improvements and maintenance
related to them. This means that the contractors share the risk for the programme with the
government in question, meaning that the contractor is responsible for ensuring that simula-
tors are operational and that improvements to the technology occur when required. This
assists in terms of considering training programmes as improvements, wherein changes to
tactics and circumstances can be added without the total replacement of the entire system.
This has proved valuable to the US programme in adding improvements in response to the
lessons learned in Iraq and Afghanistan as the conflict progressed. The availability contract
also reduces the cost, allowing more simulators to be procured at one time. The contract also
provides a definite incentive for CSC to perform well. If the company achieves the targets for
availability, the contract will be extended. This is a departure from traditional Availability
Contracting models, which merely penalise the contractor if they fail to hit targets, and tends
to be more successful in persuading contractors to provide solutions to problems that they
foresee in the future or suggest suitable improvements.
B e n e f i t s o f C o s t a n d T i m e E f f i c i e n c y b y S i m u l a t e d
Tr a i n i n g
European militaries, in spite of the added costs of procurement for simulated training equip-
ment, have found that the operations and maintenance costs for flying in a simulator are
minor compared to the same nature of costs incurred by actual flying aircraft for all training
purposes. The same can be said for the use of live ammunition for training with tanks.
Rehearsals in simulators do not necessitate the immobilisation of actual systems for training.
Actual fighting systems can therefore be deployable for the purpose of fighting operations,
increasing the availability of fighting systems. The simulated systems are designed to be used
for the purpose of training and hence are at a minor risk than the actual systems. Time effi-
ciency is also an important factor as more rehearsals can be performed on the simulators
rather than on actual systems. For instance, the US Air Force has estimated that the cost of
an hour of use of a simulated training device is worth the cost of 6 minutes in an aircraft.
Time saving applies to all military applications.
In terms of personnel safety, simulation helps avoid injuries and accidents that can occur
during actual training. These arguments have always been driving the growth of the simu-
lated training market and are likely to remain so in the foreseeable future.
Ma r k e t R e s t r a i n t s
Introduction
This section discusses the various issues which might restrict the size of the market over the
period 2006-2015.
Figure 3-3 shows the market restraints ranked in order of impact for the market of military
synthetic training and simulation in Europe during the period 2007-2015.
F i g u r e 3 - 3
Military Synthetic Training and Simulation Market: Market Restraints Ranked in Order of
Impact (Europe), 2007-2015
Rank Restraint 1-3 Years 4-6 Years 7-9 Years
1 High Technical Competitiveness High Medium Medium
2 High Outlays Faced by Specialised Companies High Medium Medium
3 Complex and Long Implementation Time for Joint Programmes High Medium Low
4 Shrinking European Defence Budgets Medium High High
5 Potential Constriction of the Market Due to Increased European
Integration
Medium Medium High
6 Reluctance from Militaries to Adopt Sophisticated Simulators Medium Medium Medium
7 Simulators Seen Only as a Complimentary Tool Medium Medium Medium
8 Limitation of Market Value Due to Intensive Use of COTS Products Medium Medium Low
H i g h T e c h n i c a l C o m p e t i t i v e n e s s
The military training and simulation market is more complex than ever. The advances in
technologies have allowed a large number of companies that are specialised in commercial
communications and display technologies to ruggedise their products in order to penetrate
the military market. Frost & Sullivan has identified more than 150 competitors in the market
(and its submarkets) that has a competitive structure made of both military and civil compa-
nies. However, the European market is likely to remain constricted to a degree due to its very
high number of competitors. This high level of competition may constrict the market and
result in some participants exiting the market.
H i g h O u t l a y s F a c e d b y S p e c i a l i s e d C o m p a n i e s
Defence companies specialised in manufacturing simulators may face financial difficulties in
their initial stages and in the short term, as they incur losses in their research and develop-
ment. CAE is a fitting example for a company of this kind. Despite having numerous
significant gains in terms of military simulation contracts, the company has experienced
financial difficulties. In 2004 and 2005, for example, the company went through a lean patch
and was forced to make some 450 redundancies. CAE's simulation revenue stream actually
increased by some 13 per cent, as more militaries opted to use simulators. This resulted in a
production backlog of systems worth $1.4 billion. However, the cost of running over
100 flight simulators is very significant over the short term as a result of the technical diffi-
culties of producing and fielding such systems. While long-term support, maintenance and
upgrade may offer good opportunities for profit, the short term can lead to substantial losses
and may well require considerable stakeholder patience before a contract becomes profitable
enough to outweigh the initial expense.
C o m p l e x a n d L o n g I m p l e m e n t a t i o n T i m e f o r J o i n t
P r o g r a m m e s
In joint programme processes, the stakeholders must take a long time to define, implement
and test their requirements before placing an order for joint training simulators. The variety
of needsof procurement laws, of acquisition policies, cultural differences and all the tech-
nical practices in each countrymakes the process more complex and longer to implement.
Hence, the supplying companies might have to follow the whole process for several years.
This upkeep process might last five years before companies can win contracts and launch
simulator provisions.
S h r i n k i n g E u r o p e a n D e f e n c e B u d g e t s
The current European political opinion is of investing in the defence sector. Defence budgets
are no longer a priority in Europe. This trend can affect the purchase of new platforms and
therefore lead to a decreasing demand for new simulators for those systems. As training and
simulation are part of the overall budget, a general decline will impact on the resources allo-
cated to these specific sectors.
Governments might be reluctant to opt for an upfront funding for training and simulation as
they are no longer able to handle many of the systems and service requirements. There is
obviously a need for management in a cost-effective manner and companies from the private
sector are increasingly asked to fill the gap. Companies have to adjust Private Financed Initi-
atives (PFI) which are likely to be a more and more used project style. They are more likely to
address whole life costs in a different way and will have to bear the provisioning for financial
and products services.
P o t e n t i a l C o n s t r i c t i o n o f t h e Ma r k e t D u e t o I n c r e a s e d
E u r o p e a n I n t e g r a t i o n
The increasing drive for European interoperability and defence cooperation may constrict the
market, as a number of nations rely on European initiatives to utilise joint funds to provide
simulation capabilities. Such funding allows various nations to have access to simulators and
training tools that would be more difficult to afford under other circumstances or which
simply might not occur otherwise. The European Jet Pilot Training programme (AEJPT or
Eurotraining), for example, was launched in 1997 with the intention of providing training
for the pilots of various participating nations. Greece, Austria, Finland, France, Italy
Germany, Portugal, Spain, Sweden, Belgium and Switzerland all participate in this
programme, albeit within tight financial constraints. The start-up date for this project was
projected as being 2010. NATO programmes also allow for some training for European
pilots. However, these attempts at unified programmes can restrict the market to some
extent. Due to the inherent difficulties of catering to so many vested interests, the programme
has suffered numerous delays, resulting in a failure to procure the requisite simulation equip-
ment. Various disappointments relating to the programme have resulted in both the Dutch
and the Hellenic Air Force either withdrawing or threatening to withdraw their participation.
While the AEJPT itself offers a considerable market for simulators, programmes of this
nature restrict the necessity and funding for simulators within the various participating
nations and lower the requirement for units. In this instance, it has also led to some nations
failing to procure simulators.
R e l u c t a n c e f r o m Mi l i t a r i e s t o A d o p t S o p h i s t i c a t e d
S i m u l a t o r s
Military trainers might not see a technically indispensable use of sophisticated simulators.
Some sophisticated simulators may be perceived as crucial and highly efficient for training as
their technology opens the scope to a very realistic training. However, trainers may think that
some technological features are too advanced and that they pragmatically might not need
such a high level of technology, which is sometimes too sophisticated, complex, and not
directly connected to their military needs. Certain militaries will consider at a certain point
whether they need to be technology driven or just be more pragmatic. Nevertheless, the tech-
nology does not need to be too advanced for them to train properly on a daily basis as long
as they have the proper fidelity in their training process.
S i m u l a t o r s S e e n O n l y a s a C o m p l i m e n t a r y To o l
Although the training decision-makers see an indisputable advantage in resorting to simula-
tors in terms of time and cost efficiency, they are reluctant to accept the constant use of
simulators to efficiently train their forces. Indeed, as for the air application for instance, the
time in the air is seen as primordial and irreplaceable. The basic skills for a pilot are to be
developed at the earlier stages of the training. It is crucial that the trainee spends a minimum
number of hours flying and acquires the basic skills before he can resort to simulators. He
would use simulators for his training once he masters the actual air requirements. Therefore,
air simulators come at the second stage of a pilot training programme and as a secondary
resource for efficient training. They are not systematically used for air training, but rather
used quite sparingly by the trainers. Simulated training should be used at a later phase during
the training process than live training. This will ensure that the trainees shall use simulators
once they have a certain experience in live training. Simulators might be considered as over
capable in comparison to the concrete and immediate needs.
L i m i t a t i o n o f Ma r k e t Va l u e d u e t o I n t e n s i v e U s e o f
C O T S P r o d u c t s
The introduction of COTS technologies will prove to be a market driver as the decreased cost
of purchasing simulation systems will allow the greater uptake of simulation technology by
countries and armed forces, which previously would have been unable to afford technologies
of this type. However, these technologies will also restrict the size of the market, as they are
inexpensive compared to traditional simulation technologies, and may lead to a decline in the
total market size as a result. The extensive use of COTS may limit the value of the market.
4
To t a l F o r e c a s t s
Figure 4-1 and Chart 4.1 show the total revenue forecasts for the military synthetic training
and simulation market in Europe during the period 2006-2015.
F i g u r e 4 - 1
Military Synthetic Training and Simulation Market: Total Revenue Forecasts (Europe),
2006-2015
Revenues
Year ($ Million)
2006 1,100
2007 1,350
2008 1,475
2009 1,345
2010 1,400
2011 1,310
2012 1,410
2013 1,465
2014 1,590
2015 1,800
C h a r t 4 . 1
Military Synthetic Training and Simulation Market: Total Revenue Forecasts (Europe),
2006-2015
Forecasts by Military Segments
Figure 4-2 and Chart 4.2 show the total revenue forecasts and displays all three segments
(air, land and maritime) for the military synthetic training and simulation market in Europe
during the period 2006-2015.
0
500
1000
1500
2000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
R
e
v
e
n
u
e
s

(
$

M
i
l
l
i
o
n
)
Year
C h a r t 4 . 2
Military Synthetic Training and Simulation Market: Total Revenue Forecasts by Segment
(Europe), 2006-2015
F i g u r e 4 - 2
Military Synthetic Training and Simulation Market: Total Revenue Forecasts by Segment
(Europe), 2006-2015
Air Land Maritime
Revenues Revenues Revenues
Year ($ Million) ($ Million) ($ Million)
2006 500 400 200
2007 600 500 250
2008 650 550 275
2009 590 530 225
2010 650 500 250
2011 550 500 260
2012 590 560 260
2013 620 570 275
2014 690 600 300
2015 800 650 350
A i r
Revenue Forecasts
Figure 4-3 and Chart 4.3 present the revenue forecasts in the air segment for the military
synthetic training and simulation market in Europe during the period 2006-2015.
F i g u r e 4 - 3
Military Synthetic Training and Simulation Market: Air Segment Revenue Forecasts
(Europe), 2006-2015
Revenues
Year ($ Million)
2006 500
2007 600
2008 650
2009 590
2010 650
2011 550
2012 590
2013 620
2014 690
2015 800
C h a r t 4 . 3
Military Synthetic Training and Simulation Market: Air Segment Revenue Forecasts
(Europe), 2006-2015
The air segment has traditionally been the driving force for training and simulation as risks
are bigger while training on actual aircraft. As a consequence, simulators are in much
demand from this military segment. This segment is likely to remain a major part of the
market. The market is in great part sustained by simulator upgrades and modifications. One
of the main trends has always been a demand for high-fidelity systems. Requirements and
technological advances for simulation systems are increasing. Whilst capability improves,
costs remain the same
Image generation performance is a major requirement for military aircraft.
The major air project at the moment relates to the equipment for the Eurofighter/and is
worth about $1.5 billion.
At present, the helicopter simulation market in Europe is very dynamic with a growing need
for new training equipment on the NH-90 between four core nations which are Italy,
Germany, France and The Netherlands. As helicopters are highly reconfigurable, their
procurement per user is likely to be scarce and, therefore, there is opportunity for further
procurement in the years to come.
The total cost of air simulation systems amounted to $500 million in 2006. More stable reve-
nues are expected during the period 2007 to 2009. In 2010, some mid-life upgrade activities
are anticipated to offer an increase in revenues for the participants.With the termination of
some programmes and the resultant opportunities for the provision of new equipment and
replacement/removal of older systems, the market is likely to witness revenues of
$800 million by 2015. This would represent an increase of at least $100 million in a
9-10 year time frame, because this estimation does not include revenues that could be derived
from potential programmes. Considering the current and future need for air simulators,
revenue growth can only show a stable trend. A slight revenues pike is likely in 2008 due to
the mid-life upgrade of the NH90 helicopter trainers in some countries.
0
100
200
300
400
500
600
700
800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
R
e
v
e
n
u
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s

(
$

M
i
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l
i
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n
)
Year
France, the United Kingdom, Germany and Italy are the countries that procure the highest
number of air simulators. The companies which have the biggest revenue share for air simu-
lation in Europe are CAE, Thales and Eurofighter GmbH.
L a n d
Revenue Forecasts
Figure 4-4 and Chart 4.4 present the revenue forecasts in the land segment for the military
synthetic training and simulation market in Europe during the period 2006-2015.
F i g u r e 4 - 4
Military Synthetic Training and Simulation Market: Land Segment Revenue Forecasts
(Europe), 2006-2015
Revenues
Year ($ Million)
2006 400
2007 500
2008 550
2009 530
2010 500
2011 500
2012 560
2013 570
2014 600
2015 650
C h a r t 4 . 4
Military Synthetic Training and Simulation Market: Land Segment Revenue Forecasts
(Europe), 2006-2015
The market for land systems should see a period of growth due to the need for joint training
with the air segment.
Some programmes presently available in some European nations can be observed, for
instance, on the Leopard tank in Norway. Leopard tank simulators are produced at a very
reasonable cost. Cost savings are therefore important.
Tank driving costs are estimated to cost around $150 per mile in live training whereas simu-
lated driving cost is only $5 per mile.
MOUT training offered by Ruag should see interesting opportunities throughout Europe.
The small arms market is occupying a significant market share and is dominated by Thales
TTS and FATS at present. In the United Kingdom, the order book for the Combined Arms
Tactical Trainer (CATT) is estimated to be at $250 million. Most importantly, in the UK,
long-running contract for the Armoured Vehicle Training System set to be implemented by
the Landmark consortium (comprising CAE, Agusta Westland and Interserve) from 2005 to
2035 is valued at $1.84 billion. The length of this programme (of over 30 years) makes the
project cost very high. However, this revenue does not set the land segment to be stronger
than the air segment.
The land segment had revenues of around $400 million in 2006. A slight revenue increase is
likely to occur in 2012 due to mid-life upgrades. With no specific service provision or
upgrades in the pipeline, the rest of the years are expected to generate stable income from
maintenance activities mainly.
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
R
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v
e
n
u
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s

(
$

M
i
l
l
i
o
n
)
Year
The year 2006 is of particular importance as many programmes that commenced in
2003 have their mid-life upgrades scheduled in this year. Some programmes have also been
contracted for in 2006. Revenues will remain stable in 2007 and will see a spike in 2008 and
2010 due to the planned procurement of some land training programmes.
Ma r i t i m e
Revenue Forecasts
Figure 4-5 and Chart 4.5 present the revenue forecasts in the maritime segment for the mili-
tary synthetic training and simulation market in Europe during the period 2006-2015.
F i g u r e 4 - 5
Military Synthetic Training and Simulation Market: Maritime Segment Revenue Forecasts
(Europe), 2006-2015
Revenues
Year ($ Million)
2006 200
2007 250
2008 275
2009 225
2010 250
2011 260
2012 260
2013 275
2014 300
2015 350
C h a r t 4 . 5
Military Synthetic Training and Simulation Market: Maritime Segment Revenue Forecasts
(Europe), 2006-2015
The dominant trend for maritime simulation in Europe is the need for embedded rather than
ground-based systems. These systems would also have to be linked together and to other air
and land systems for combined training purposes. Over the past few years, there has been a
considerable delay in the delivery of these systems to the UK Royal Navy by the company
BVR Systems.
In France, the maritime market has been sustaining itself with the College Maritime bridge
simulators supplied by Kongsberg and Barco in 1997. However, there might be an opportu-
nity for new systems after 10 years of use. In Germany, the programme implemented to train
jointly with foreign forces might extend to include some additional requirements in the years
to come. This programme has been implemented by Thales TTS. The dominant maritime
training location in Europe is in the UK, and to cite a few there are the Combat System Skills
Trainer site (CSST) or Maritime Composite Training site (MCTS). The United Kingdom
conducts more than seven maritime training programmes. The most important maritime
training centres are Faslane, Portsmouth and Devonport. The maritime training market might
observe some needs for interoperability with satellites, aside from embedded trainers, to be
procured for the training centres.
As for forecasts for the maritime segment, the years 2007 and 2008 will see a slight increase
due to the upgrade cost of a programme, from a joint venture between CAE and AMS, in the
United Kingdom. Although no outstanding orders/upgrades/contracts are expected during the
period 2010-2015, this segment is likely to grow and have revenues of $350 million by 2015.
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5
Ma r k e t S h a r e s b y C o u n t r y
Introduction
Countries in Europe show an increasing demand for collective training programmes. Their
purpose is to reach the best military efficiency in net-centric commands and to share practices
between various trends, while simultaneously ensuring cost efficiency through sharing costs
of training. Countries do need to cooperate and are initiating phases of discussions between
each other. With their leading presence in several joint training programmes, Germany, the
United Kingdom and France are taking the most initiatives towards joint training modalities.
Countries such as Belgium and Italy are closely following these trends. Belgium conducts air
training exercises jointly with France.
Switzerland is also dynamic and will have a demand for future joint training possibilities.
Northern countries such as Finland, Sweden, Norway and the Netherlands are also taking
initiatives to join European training programmes. Eastern European countries such as
Bulgaria and Romania have been looking at buying western aircraft for over ten years in
anticipation of joining NATO programmes, but have accorded priority to re-equipping and
reforming their armies and navies.
Investment of Key European Countries in Synthetic Training
Chart 5.1 shows the investment in synthetic training for the key European countries in the
military synthetic training and simulation market in Europe for 2006.
C h a r t 5 . 1
Military Synthetic Training and Simulation Market: Key Country Investment (Europe), 2006
The chart intends to represent the key countries market share, showing the leading countries
in terms of training in Europe.
Joint Training Programmes
Chart 5.2, Chart 5.3 and Chart 5.4 show country shares for 3 joint training programmes in
the military synthetic training and simulation market in Europe in 2006.
Chart 5.2 show the NH90 training programme with France, Germany, Italy and the Nether-
lands as the four core nations.
Uinted Kingdom
30%
France
25%
Germany
16%
Belgium
6%
Italy
8%
Other
15%
Note: Others includes Scandinavian Countries, The Netherlands, Greece, The Czech Republic, Poland, Romania,
Spain and Switzerland
C h a r t 5 . 2
Military Synthetic Training and Simulation Market: NH90 Joint Air Programme (Europe),
2006
Chart 5.3 show the air training initiated by France and Germany.
C h a r t 5 . 3
Military Synthetic Training and Simulation Market: Joint Air Programme (Europe), 2006
Italy
25%
France
25%
Germany
25%
The Netherlands
25%
France
50%
Germany
50%
Chart 5.4 show the maritime training between Belgium and Norway called EGUERMIN
which consists of mine sweeping training.
C h a r t 5 . 4
Military Synthetic Training and Simulation Market: Eguermin Maritime Joint Programme
(Europe), 2006
Ma r k e t S h a r e s b y C o m p a n y
Chart 5.5 shows the company market share by revenues for the military synthetic training
and simulation market in Europe for 2006.
C h a r t 5 . 5
Military Synthetic Training and Simulation Market: Company Market Shares by Revenue
(Europe), 2006
Norway
50%
Belgium
50%
BAE
11%
Rheinmetall RDE
6%
Others (Defence)
13%
Others (Civil)
6%
EADS
9%
Saab
5%
Thales
16%
KMW
6%
Rockwell Collins
5%
Lockheed Martin
7%
Agusta Westland
5%
CAE
11%
Thales and CAE accounted for one-fifth of the market revenues. Being a company catering to
the civil sector, Barco had significant market share due to its important position as a provider
of display devices for numerous programmes in Europe. The other defence companies
together hold about 14 per cent of the market. BAE Systems had quite a good market share
(11 per cent) as well due to its delivery of training systems to the United Kingdom, the leader
in Europe for military training and simulation applications. Agusta Westland had a consider-
able 7.0 per cent share due to the widespread training available on helicopters.
6
Competitive Environment
This section analyses the competitive environment for military training and simulation,
listing some of the companies that offer remarkable training and simulation products and
service provision to the European military forces. Frost & Sullivan has identified more than
100 competitors in this market. The list is not exhaustive and may not include all of the
competitors, especially smaller entrants. Nonetheless, this analysis is likely to draw a
comprehensible vision of the whole military training and simulation competitive landscape
for a better awareness of market opportunities and industrial competitiveness.
Competitive Structure
Figure 6-1 shows the competitive structure for the military synthetic training and simulation
market in Europe during the period 2006.
F i g u r e 6 - 1
Military Synthetic Training and Simulation Market: Competitive Structure (Europe), 2006
Number of Companies in the Market 150
Types of Competitors Military companies
Defence manufacturers
C4ISR manufacturers
Civil companies
Visual display companies
Software companies
Video game manufacturers
Distribution Structure Prime contracts
Subcontracts
Consortium
Tiers of Competition Tier 1:
Two main defence companies
Medium size defence companies
Tier 2:
Medium size defence companies
Large visual displays companies
Medium size visual display companies
Medium size software companies
Large video game manufacturers
Medium video game manufacturers
Small video game manufacturers (can be new entrants).
Notable Acquisitions, Mergers BVR systems acquired blue ridge simulation in march 2006.
Rockwell Collins acquired Evans & Sutherland in may 2006. cost of
acquisition: 71.5$M.
Procurement Entities Ministries of defence
European simulation procurement agencies
Key End-user Groups Air defence training centres
Land defence training centres
Naval defence training centres.
Competitive Factors Best bespoken capability
Training efficiency
Low life cycle cost
Operational costs
Interoperability capabilities
Best upgradeability
Maintenance costs
Maintenance provision capabilities
Ma r k e t P a r t i c i p a n t s
Adacel
Adacel Inc. is a subsidiary of Adacel Technologies. Adacel provides simulation software in
about 30 countries and is recognised as a leader in this segment. The company's main exper-
tise is in simulation activities relating to Air Traffic Control (ATC). Adacel has won
significant contracts in the United States in direct competition with other companies and has
gained contracts in Europe from the Norwegian and Italian armies over the last few years.
The company also offers its products to the UK military. The company had experienced
human resource problems but this will not influence its presence in the market for the years
to come as it is gradually gaining the trust of its new European customers. Frost & Sullivan
forecasts a significant growth for the company due to the focus made on software that
enables interoperability features. Indeed, the companyis well positioned to improve its
market share and is likely to lead the way for networked software in Europe in the coming
years.
Agusta Westland
A subsidiary firm of Finmeccanica, Agusta Westland is one of the main helicopter manufac-
turers in Europe. With an annual turnover of 2.490 million, this company based in Italy
and the United Kingdom is undergoing strategic partnering arrangement with the MoD. With
a strong presence in the United Kingdom, Agusta Westland provides several simulator
systems to the country's defence sector. The company is also much involved in joint training
programmes, the most notable of which is ROTORSIM with CAE. ROTORSIM is expected
to generate revenues of $96 million over 15 years on two reconfigurable simulators at the
A-109 training facility, a AW-139 FMS and a full range of maintenance, trainers supported
by electronic classrooms and computer-based training (CBT). Besides this joint programme,
the company will also be partly monitoring the Military Flying Training System (MFTS) eval-
uated at $17.5 billion and for which a Training System Partner (TSP) will be selected from
three competing consortia. This private programme is of very high importance as the
company can predict an opportunity for the development of simulators on its products such
as the A109, the A119 and AW139. Nevertheless, the main challenge on this equipment
would be to integrate simulation interoperability at the very early stage of development in
order to make the systems flexible for potential joint simulation programmes.
Agusta Westland also offers its Air Manoeuvre Collective Training System (AMCTS) to the
Royal Air Force. CAE entered the ATIL consortium along with Boeing, which provides
training on the Apache to the British Army.
The company will also be providing the Lynx Collective Training System to the UK Armed
Forces.
Barco
As a world leading manufacturer of high-performance visual display systems for both the
civil and military markets, Barco offers a wide range of simulation applications for the mili-
tary sector. The acquisition of a major contract from BAE systems for the supply of
minidome simulators has rewarded the company for its trust on its highly qualified engineers.
The short deadline for delivery to the RAF and the high requirements have been met with
success based on the XRACU technique. The large variety of its devices allows Barco to have
a strong market presence. Some of these devices include modular rugged flat displays, rugged
large displays and thin lightweight displays to cite a few. These are ruggedised or ruggedis-
able at several levels and are adaptable for airborne, ground based and shipboard
applications. The indisputable reputation of Barco regarding the provision of the best visual
display devices for military training has led the company to the leadership position world-
wide in the last few years. It is estimated that the company will remain a dominant provider
in the niche market due to its considerable R&D size.
BAE Systems
BAE Systems is the largest defence company in Europe employing 90,000 people worldwide.
The company has a greater focus on R&D with a significant budget dedicated for this
purpose. The market for simulation is largely addressed by the company's tools, which fully
meet the military training requirements, as well as its COTS products for database genera-
tion. BAE Systems has gained expertise from its knowledge of imagery processing techniques
gained over more than 20 years. Frost & Sullivan forecasts a significant growth for the
company which finds its potential in its approach to PFI programmes, partnerships with
simulation companies and its important provision to the UK MOD. One of the major
contracts awarded to the company by the MOD is the 10-year Seabridge assignment in the
maritime segment.
BVR Systems
Founded in 1998, BVR Systems is an Israeli company which provides air, land and sea
training systems. The company's competitive advantage lies in embedded systems (based on
COTS architecture), live training, distributed simulation network systems and synthetic
environments.
In March 2006, BVR Systems has performed a strategic business operation: BVR Systems
acquired Blue Ridge Simulation (USA) for its proven high performance in radar of Blue Ridge
Simulation. Acquiring Blue Ridge Simulation also allows BVR Systems to have a geograph-
ical position in the United States. Through this strategic operation, the company stands to
derive both technological and geographical advances/benefits.
The key product lines of the company are:
Embedded Virtual Avionics (EVA),
In-Flight Electronic Warfare Simulation (IFEWS),
Autonomous Air Combat Manoeuvring Instrumentation (AACMI).
CAE
CAE is a world-leading provider of simulation and modelling technologies for civil aviation
and military customers. With annual revenues of more than C$1 billion, the company oper-
ates in 19 countries around the world. CAE has sold nearly 700 simulators and training
devices to airlines, aircraft manufacturers, training centres and defence forces for air and
ground applications in more than 40 countries. With over 100 full-flight simulators in more
than 20 aviation training centres serving approximately 3,500 airlines, aircraft operators and
manufacturers across the globe, CAE is an outstanding company in the military training and
simulation industry. CAE licences its simulation software to various market segments and has
a professional services division assisting customers with wide-ranging simulation-based
needs. CAE have established a common database (CDB) of world terrain that is likely to be
widely used by European defence companies. This provides the company with a wider market
access on the back of numerous other simulation projects.
From the beginning, flight simulation has been at the heart of the company's research. With
the gradual migration from commercial to military simulation seven years ago, CAE Systems
developed simulation systems at a portfolio ratio of 30 per cent military and 70 per cent
civilian applications. However, the company has currently managed to extend its military
expertise in up to 50 per cent of its business through its full flight simulator cockpits. CAE
believes it is beneficial for its Research & Development wing to concentrate on the military
area as a key business driver.
Christie
Christie is an US-based manufacturer of customised visual solutions designed and installed to
meet the most exacting visual requirements of organisations within the energy, military
training and simulation, manufacturing and design, aerospace, and government end-user
sectors.
Coel
Coel GmbH has its expertise in laser-based weapon training. Based in Germany, the company
has become a subsidiary of Ruag in January 2006. In participating in MOUT training in
Switzerland with Ruag, the company is proving its expertise in laser-based devices. This
should allow Ruag to further expand to Finland, Switzerland and potentially to Germany and
Belgium with its collective land training simulation product line.
Concurrent
Concurrent has been providing digital bespoke systems and real-time computer systems for
both civil and defence companies for over 402 years.
The principal defence product is known as iHawk from the Hawk family.
The company has won a significant contract to supply the new power Hawk 940 for the next
generation of in-flight simulation to EADS for data acquisition purposes. This application
will be linked to the next-generation WaSiF and was chosen by EADS for its reliability, exper-
tise in critical environments and real-time training capabilities. The company has achieved
success in the past with this particular provisioning. This contract is set to provide the
company with a significant increase in market share in the years to come. With real-time
technology being its specialisation, Concurrent, as a subcontractor, can be expected to win
contracts in the development of common databases for joint training programmes in Europe.
Cubic
Cubic's Simulation Systems Division (SSD) makes computer-controlled simulators that allow
military personnel to gain weapons and maintenance experience in a realistic, but safe, envi-
ronment. SSD's major products include the Close Combat Tactical Trainer, which trains tank
crews; the Engagement Skills Trainer 2000, a small arms trainer; Javelin trainers, which teach
personnel in using the Javelin missile and the F-16 and F/A-18 Maintenance Trainers, which
provide aircraft maintenance training.
Cubic Defense Applications has been awarded a $52 million contract by UAV Tactical
Systems as a subcontractor to the prime contractor Thales UK WATCHKEEPER. The
company will supply advanced data link technology to the prime contractor Thales in this
initiative of the UK MoD. Cubic has issued a further subcontract to its UK design and manu-
facturing partner, Ultra Electronics, to assist in supplying the data links for this critical UK
defence programme.
Cubic, along with Ultra Electronics, also recently completed delivery of a nearly identical
narrowband data link subsystem for the UK's Airborne Standoff Radar System or ASTOR.
Cubic's data link is part of a major new battlefield surveillance platform scheduled to enter
service in 2006. As the two systemsJoint STARS and ASTORoffer some degree of inter-
operability, mission-critical intelligence and reconnaissance information can be shared in real
time, allowing for the conduct of joint operations.
EADS
EADS GDI Simulation has been successful with its simulation products and service provision
and participates in ambitious programmes relating to simulation at the Centres of Combat in
France and abroad. The company's product line also includes anti-tank missile equipment,
tank LECLERC simulators and other types of simulators. As an innovating company, EADS
GDI Simulation has been the first in developing simulators for helicopters in the 1950s.
The company has sold more than 6,000 simulators as on date in more than 40 countries.
EADS GDI Simulation has established a centre called NetCOS, which trains in a 3D environ-
ment to operate in net-centric warfare scenarios. The highlight of this system is that it allows
trainees to interact in synthetic fields in all segments of air, land and sea. Certified with ISO
9001 and AQAP 110, the company is a partner of the French procurement entity, the Delega-
tion Generale pour l'Armement (DGA) and other groups such as Euromissile, GIAT
Industries, Thales TTS and Cubic Defense Systems.
Evans & Sutherland
A major event in the world of military training and simulation has been the acquisition of the
simulation business of Evans & Sutherland by Rockwell Collins in May 2006 for a consider-
ation of $71.5 million. Being a major participant in the visual systems arena,
Evans & Sutherland has been providing unique visual simulation image generators, displays
and databases for the military simulation industry. Similar to other companies, this product
portfolio includes a terrain database and the other requisite technologies and content suitable
to simulate a specific mission. The company's technology is mainly PC based. It has a partic-
ularly substantial presence in the United States in developing Close Combat Trainers for the
US Army.
In Europe, Evans & Sutherland has been involved with the upgrades for the Aviation
Command and Tactics Trainer (ACTT) in the United Kingdom. The company's main technol-
ogies include the Environment Processor with Military Extensions (EPX) and the Harmony
Image Generator that is deployed across Europe. The latter technology generally relies on
COTS PC hardware to reduce the price of services to clients and to meet the full range of
military needs. Rockwell Collins found business merit in acquiring Evans & Sutherland given
the high quality of its visual devices and the financial problems encountered by the company.
ETC-PZL Aerospace Industries
ETC-PZL Aerospace Industries has more than 20 years of experience in the simulation busi-
ness. The company specialises in designing and manufacturing various types of simulators
and training devices.It also provides maintenance and upgrade services for simulators. These
systems cover the air and land segments. The company has won a contract from Gripen to
develop a training solution for the Polish Air Force. ETC-PZL Aerospace Industries will be
providing a full mission flight simulator, two squadron level mission flight simulators, a
procedural simulator and a computer-based training system.
Indra
Indra, the Spanish training and simulation manufacturer is a member of the Network Centric
Operations Industry Consortium (NCOIC) as announced in 2005. Indra has been under
contracts to build avionics, training and simulation systems and automatic maintenance
systems for the new European Tigre combat helicopter, an operation which is worth 111m.
Being the only non-American firm to provide naval training systems to the United States, in
Europe, the company has a significant presence in Spain and in France and heads the
Eurofighter-2000 simulation program.
KMW
The Training & Simulation (TS) division of KMW makes training equipment and simulators
for a variety of land applications ranging from areas like driving, maintenance and gunnery
to other combat skills. One of the biggest projects for the company is the air-defence gunnery
and combat simulator, the ASF/PLT-V. It is used to train commanders and gunners of the
Gepard and Cheetah Self-Propelled Anti-Aircraft Guns (SPAAGs). The simulator recreates
the vehicle's battle stations in a "highly realistic manner." Up to seven simulator cabins can
be networked together. The latest product is the driver training simulator. It involves the inte-
gration of a three-dimensional mobile, real truck driver's cab as well as a classroom with six
computer-based training stations in a truck semi-trailer measuring more than 13 meters in
length. The core of the system is a graphical user interface that allows driver training instruc-
tors to quickly and easily create complex driver training exercises with critical traffic
situations. This semi-trailer can be used for mobile and flexible training at various driver
training schools and public institutions in Europe. PFI programmes as well as Germany's
involvement in increasing military training activities will allow the group to sustain or even
increase its market share in the years to come.
Kongsberg
Kongsberg has supplied more than 600 training and simulation systems around the world.
The three main products currently are the action speed tactical trainer called Proteus, a
mobile combat trainer and RBS-70 Training system. Proteus provides high fidelity naval
tactical training for operations such as anti-submarine warfare, anti-air warfare, anti-surface
warfare, electronic warfare and mine countermeasures. The mobile combat trainer is a
training solution for personnel manning armoured vehicles and tanks. It includes, in great
part, the COTS technology which is an advantage for the system as it is provided at a low
cost and can be readily modified when needed. The range of coverage includes visual
weapons vehicle simulation and scenario generation. The main strength of the company is its
ability to offer low-cost products, mainly based on the COTS platform.
L-3 Link
L-3 Link is one of the leaders in providing air simulators in rotary and fixed wing platforms.
The company has offered its products to the Swiss and Finnish militaries and has been rela-
tively successful in the niche market compared to its US counterparts. With its significant
presence in the United States, the company is also gaining Europe. A major contract worth
$74.6 million has been awarded by the US Army for its training activities in Europe.
The company will provide constructive simulation support for eight Battle Command
Training Centres in Germany, Italy and other locations. If proven successful, this perform-
ance is likely to win more contracts for live joint training from other European countries.
Lockheed Martin
Lockheed Martin has proved its presence in Europe as a leader in the provision of military
simulation and training. This segment does not represent the main expertise of the company.
However it has considerably developed this capability and has won significant contracts in
Europe (in Belgium and the Netherlands) relating to land integration training. The
company's expertise in interoperability and high level architecture as well as it reputation
across Europe are likely to maintain its leadership position in the region.
Qinetiq
Qinetiq offers a considerable range of simulation devices and operates mostly in the
United Kingdom. The products include mission system trainers (MST), which are deployable
desktop simulators for training mission system operators. CueSim, a wholly owned subsid-
iary of Qinetiq, offers a generic but very realistic networked training application. This
product enables the use of COTS which keeps the cost reasonable and flexible. Another
noticeable system is the Air Command Systems Test Bed (ACSTB) which is used as a
consulting planner for interoperability and integration. This modelling system is a potential
expertise with high added value allowing Qinetiq to win contracts in charge of interopera-
bility and networking in the future for collective training across Europe. Moreover, it is
designed for detailed models for the following systems in maritime and air segments:
Eurofighter, E 3-D, Sea Harrier, Sea King Mk7 and Type 42 Destroyer.
Quantum3D
Quantum3D is a leading developer and manufacturer of interactive, open-architecture visual
computing solutions. The company offers a good quality with its image generation (IG) tech-
nology. It offers products to both the embedded and mobile training sectors covering the land
and air segments. One of its COTS product based on a NVIDIA graphic solution, allows the
company to provide low-cost 3D imagery.
Oerlikon Contraves AG
As a subsidiary of Rheinmetall, the expertise of Oerlikon Contraves AG lies in individual
computer based training (CBT), real equipment training, driving simulators and mission
planning (Caesar) covering the land and air segments. The company employs about
1,700 people at present. Its location in Italy, makes the access to the company easier for
European militaries.
Pennant Training Systems Ltd.
Pennant Training Systems Ltd is a wholly-owned subsidiary of Pennant International Group
PLC.
The core competency of Pennant Training Systems is the design, development and production
of technical training solutions for military and civil operator and maintenance personnel.
This core competency in training systems has been built from the 1950s. The company manu-
factured numerous military platforms in the three military segments including fixed and
rotary winged aircraft, naval vessels and army vehicles. The emphasis has been laid on mili-
tary programmes. The company runs over 250 training systems in service with the UK MoD
and overseas defence forces and has produced over 1,800 hours of aircraft-related mainte-
nance courseware.
Pennant Training Systems Ltd products and services are the following: training needs anal-
ysis, training delivery, computer assisted instruction, multi-media solutions and
computer-based training.
In the defence market, Pennant has produced CBT courseware for:
Radar and electronic warfare
Operator and maintainer sonar and command system training
Aircraft maintenance
Aircrew training
Communications
At present, Pennant offers a wide range of training solutions including highly interactive
training media for use in instructor-led training, self-paced computer-based training and
e-learning over the Web or company intranets; systems emulators for free play diagnostics
training; virtual reality visualisations; electronic classrooms; hardware based simulators and
part task trainers. Through these activities the company has built a wide experience base and
has gained worldwide trust from users in the business sector.
Rheinmetall
Aside its subsidiary, Oerlikon Contraves, Rheinmetall develops simulators for all three
segments ranging from virtual combat simulators, tactical simulators and flight simulation
devices to naval simulators. The combat simulator product line includes 12 different simula-
tors while the flight simulation family includes six types and the naval segment includes four
types. Rheinmetall has a significant market share in Europe. The company's revenue in
2006 is estimated at some $160 million.
Rockwell Collins
Rockwell Collins is a leader in the design, production and support of communication and
aviation electronics for commercial and Government customers. The company employs
17,000 people in 27 countries. It supplies training and simulation solutions as well as
communication and navigation devices.
One of its best value proposition is the development of programmes utilising an open system
architecture approach. The company's commitment to process improvement has earned it a
Software Engineering Institute's (SEI) Capability Maturity Model Integration (CMMI) Level
5 certification.
Rockwell Collins has the expertise in upgrading sophisticated cockpits, avionics and vehicle
electronics through a cross combination of its business units.
The simulation and training product offerings of the company cover all levels of fidelity and
complexity for the military market. Newly developed products include part-task and desktop
training devices for maintenance and flight applications, complex maintenance training
systems, ground and air vehicle simulators including rotary wing and fixed wing training,
crew training and flight training devices and mission system simulators, as well as a full
range of related modification, maintenance and engineering support services for legacy
training devices. FAA Level D qualified Full Flight Simulator remains a Rockwell Collins
standard for both military and commercial customers. In addition, Rockwell Collins offers
custom and commercial simulation helmet mounted displays (HMD) for airborne and ground
vehicles, high resolution full colour displays and collimator solutions for man portable and
vehicle mounted simulated sights. The company has expanded through the acquisition of
Evans & Sutherland in 2006 for some $71.5 million. This added expertise will allow the
company to broaden its range of product expertise.
RUAG
RUAG Simulation & Training is part of the RUAG Technology Group. RUAG
Simulation & Training offers a wide range of simulators from simple computer-based
training systems to complex simulators. Some of these include:
Digital training/computer based training (CBT)
Virtual simulation systems (firing training systems, driver training simulators, tactical
trainers and others)
Live combat training (combat training centre; MOUT training)
The modular product range, along with the expertise and competence of the employees,
enables RUAG Simulation & Training to find the best possible solutions to fit the require-
ments of its customers, the most important of which is the Swiss Army. Customers and their
needs are central to all the actions undertaken by RUAG Simulation & Training. The
company focusses its attention on meeting general training requirements rather than on a
specific technology or weapons systems. It has won a contract from the French Army to
supply over 4,000 laser firing simulators for infantry soldiers, a contract from the Slovak
Army and another agreement with Switzerland for supplying a MOUT Training System and a
Howitzer Crew Trainer. RUAG Simulation & Training has also proven its expertise in
providing an efficient full life cycle.
Saab
Saab operates in all the three military segments of air, land and sea. The company has proved
to be an efficient provider of simulation and training solutions in Europe. The company
works closely with Barco to deliver top range simulators and training solutions. Contracts
have been made across Europe, including Hungary and the Czech Republic. The high chances
for Saab to further develop its presence in the region revolves around its capability to achieve
a high level of architecture and in the provision of efficient solutions for collective training.
The main product offering such a capability is TRX that is inclusive of several C4ISR
training systems which may be interconnected to perform collaborative exercises for mission
training in a common simulated environment.
Sogitec Industries
Sogitec Industries is a subsidiary of Dassault Aviation. The French company has two main
operational divisions; one is specialised in simulation and the other one provides documenta-
tion for Dassault aircraft. Sogitec provides a full range of related services for armed forces
personnel training, instruction and documentation. As a simulation specialist, Sogitec designs
a full range of subsystems and integrates systems for large-scale simulation programmes on
trainers and full mission simulators. It is also involved in functions likes maintenance of
simulators and performing intervention on simulator networks. Sogitec works closely with
the French Air Force's Air combat Centre. The company considers the maintenance market as
a potential area for its expansion. As it is also specialised in documentation, it might be
providing documentation for Eurocopter, which is a part of EADS. The company's strategy is
focussed on this part of the business as advanced software are to be designed in new synthetic
environments. Sogitec has targeted this potential with its diversification approach and is
likely to succeed as it is an expert in the field of documentation for helicopters. By generating
such an awareness, the company has also maintained its market share.
Thales
As a major constituent in the training and simulation sector, Thales is considered as the
leading company in the field of simulation and is highly reputed for its flight simulators, its
systems for drive training (planes, helicopters, tanks, trucks and others) and its tools in
modelling, both in the civil and military applications. Thales has already proven its excel-
lence by delivering over 300 training simulation systems to the armies of 20 countries. Thales
UK Services has been rewarded a Global certification in August 2006.
S i m u l a t o r s
Tactical Indoor Simulation System (TACTIS): This system is currently being produced by
Thales for the Dutch armed forces. TACTIS is a networked and modular simulation system
that introduces a distributed interactive synthetic (DIS) environment for combined arms
training. It will be used to instruct and train armoured infantry and Leopard 2 tank battal-
ions in a sophisticated mobile virtual environment. The system comprises 31 simulators
associated with 8 desktop PC systems.
As a simulation system, the concept of CHESS is a computer generated forces simulator that
replicates tactical scenarios and train command skills with very high fidelity. As a land simu-
lator, it replicates Operations Other Than War (OOTW) and convoy situations on a tactical
basis. As an air simulator, it is designed to train helicopter pilots on a single aircraft type. It
can also be used for training purposes.
Flight Tactical Combat Simulator (FTCS): This simulator is designed for Air Force training in
net-centric operations. This simulator comprises all the features that can meet critical air
training needs while also being cost effective. It is flexible, adaptable to the trainee, ensures
significant cost reduction as it makes use of COTS displays which are themselves easy to
upgrade with technological evolutions and can be networked. This simulator is being used by
the Royal Air Force.
7
Key Country Analysis
Regional Analysis
A regional analysis of the simulation and training capabilities of European countries is
important in order to understand the dynamics of joint doctrines. Indeed, some smaller coun-
tries may find an advantage in joining collective programmes as they might not be able to
afford a massive investment in acquiring military simulation capabilities. Leading countries
do have a significant expenditure in simulation but may take a couple of years to replicate
what has been implemented in the United Kingdom. Other countries such as Bulgaria,
Estonia, Hungary, Latvia, Lithuania, Portugal and Slovakia will deliberately not be covered.
C o u n t r i e s
Austria
The Austrian Army is quite small and therefore the organisation lies in one main command
called the Joint Air Force Command. The Ministry attends every six months the training and
simulation workgroup across Europe to find the best practice to follow and to share prac-
tices. It also attends on-field exercises.
Training is one of the core competencies of the Austrian Armed Forces (AAF) next to
fighting. The complexity of present and future scenarios makes training even more important
than it was in the age of the Cold War.
Asymmetric warfare demands multifunctional soldiers who can operate (not just simply
fight) in a wide variety of scenarios. Today's soldiers are not just fighters but also peace
keepers and must have abilities that go beyond their normal firing skills. At the same time,
training time is seen as relatively cost intensive and therefore must be used as efficiently as
possible. Spending more time on simulators and less on marching, driving or flying to and
from the training area is one aspect to be considered. Another is to have the appropriate situ-
ation (possible or declared operation area in the Terrain Data Base; friends and foes as
Computer Generated Forces) to be able to train in different scenarios. The necessity of using
time efficiently will push the use of simulators.
In ten years, most simulators in Austria will be networking together as well as with other
systems such as Battle Management Systems, C3I or whatever technologies that will become
available and prove to be efficient at that time.
Since the Austrian Armed Forces use ammunition in a rather low intensity, lowering the costs
by reducing training ammunition is not necessarily an argument. However, there is a variety
of other positive aspects such as enhancing training, using time for training more efficiently,
wider variety of training scenarios through databases, Computer Generated Forces,
networking distributed training/fighting partners (national and international) via networked
simulators and War Gaming (what if scenarios).
The Austrian Armed Forces use Live, Virtual and Constructive (LVC) simulation throughout
the whole training process of conscripts, NCOs and Officers. Their goal is to integrate simu-
lation as often as possible so that simulators are being used even in live exercises.
The restraints of using simulation in Austria lie in the fact that some terrain databases, CGF,
networking capabilities and other functionalities are not available in an acceptable state.
The challenges in using simulators in Austria is persuading their staff to accept the necessity
of using modern training equipment and simulators to a larger extent than at present.
Furthermore, it will be a challenge in these times of continuous manpower reduction for the
AAF to man simulators with full-time operators as opposed to second-hand operators. This
would also increase the effectiveness of training time as well as reduce malfunctions caused
by faulty use.
C o m p e t i t i v e E n v i r o n m e n t
It is a law in Austria that the armed forces should not make any preferences in procurement
to any company, whether domestic or foreign. Therefore, even as these forces have a wide
range of Live, Virtual and Constructive (LVC) simulation plans relating to individual, team
or group training purposes, there is no specific system that they can prefer. However, there is
one Austrian company called AMST Gmbh that is manufacturing simulator components for
air applications. The Ministry of Defence defines the specification and this stage is followed
by competition between companies to vie for projects, as the law mandates the participation
of a number of contractors and competitors in the bidding process. Some of the notable
companies which have been working with the Austrian Army as contractors for simulated
training are CAE, EADS, SAAB, BOFORS, KMW and ELBIT. These companies generally bid
together and work jointly to provide simulators to the Austrian military. There are approxi-
mately 2,500 simulators that are in use by the Austrian defence forces.
A i r
The AAD does not own simulators at present, but is procuring several of them within the
Eurofighter programme. CAE has signed a contract worth $8.4 million for the Typhoon
simulators as the country has procured 18 Eurofighter Typhoon aircraft. The date of delivery
is planned for 2007.
L a n d
The land segment is currently making use of LVC for individual, team and group training
activities. They are LVC for individual, team and group training. The Austrian Army is also
signing dry and wet lease contracts with other armed forces and companies for procuring
various simulators.
Ma r i t i m e
Austria does not have a naval wing since the end of WW I.
Belgium
Belgium undoubtedly resorts to military simulation as training facilities and available fleet
have been increasingly limited and reduced. The costs of sending forces to foreign fields have
become high and simulation is the main solution to solve these restraints.
The high realism of simulators has persuaded the trainers about the cost reduction and effi-
ciency of resorting to simulated training instead of live training. Any procurement therefore
requires the upfront embedding of a simulator.
In terms of joint programmes, Belgium intends to increasingly move towards cooperation
with France particularly for air simulation. In this regard, it is in the phase of becoming one
of the main users of military simulation along with France.
Due to a trend towards joint simulation programmes with France and other European coun-
tries, the main challenge faced by the country is standardisation of data, which is still
obsolete despite the fact that the standards are currently official. Interoperability with other
simulators still does not exist. Hence, there is no existing coherent policy in Belgium for all
the simulators types.
The cooperation is making use of three simulators in the area of Tours, in France. Some
related modifications are planned to occur in 2008. This cooperation may extend to include
countries like Portugal and Sweden. Nonetheless, the main concern of Belgian Air Forces is to
capture human emotions in simulated air training.
Barco is the leading participant in the Belgian military simulation market. The company
specialises in the provision of high-tech visual display devices for a great variety of functions,
particularly those related to simulation. Barco has won significant simulation contracts both
in Belgium and abroad. In particular, the company provides 360-degree simulation products
for the US Air Force, as well as for the SAAB Gripen, allowing access to Swedish, Hungarian,
South African and Czech forces which have purchased that aircraft.
The Belgian forces mainly work with companies such as Thales UK or Lockheed Martin with
whom they have a technical agreement. The main contractor for the simulation of ground
based air defence (GBAD) is MBDA, a consortium between EADS, Finmeccanica and BAE
Systems.
The Belgian Army does not have a preference for vendors of a specific nationality or other
strategic restrictions in terms of selecting its training provider. Obviously, the MoD would
assess the financial and technical capabilities of their suppliers, but principally would empha-
sise on the sustainability of the business partnership with its providers, as the life cycle of
their systems is as long as around 15 years. They must select the most sustainable, credible
and reliable partner as possible. Hence, logistic support considerations prevail over other
concerns.
In joint programmes with Norway, the two armies need to standardise their data. In that
sense, they are subject to the industries' price conditions. Nevertheless, this collaboration
presents a cost reduction advantage as both countries share costs.
The main concern for the Belgian Army is not purely in financial terms but primarily in terms
of availability of deployable fleet. Indeed, the Belgian forces need to maintain a fair size of
fleet to deploy for combat. Resorting to simulated training might be a solution to solve the
problem of how to train as many soldiers as possible with little of the fleet available for
training.
A i r
Belgian air simulators are mainly PC-based systems. The acquisition of air simulators was
made a few years ago. Though the country tends to resort to modelling rather than
purchasing new simulators, it is not an exclusive option as there are plans for a probable
phase of acquisition during 2011-2012. It evolves in two ways: either investing $10 million
upfront for simulated training or use the current simulators enabling each trainee to spend
one or two hours in training. Belgium wishes to combine these two solutions to achieve a
better return on investment.
Several low budget joint programmes are also likely to take place which should upgrade
computer capabilities. For the F-16 aircraft, trainees will have the use of AirBook manufac-
tured by Simigon. Belgium plans to replace the PCs while maintaining the current cockpits.
As the market of training and simulation evolves very quickly, the main concern for training
programme managers is to acquire the right simulators which are really matching the training
need. The best way to purchase these simulators is to get them as and when needed rather
than in advance. This latter solution carries a risk as there might be a discrepancy between
the needs of the trainer and simulators that are technologically too advanced for those needs.
Therefore, it is crucial to consider the precise purpose for which the forces might utilise simu-
lated training.
L a n d
The Belgian Army utilises Thales' Chess simulation system, which replicates OOTW and
convoy situations, such as those frequently encountered in Afghanistan and Iraq.
Financial allocation remains limited for the simulation of GBAD. The allocated budget is
related to maintenance of the five current MISTRAL simulators in service. A midlife upgrade
(MLU) planned in 2003 has been cancelled. The main simulators for GBAD operations are
MISTRAL G2 and MANPAD/ATLAS. The major inconvenience is the upgradeability of the
simulators, which necessitate replacement or an upgrade due to a very short life cycle of the
components.
Ma r i t i m e
The Belgian forces work jointly with the Netherlands in maritime mine hunting training at
EGUERMIN, the naval mine warfare school. Belgium is currently in the process of specifying
technical criteria for a maritime minesweeper embedded simulator to a relevant
manufacturer.
Czech Republic
The Czech Republic intends to spend about $1.9 billion on military training for the fiscal
year 2006. All simulators can be connected through Distributive Interactive Simulation (DIS)
protocol to provide distributed exercises.
The US Multiple Integrated Laser Engagement System (MILES) provides live simulation and
battalion level field exercises. The system is not instrumented at the present.
A i r
The Czech Air Force utilises virtual simulators for the L-159. As the Gripen trainers have
been purchased from Saab, the fast jet pilots are also trained on the Saab Petra simulator,
which is PC-based. Both the virtual and Petra systems are of the Flight Model Simulator
(FMS) type and can be linked by the DIS protocol. The Czech Air Force also makes use of
desktop simulators for the L-159 aircraft.
L a n d
The Czech Army employs constructive and virtual training approaches. Commanders, staff,
units and crews are trained using both constructive and virtual simulation techniques. For
unit tactical training, live simulation is used on a laser generator base. Those tools and equip-
ment are installed in the Centre of Simulation and Training Technologies (CSTT) at its
headquarters in Brno.
Two versions of virtual simulators have been installed at the CSTT. Virtual simulators (VS) of
the first type are designed like the Czech tanks and the BVP (armoured battle vehicle). These
virtual simulators are FMS based. Virtual simulators of the second type are special desk-top
PC simulators which are reconfigurable according to training requirements. These VS can be
changed from tank to BVP simulators as well as to helicopter simulators. These simulators
are indigenous? Czech products.
Artillery simulators which are based on virtual simulation are used for training artillery
specialists (for example, the FOs). These simulators use 3D visualisation for direct view of
the battle area through artillery optical observation equipment.
Denmark
The extensive use of simulators in Denmark can reduce the training period of the conscript
army. Simulators are not likely to considerably reduce the training costs, but must be seen as
a means to make training more effective and/or realistic and capable of meeting environ-
mental demands.
The Ministry of Defence established a Danish distributed Commander and Staff Training
Simulation facility called CASTSIM.
Denmark is currently completely remodelling the organisation and is launching the Danish
Defence Acquisition and Logistics Organisation (DALO). DALO will take over from the old
organisation in 2007. Budgets are therefore quite restricted at the moment. The Danish Navy
has recently acquired a navigational trainer.
Danish forces opt for simulated training for safety aspects, cost reduction and reduction of
manpower.
The main challenge for the country is to have the simulators interoperable and linkable for
combined training programmes. To facilitate such a combined work, it is preferable for the
Danish forces to use HLA simulators with multi-blocks.
Denmark has agreements with national and international suppliers for purchasing military
simulators.
A i r
Cubic Corporation provides sensor simulators for testing aircrew against potential threats.
L a n d
New initiatives agreed in the Defence Agreement 2005-2009 will include procurement of a
staff exercise simulation system, command and control systems (C3I), armoured light
multi-role vehicles, infantry combat vehicles, modern fire-support system, armoured recovery
vehicles, engineering equipment, logistic equipment including upgrade of a field hospital and
equipment for operating in special climates, special vehicles and equipment for the special
operation forces, as well as joint Nuclear, Biological and Chemical (NBC) equipment.
Ma r i t i m e
As recently in 2003, the Danish Navy acquired a navigational trainer from a domestic
supplier. This system will be in service for five to ten years. Force Technology is the company
in charge for naval simulators in Denmark. This vendor offers simulation of several naval
vessels.
Finland
The use of military simulation systems in Finland might increase as they are cost effective in
comparison to live training platforms. However, the Finnish forces do not have separate
simulation programmes. They have considerably decreased their defence budgets and are
increasingly expanding their purchase of COTS products.
The Ministry must first of all address the forces, in the selection of companies providing
simulation devices, and they might request for quotation.
It is a worldwide competition. As a consequence, the Finnish are open to purchase from all
companies based on the criteria of cost consideration, efficient Life Cycle Cost and opera-
tional effectiveness. They have no specific supplier: it is an open European competition.
In 2000, the Finish were using simulators provided by a New Zealand company which has
been upgraded by SAAB. At present, the main suppliers in the country are Thales and CAE.
A i r
The Finnish Air Force have selected the NH90 as their helicopter of choice, and are likely to
procure CAE's specialized NH90 simulator.
France
The French Armed Forces represent the second largest market for simulation products in
Europe behind that of the United Kingdom. Similar to the British forces, the French are
heavily deployed with some 30,000 troops operating away from home at any point of time.
Of a defence budget of some $41.5 billion annually, the French forces dedicate $4.4 billion to
maintain set standards of training.
The French Delegation Generation pour l'Armement (DGA) is taking tentative steps towards
outsourcing some aspects of its training regimes to the private sector. This includes areas of
training in which there is a definite and obvious requirement for simulators, such as heli-
copter training for the French Army. This will also include a move towards the use of PPPs,
although perhaps not on the British model. The French market remains dominated by Thales.
In particular, Thales is heavily involved in the NH90 programme through a joint venture
with CAE. This programme is estimated to be worth somewhere in the region of
$400 million. Saab Training Systems and RUAG may also be able to achieve some market
share in the future. EADS is another company having a presence in this market. This
company hopes to capitalize on recent wins by Giat Industries for providing fire weapon
simulators.
France is increasingly seen as a good location for the provision of training for foreign armed
forces. In particular, helicopter training has been identified as a productive source of revenue.
France and Germany collaborate on some aspects of flight training as part of the attempts of
the two governments to push the concept of a Joint European Armed Force. One manifesta-
tion of this is the Ecole Franco-Allemande, a training centre for French and German pilots
based in Le Luc in France. Another such training centre for helicopter pilots, which was set
up specifically to handle training for foreign flyers, is the Helisim Centre. Helisim is a joint
venture between Thales Training and Simulation, Eurocopter and Defense Council Interna-
tional. It is dedicated to handling helicopter simulation training, principally for foreign
clients. Like the UK's MSHATF Merlin simulator, Helisim has reconfigurable simulators that
can be switched in 45 minutes.
A i r
The Ecole Franco-Allemande has recently ordered 18 simulators intended to train pilots on
the Tiger helicopter. This contract is managed via OCCAR (European Joint Armament Coop-
eration Organisation) and has been awarded to a joint venture between Thales and
Rheinmetall Defence Electronics, at a price of some $297 million. This contract included
several dome projection systems to be provided by Thales. The facility is expected to train
some 60 pilots each year. The first simulators are expected to arrive in 2006. It is possible
that a further 11 simulators will be ordered at later stages. As the French Air Force also
participated in the NH90 programme, it is likely to accept simulators from CAE for this
aircraft. The simulator domes themselves are older ones that were refurbished by Barco in
2005.
In terms of wholly indigenous air training capabilities, the French Air Force has procured a
Rafale trainer from a team comprising Sogitec (a subsidiary of Dassault) and, inevitably,
Thales. The first delivery of this system occurred in July 2006. Sogitec was also involved in
designing simulators for the Mirage 2000, both for domestic use and for export to Middle
East nations, such as the UAE. Barco also has a presence in France, particularly relating to
the provision of simulation domes. The company was recently selected to refurbish simula-
tion domes for the Tiger and the Rafale trainers at the Centre d' Essais en Vol (CEV).
L a n d
The French Army is said to be considering the purchase of Thales' Chess system, which was
evaluated by two French tank regiments last year. Chess provides urban OOTW and convoy
simulation requirements, and is thought to have been well received by users, although some
recommendations for improvements were made. The army has already purchased
4,300 Tactical Engagement Simulation Systems (TESS) from RUAG and GAVAP at a cost of
$22 million. These systems will be introduced between 2006 and 2008. The French Army is
also interested in purchasing a truck driver simulation programme. However, it appears that
there is not much funding available for such a programme even though Thales is the main
contender to offer this programme (probably based on the TRUST concept).
The DGA is currently working on two major programmes intended to provide experience in
joint operations and C2. The first of these is the System de Combat Inter-armees pour la
preparation Interactive des Operations (SCIPIO), a joint forces simulation, which is interop-
erable with the French Army's Thales-designed communications system. This systems is
offered at a price of $19 million. The DGA is also working on a system called JANUS, which
is intended to train officers. JANUS has been designed by a series of companies, including
Kynogon, which is currently making significant strides into the French military market.
In terms of live simulation, the DGA's Centre d'Entrainement en Zone Urbaine (CENZUB)
may well be a PFI, potentially awarded to Thales, Saab or possibly RUAG. However, this is
unlikely to occur prior to 2008. Other companies also operate in the French environment in
other roles. OKTAL have produced an artillery observation simulator, for example. OKTAL
is also involved in a helicopter training programme, to the tune of some $1.3 million.
Ma r i t i m e
The French Navy has made use of simulation to train naval personnel in piloting vessels since
at least the 1990s. Kongsberg Norcontrol Systems supplied three ship bridge simulators in
1997.
Germany
The German Army is currently rapidly contracting in size in response to the collapse of the
perceived threat from the erstwhile Eastern Bloc. For example, the army is planning to halve
the number of Leopard II Main Battle Tanks (MBT) in its arsenal to a still very respectable
852 units.
Advanced facilities for training have either been built, expanded and/or acquired. CAE
Elektronik Gmbh., based in Stolberg, Germany, was established as a subsidiary company of
CAE in the early 1960s. It has operated successfully in full support of mission simulators and
training devices for both the German Navy and Air Force. CAE hold a 25 per cent share in
Germany along with Eurocopter, Rheinmetall Defence Electronics and Thales in Helicopter
Flight Training Services GmbH (HFTS). This company will be in charge of developing three
training centres for the European NH-90 helicopter under a $590 million private finance
initiative (PFI) awarded in 2005. These centres will be operable in 2008 and the contract
would last until 2022.
Germany is currently experimenting with the concept of PPP/PFI based training contracts.
The German NH90 Helicopter Training Programme is based on the PFI concept, with simula-
tion equipment being owned by the contractor and available to training staff on an
availability basis. The Bundeswher has a lesser exposure to arrangements of this kind than
the UK MoD. PFIs and PPPs have been used in Germany before in non-military contexts and
are not considered to have been particularly successful. The Bundeswher is also under pres-
sure to have a substantial cut in troop numbers. Like in the United Kingdom and the
United States, the emphasis is on reducing numbers of support and logistics staff in order to
concentrate funding on the key military divisions. There are a number of German firms oper-
ating in the simulation environment. Rheinmetall Defence Electronics has achieved some
domestic success and has also succeeded in exporting a naval training suite, based on COTS
technologies, to the Indonesian Navy. CAE (as CAE Elektronik GmbH) also has a consider-
able presence in the German simulation industry and maintains the majority of the
Bundeswehr's aircraft simulators. Thales has a limited presence in the German defence
industry. In particular, the company's action speed tactical trainer is used in German and
foreign navy operations.
One other company which has a particularly strong presence in the German market (and, as
a result, operates in some Franco-German projects, such as the medium-sized Multi Role
Armoured Fighting Vehicle in a joint venture with Giat) is Krauss-Maffei Wegmann or KMW.
KMW has a particularly strong presence in the domestic market and is likely to compete for
simulation projects involving armoured vehicles or MBTs.
A i r
Luftwaffe
The ranking uniformed member of the Luftwaffe is the air force chief of staff, with headquar-
ters in Cologne. The Combat Command is also located in Cologne and is subdivided into the
Southern Tactical Command and the Northern Tactical Command. The Southern Tactical
Command is collocated with the NATO Combined Air Operations Centre at Messstellen in
the southwestern corner of Germany; the Northern Tactical Command is at Kalkar near the
Dutch border. The Transport Command at Mnster also comes under the Combat Command,
as does the Communications and Electronic Command. The Air Force Office in Cologne is
responsible for personnel, training, communications and armaments.
France and Germany collaborate on some aspects of flying training, as part of the attempts
by the two governments to push the concept of a Joint European Armed Force. One manifes-
tation of this is the Ecole Franco-Allemande, a training centre for French and German pilots
based in Le Luc in France. This school has recently ordered 18 simulators intended to train
pilots on the Tiger helicopter. This contract is managed via OCCAR (European Joint Arma-
ment Cooperation Organisation) and has been awarded to a joint venture between Thales
and Rheinmetall Defence Electronics. Around 60 pilots are expected to be trained each year.
The first simulators were delivered in 2006, with the domes being provided by Thales and
Barco. As with Eurofighter's Typhoon simulators, Thales claims that the simulators in the
Ecole Franco-Allemande will be so advanced that they will dramatically reduce the amount
of actual air training required for each pilot, possibly by as much as 75 per cent. The current
contract for maintenance and support will expire in 2011. The Luftwaffe is also running a
programme on its own to train aircrew for the Tiger aircraft. This is also being administered
by Thales and Rheinmetall, with simulation technology being provided by Evans & Suther-
land. This project will include a set up of 14 simulators for cockpit procedures and mission
simulators at Bremen in Germany.
Germany is starting to adopt the PFI approach for its simulation requirements, following its
successful implementation in the German part of the NH90 training contract. The
NH90 programme has been awarded to the HFTS consortium, consisting of CAE, Euro-
copter, Rhenimetall Defence Electronics and Thales. The contract involves building three
NH90 training centres in Germany and the construction of four simulators. The NH90 has a
strong export potential. The helicopter is also flown by Australia, Finland, Greece, Norway,
Oman and Sweden and it is felt that the Bundeswehr might be able to offer training services
and technologies to aircrew from these nations. The contract should stretch from 2008 to
2022. Apart from the CAE/Thales JV leading the NH90 programme, there is some scope for
other companies to become involved in providing a software solution for other German heli-
copter programmes. The Israeli firm BGT, for example, provides software based on its
Autonomous Air Combat Manoeuvring Instrumentation (AACMI) System for some German
helicopter simulations.
The contract for providing a simulator for the German Navy's fleet of P-3C Orions was
awarded to CAE as a result of its previous work on the aircraft with the Royal Netherlands
Navy. CAE was contracted in early 2006 to provide a new version of its P-3C Operational
Flight Trainer (OFT) for a consideration of $10 million. This is in addition to the $9 million
contract for the extension of support to the older version by some two more years. CAE has
also been awarded a significant section of Germany's fast jet requirements.
CAE delivered the last of 12 simulators for the German Army Aviation School's Hans E.
Drebing Centre in Buekeburg. These included two UH-1D and two CH-53 FMSs used prima-
rily for night flying and combat training missions, as well as for type rating. Eight
EC135 simulators for basic helicopter pilot training were also provided. The German
Government also awarded a one-year maintenance and support services contract to the
company for these trainers, which will be deployed at Buekeburg. The company has received
a contract for a new Tornado simulator upgrade programme. In terms of delivering training
for the Typhoon, the contract (worth $1.3 billion) with Eurofighter GmbH involves the
provision of an extensive training and simulation functionality. The project was initiated in
2001 and is intended to provide a full suite of training aids and facilities for the four partner
air forces involved in the Eurofighter Typhoon project (Germany, Italy, Spain and the United
Kingdom). This will involve the production of 18 full cockpit simulators and 9 Cockpit
Trainer/Interactive Pilot Trainers as well as related training aids. The cockpit simulators
provide a variety of training capabilities, including air-to-air combat and beyond visual range
combat. The expanded capability of Typhoon simulators over the previous generations of
simulators mean that recipients of ASTA may be able to prepare combat-ready pilots after
30 per cent of their training has been conducted on a simulator as opposed to an operational
aircraft. The simulation facilities for ASTA were also designed from the outset to be network
enabled and are available at the main ASTA centres. In terms of live training, ASTA includes
the provision of training facilities and support until 2010 and provides options to enable this
infrastructure in any country independently of the main project. However, it is anticipated
that such a set-up will include the involvement of local industry and the indigenous air forces
in each country. In Germany, for example, Eurofighter has contracted CAE and Rheinmetall
Defence Electronics to provide support for its training activities. It has also signed an agree-
ment with EADS for the provision of maintenance simulators. The company has also
purchased CESST from EDM as its ejector seat demonstrator. Most Typhoon simulation
requirements are handled by the specialist subsidiary, Eurofighter Simulation Systems GmbH
(ESS). ESS accepts input from a variety of sources, including STN Atlas, Indra, CAE, Meteor
and Thales. The visual equipment required for the project has been awarded to suppliers such
as Barco. CAE is the prime contractor for the German Army's Night-Time low-level Flight
facility called NTF. About 12 full flight simulators have been developed and manufactured
(two UH-1D, two CH-53 and eight EC-135) mostly for basic flight training. The NTF project
features CAE's revolutionary roll-on/roll-off convertible full mission simulator design, where
a common motion base can receive a variety of cockpit modules of different helicopters.
L a n d
The Bundeswehr has been recommended the Thales' Chess OOTW and close combat simu-
lator systems by the French military, particularly for evaluation within the context of the
common Franco-German brigade.
KMW has a significant presence in the German market, especially in terms of armoured vehi-
cles. The company has won significant contracts in Germany relating to providing driver and
turret simulators for the Leopard II MBT. In addition, KMW has been contracted to provide
a simulator for the Gepard anti-aircraft platform. The company also has various smaller
maintenance contracts.
The German forces have experimented with truck simulators (TRUST designed by Thales).
However, unlike simulators for aircraft and other expensive platforms, there does not appear
to be a great deal of interest in securing funds for truck simulation programmes.
Ma r i t i m e
Cost reductions in the German maritime segment have been important among all three mili-
tary segments. In 2005, 50 per cent of the maritime fleet have been reduced. The inventory
will therefore result in 90 vessels, 15 frigates, 15 corvette patrol vessels, 8 submarines and
20 mine countermeasure ships.
Under the reforms, a management restructuring has been initiated. A number of mergers and
closures occurred and four bases are remaining: Destroyer Flotilla in Wilhelmshaven
including frigates plus support ships. The sites comprise 4 Brandenburg-class (F 123),
3 Sachsen-class (F 124), 8 Bremen-class (F 122), 2 Berlin-class (404), 3 Walchensee-class
(703), 2 RHN-class (704) and 3 Wangerooge-class (722B). The second one is located in
Olpenitz and consists of mine warfare. It ensures the protection of sea lines of communica-
tion and coastal waters. It is important to point out that the centre has been modernized.
Orders of minehunters (Type 333) and Mine Countermeasures (MCM) drone controllers
(Type 352) have been made. As minesweepers and minehunters, simulators are designed to
conduct mine countermeasures operations. Moreover, Barbe-Class utility landing craft (Type
520) and Elbe-Class tenders (Type 404) are assigned as support units to the Mine Warfare
Flotilla. The Mine Warfare Flotilla will relocate to Kiel Naval Base. The Specialised Naval
Response Forces Battalion and the Naval Protection Forces also depend on the Mine Warfare
Flotilla. The third centre is based in Warnemnde and has patrol boats, which are Gepard-
Class (Type 143 A) and are supported by Elbe-Class (Type 404). However, in the new
German Naval strategy and the changing warfare environment, the focus will be on
Corvettes. In that regard, five Corvettes have been procured. Those are F 260, F 261, F 236,
F 264 and F 265. The Corvettes will be reduced in number, but their sustainability will be
much higher than fast patrol boats. The last maritime centre in Germany is the Submarine
Flotilla in Eckernfoerde. There are three Type 212 and 11 Type 206A submarines, Tender
MAIN, which replaced the former ELBE-class 404 tender. A new advanced Submarine
Command Team Trainer (SCTT) designed by STN ATLAS Elektronik's Simulation Division
has been installed at the centre for the 2121A-class submarine. The Submarine Flotilla will
also comprise three OSTE class 423 eet service ships. The flotilla has its own school. It is
one of the main centres for theoretical simulated training which is held at the Submarine
Training Centre. The SCTT will provide specialist operating and maintenance training for
submarine sonar equipment as well as for the basic command and weapons control system
and combat information centre teams.
Greece
Thales is the leading manufacturer catering to the maritime training needs of the Hellenic
Navy.
A i r
The Hellenic Air Force has selected the NH90 for its helicopter fleet and is therefore likely to
obtain CAE's NH90 simulator as a result.
L a n d
The Hellenic Army has recently purchased a Stinger simulation device known as the Stinger
Troop Proficiency Trainer (STPT) from DME.
Ma r i t i m e
The Hellenic Navy has purchased the TACTICOS Combat Management System from Thales
for its main naval platforms. This includes an embedded simulation facility.
Italy
Finmeccanica is the main military training provider in Italy.
Italy is one of the four core nations participating in the NH90 programme (along with
France, Germany and the Netherlands) and is likely to accept CAE's NH90 simulator that is
a product of the Thales-CAE consortium. Apart from the NH90, the Italian Air Force is also
receiving the Eurofighter Typhoon and the associated ASTA programme and training services
for a consideration of $255.71 million. The purchase of this aircraft has resulted in a number
of spin-off simulation projects, which have been awarded to smaller European firms. One
such project is the Typhoon Crew Escape and Safety Systems Trainer (CESST).
A i r
The Italian Air Force uses an embedded training package for the Aermacchi MB-346 Trainer
to train pilots to use weapons and other automated systems (Embedded Virtual Avionics or
EVA). These systems are based on the AACMI application and is supplied by BVR Systems.
BVR Systems designed training systems which can be easily fitted into the Aermacchi
MB-346 aircraft. The aircraft itself has an airborne simulation suite purposely designed to be
fit for weapon training, which can save on expenditure of live weapons.On this AACMI
project, Datamat, a subsidiary of Finmeccanica, provides information system management.
The Italian Air Force has also purchased a few Predators from Lockheed Martin. At a future
date, the air force personnel may receive training at the US training facility at Creech Air
Force Base, which includes instruction on a Multi Task Trainer (MTT) for the platform.
MTT is expected to be replaced by the Predator Mission Aircrew Training System (PMATS)
at a later date.
L a n d
The Italian Army opts for training through simulators due to time and place constraints.
There is an Italian Training Centre in the North of Rome that trains 30 regiments and
4 brigades through a constructive training approach, in a joint programmes the
United Kingdom and Germany. At present, the land training is interoperable with air
training.
Ma r i t i m e
The Italian Navy has ordered an Action Speed Tactical Trainer (ASTT) on which the
company Datamat is contracting a part of the business to manage the flow of information.
The navy ordered embedded training on their ships simulating scenarios and Submarine
Attack Team Trainer, with on their Sauro Class Submarines.
The Netherlands
The Netherlands Armed Forces comprises of five brigades. These units are aiming at central-
isation of network commands which should lower the costs as the system benefits from
remote and centralised control. The training facilities are built on technologies using the
COTS standard.
The Dutch companies Rexroth and Hydraudyne offer simulations oriented towards relatively
specialised areas of the market, such as motion and control loading. These features will
mostly be used on major programmes assembled by foreign defence primes, such as Lockheed
Martin, who integrate their motion simulation products into tank simulators. Nonetheless,
Thales is the major market participant in the Netherlands and is well known for its simula-
tion predominance worldwide. Other major companies include FEL-TNO, which works on
flight training aspects.
The Dutch Armed Forces are currently exploring the concept of netcentric simulation and
have been conducting experiments with the US and the UK armed forces to study this
concept. They have also been involved in other concepts such as the Thales-created
Battlespace Transformation Concept (BTC) along with the respective military wings of the
United Kingdom and France. However, a consortium of companies consisting of JGP
Consulting Ltd, Flagship Training Ltd and Claremont Training Interiors are leading the
charge of this major networking programme that would cater to the future training needs of
the forces.
Ma r i t i m e
The Dutch Royal Navy works in collaboration with Belgian forces on maritime simulation at
the school of EGUERMIN in Belgium. The forces undergo training on mine hunting simula-
tors at this facility.
Norway
Norway's traditional arms supplier, Kongsberg Systems, is not especially active in the simula-
tion market, making the military training market competitive for foreign simulation
companies. Therefore, the Norwegian defence market is relatively eclectic and is populated
by a variety of foreign vendors, including CAE, Rheinmetall, KMW and FATS.
A i r
Norway's armed forces have selected the NH90 as their primary helicopter. This purchase
may result in the procurement of CAE's NH90 simulator system. However, the Norwegian
Air Force already possesses an Eurocopter-approved simulation facility at Stavanger, run by
CHC Helicopter Corporation. A Super Puma simulator for this facility was additionally
procured from Evans & Sutherland in 2003. This is a semi-private unit and is expected to be
available to train on foreign Eurocopter NH90 and Tiger simulators. This facility will also be
able to provide training on the Puma aircraft.
L a n d
The Norwegian Armed Forces procure simulation aids from a number of sources. Current
simulation packages in use with the Norwegian Army include Driver Training Simulators
provided by Rheinmetall, with Leopard requirements being fulfilled by Krauss Maffei
Wegmann. Infantry requirements have been met by the use of SAT ranges purchased from
FATS. There are also Staff and Command Trainers from CAE, Combined Combat Simulators
from Kongsberg and other live requirements supplied by Saabtech Training Systems.
Poland
ETC-PZL, jointly with Link Communications, is the main company supplying simulators in
Poland. Gripen is currently developing a full training solution for the Polish Air Force.
A i r
The Polish Air Force procured F-16s in 2002. In order to train its pilots on the new aircraft,
the air force purchased a number of simulators from ETC-PZL at a value of around
$6.6 million in 2004. This contract also includes maintenance and support services until
2009. ETC-PZL also provides simulation capabilities for a variety of ex-Soviet kit, including
older trainers such as the TS-11 ISKRAA, the PZL-ORLIK and the W-3 Soko helicopter as
well as frontline jets such as the SU-22. In 2005, ETC-PZL achieved the delivery of three
F16C Block 52+ Aircraft Simulator Cockpits. These cockpits were manufactured jointly with
L3 Communications to support the F-16C/D fighter aircraft purchase. The procurement
included three cockpits, three instructor stations and a visual scene and avionic sensor
database.
The company has also manufactured and delivered Egress Procedure Trainers (EPT) for prac-
tising jet ejection procedures.
In 2007, the Polish Air Force will receive a second squadron level trainer and egress proce-
dure trainers from Link Communications. This company will be supported by Poland's
ETC-PZL Aerospace Industries organisation on the aircrew training programme.
The F-16 Full Mission Trainer will be integrated with Link's nine-panel SimuSphere visual
display, which will provide the pilot with a 360-degree field of view. Link's SimuView
personal computer image generation system will power both out-the-window and cockpit
sensor display imagery viewed by the pilot. This high-fidelity trainer will be used to reinforce
a full range of pilot war fighting skills, including low-level flight, formation exercises, air
refuelling, takeoffs and landings and emergency procedures. Pilots will also be able to
acquire and identify targets and deliver a wide range of weapons during simulated air-to-air
and air-to-ground combat.
Ma r i t i m e
The Polish Navy has purchased Thales' TACTIS Combat Management System for its main
naval platforms. This procurement also includes a simulation element.
Romania
Since 1993, the United States has greatly supported the training requirements of Romania
through the International Military Education and Training and some additional programmes.
Romania opted for a new military integrated concept. In 2004, the country joined the NATO
Forces. The Romanian Army is planning for complete professionalisation of the armed forces
by the end of 2006 and aims to have 75,000 active military personnel by 2007.
The army should be able to participate in foreign operations and to be interoperable for a
minimum of two years. The country's need for modelling and simulation has increased in all
three segments and all levels. However, budgets are relatively limited and human resources
are decreasing. Therefore, the country aims at linking constructive, virtual, live and synthetic
training modalities.
Cubic has been provided a four-year contract for establishing the Romanian Training Centre.
It will be quite sophisticated and will include joint computer-aided exercises and war games
and international training features such as SEESIM 04 and ROMANIA RCC 05.
State ownership of training and simulation is quite limited in Romania. The government is
adopting a flexible approach and is open to foreign weapon industries only, as domestic
defence-oriented companies are facing bankruptcy. However, Simultec is one of the rare
Romanian companies operating in this field.
A i r
The Romanian Air Force (RAF) is willing to invest massively in training facilities, especially
relating to the use of simulators,simulation-based and PC-based training systems. The major
objectives are integration of all levels of command and staff, increasing readiness levels and
education programmes, long-term use of technology within the realm of NATO and other
international programmes, as well as the initiation of distributed mission and hosting exer-
cises. The RAF started to make use of simulators about 20 years ago and, since 2001, the use
of simulators has been made within the Joint Conflict and Tactical Simulation programme
(JCTS). Romania has also established a Simulation Training Centre. Under the ownership of
Elbit, Simultec has manufactured a MiG-21 LanceR Trainer for the Romanian Air Force.
Spain
Spain requires a strong and effective training system but is likely to be involved in coalitions
due to its limited entity to have a better solution to modify, update or replace military equip-
ment. Any competent system would thus be welcome in this context, as the Spanish air forces
are open to all type of solutions and are highly flexible.
The trend in Spain in terms of simulated training is to utilise interoperable systems.
A i r
The Spanish pilots spend approximately 42 to 50 hours on simulators and obtain about
90 per cent of the virtual precision. The simulators have reduced the actual hours using
virtual radars. These simulators are utilised for two hours per mission. A trainee must
undergo 36 missions and therefore the simulators are used for 72 hours per individual.
Switzerland
Referendums in Switzerland testify that the country is in favour of stronger commitment to
its international missions. In addition to incurring expenditure for reorganisation, the reform
plan, Arme XXI, is intended to involve an important change in armament procurement. It is
included in an investment measure planned for some $12 billion over 15 years. Nearly
$800 million are dedicated to simulation. After the failure of the programme, a review in
2006 indicated that the planned expenditure amounted to $1.2 billion.
The main suppliers for the Swiss Army are RUAG and Oerlikon Contrave.
A i r
At an expense of $154 million, around 15 Super Puma helicopters should receive upgrades
and an adaptability programme in order to technically remain in service for at least 15 more
years. The Swiss military also wishes to equip 160 Piranha hunters with computerised tools
at a cost of approximately $100 million. The programme comprises four flight simulators for
the F/A-18 that are estimated to be worth $55 million.
L a n d
The Swiss Government intends to procure six Pilatus (PC-21) systems allowing for simulation
of mission systems for the F/A-18 combat aircraft for an amount of $92 million. The most
important portion of the programme ($424 million) is dedicated to the management of infor-
mation systems for land forces, SIC FT. These systems are to be built through a considerable
number of PCs linked together by military networks. The government also intends to procure
12 tanks and mine hunting tanks for $110 million. This procurement has been refused in
2004. Moreover, $31 million is likely to be spent for a training centre for the Leopard tank.
An additional $107 million is supposed to be utilised for upgrades of 134 Leopard tanks.
The United Kingdom
Despite evident overstretch amongst the United Kingdom's Armed Forces, particularly the
Army, and the continuous commitment in Iraq and in Afghanistan, the Labour government is
persisting with reductions in manpower and budget for the country's armed forces in real
terms. This is justified in terms of improving equipment and training and is likely to result in
a considerable investment in simulation technology to save man-hours and equipment used in
training.
The procurement of simulation systems is regulated by an Authority which manages the
acquisition and in-service management of Land and Joint Training Systems (Joint & Battle-
field Trainers, Simulations and Synthetic Environment Integrated Project Teams (IPTs)). This
entity can give support and guidance to ensure the delivery of operational capability. It is
entitled to facilitate initial contract with manufacturers and to provide the necessary guid-
ance for the development and integration of the training systems.
The United Kingdom has always been the first user of simulation training in Europe. The
country's defence entities are easily the most important exponents of the PFI and PPP Availa-
bility Contracting models. Some other European countries such as Germany and even, to a
lesser extent, France, are starting to adopt this model. However, of all the European MoDs,
the UK MoD is the most familiar in dealing with contracts of this nature. This has proved to
be particularly successful in terms of training, which the MoD is keen to outsource at least to
a certain extent. The 2001 Defence Training Review highlighted numerous deficiencies in
terms of training, mostly revolving around the advisability of cutting the number of bases in
use by the UK Armed Forces. Some $18 billion worth of funds have also been spent on a
programme intended to redress this balance. In particular, the MoD is hoping to improve the
methods by which engineering is taught, potentially involving colleges which will include
civilian students. This contract is being contested by a number of firms, including BAE, BT,
Raytheon and Flagship Training. A second tranche of this programme intended to outsource
training in logistics, policing, languages and intelligence is being disputed by Metrix and a
consortium involving Babcock International and Mowlem. It is likely that these deals will
close single service schools in favour of joint facilities.
In terms of technology, the UK MoD is expecting its training requirements to be increasingly
netcentric. It has put together a programme, known as the Mission Training through Distrib-
uted Simulation (MTDS) system, intended to explore this objective. This has been
implemented by a consortium headed by Qinetiq, as part of a $13.9 million contract. MTDS
should last for two and a half years (finishing in late 2009). The results of this programme
can be expected to feed into further and existing programmes after this date. The exploration
of netcentric training has included experimental exercises with the US and Dutch armed
forces. This is also the case in terms of individual platform and system simulators. The Royal
Navy's Sonar 2076 simulator, for example, is expected to interconnect with other systems
which are available on its submarines to provide operators with a more realistic picture of
life on board a ship. British forces are relatively advanced, both in terms of simulator tech-
nology and connectivity. The Royal Navy recently took part in its first coalition exercise in
an entirely synthetic environment, working with a US Navy contingent. Domestically, the
United Kingdom is also spending a great deal on ramping up its unified simulation capability.
In 2002, Agusta Westland provided the Air Manoeuvre Collective Training Systems
(AMCTS), which integrates live helicopters into the ground-based environment.
The UK MoD is particularly interested in distance learning for its troops and has deployable
simulators of various types in theatre. For this purpose, it has procured a number of Defence
Electronic Learning Centres (DELCs), which are based on laptops and provide distance
learning facilities. Some DELCs have been initiated on ships and in some places like Basra
where British forces are deployed for a long term. Simulators are also used more practically
in some circumstances. Electronic Performance Support System (EPSS) technologies can be
used to assist engineers in diagnosing specific faults. It is anticipated that these will be used
on the Royal Navy's Type 45 Destroyers in conjunction with PDAs to providesimulated solu-
tions for problems they are likely to be encountered by the maintenance personnel. This will
also include solutions to potential administrative issues t.
There is considerable scope for foreign firms to operate in the UK market. Major defence
companies are heavily represented in the country, which is a major target market for foreign
simulation companies. Lockheed Martin, Thales, CAE and Saab are all heavily represented
and operate in the simulation market. These larger firms now tend to offer training services
as part of more general packages as opposed to simply offering simulation programmes for
one specific context. This is particularly important as training and simulation capabilities
now tend to be integrated into larger-scale programmes. BAE, for example, is more likely to
be interested in offering embedded training capabilities with the Hawk than a separate
training package. Smaller firms can also sustain in the market by securing MoD contracts.
For example, solutions from the Australian Simulation firm Calytrix are used by the MoD's
Directorate of Analysis, Experimentation and Simulation to model productivity. The
United Kingdom also has some leading indigenous training providers, particularly Vega.
Other major UK firms such as BAE also include major simulation components. In terms of
specialist firms, companies such as Primary Image and Equipe are key visual system providers
who operate in both domestic and international environments.
UK Virtalis (formerly VP-Defence) provides image generation services for the Navy and the
RAF.
A i r
The United Kingdom is currently trying to tie all of its future simulation requirements for
fast jets into one large contract. This will be known as the UK Military Flying Training
Service (UKMFTS) programme and will involve outsourcing all of the UK's flying training to
industry ranging to operational conversion unit level. Partnership is the best solution for this
programme. This programme has become operational in 2005 and has experienced a massive
extension of environment awareness and digital awareness. It has brought so much into the
aircraft. In that matter, the trainees need to have the same cockpit for the same system
management in cooperation training.
Ideally, the programme managers try to reach a mix of simulation and computer-based
training systems in order to maximise the technical skills. Nevertheless, the trainers are
always required to master these systems.
The contractor will be required to provide 21 aircrew specialisations on 11 aircraft types. In
addition, changes to the RAF's front line arsenal, particularly the introduction of the
Eurofighter Typhoon and EH101 Merlin, will mean that some 70 per cent of UK's aircraft
will be new types by 2010. This will bring in considerable attention to the contract. One of
the three main groups, namely the Sterling Consortium led by Thales UK and Boeing; Ascent,
led by Lockheed Martin and the VT Group and Vector, which consists of Kellogg, Brown and
Root (KBR), Lear Siegler, Bombardier, FlightSafety and Northrop Grumman is likely to be
awarded the contract in April 2006. All three of these consortia were previously awarded the
conceptual design contracts (CDC). This is set to be a very lucrative contract, currently
valued at about 10 billion ($18.5 billion). It is anticipated that it will run for 15 or more
likely 20 years, with full provision of training services by 2012. The contractor may well also
be in a position to influence the future procurement of training aircraft away from the UK's
current BAE Hawk128s (of which the country has 44 on order possibly contributing to the
company's decision to pull out of MFTS). This contract is likely to be delivered on a largely
availability basis. The simulation market in the United Kingdom is relatively crowded, with a
variety of companies supplying solutions for segments of the helicopter market. Agusta West-
land supplies deployable collective training systems for the Lynx, whereas the Pumas,
Chinooks and EH-101 Merlins may be equipped with linked training facilities supplied by
CAE. Most of the flight training, including training on the Chinook, Puma and Merlin, is
carried out through the Medium Support Helicopter Aircrew Training Facility (MSHATF) at
RAF Benson. Training for Apache and Lynx attack variants is conducted at the British Army
Aviation School at Middle Wallop. A link between the British Army Aviation School and
MSHATF is scheduled to be established this year. All of the helicopter simulation
programmes will eventually interoperate in an effective manner. Agusta Westland is currently
working on an interoperable simulation intended to link the various UK helicopter types.
Like the other member nations involved in the Eurofighter project, requirements for the
RAF's Typhoon simulation are to be met from an initial payment to Eurofighter GmbH of
DM 2.1 billion ($1.31 billion). This contract is intended to provide training components and
simulators. The value of the UK's share of the deal should be in the region of $490.2 million.
Simulators in the air environment in the British Armed Forces are not just limited to the
provision of flight training. The British simulation firm Virtalis is responsible for providing
the RAF with a variety of aircrew simulation systems, including the Reality Helicopter Voice
Marshaling Trainer and the Helicopter Crew Reality System portable trainer. There are also
niche markets for smaller participants. Equipe Electronics supplies some aspects of the simu-
lators used at the RAF's Hawk Synthetic Training Facility, for example. Contracts such as the
desktop Avionics Systems Trainer (AST), which is current in the process of a $1.1 million
upgrade by Vega, are used to train maintenance technicians on first-line support and opera-
tions roles. Vega operates in more specialised areas of the aircraft maintenance market. For
example, the company was responsible for designing the RAF's Aircraft Propulsion System
Trainer.
The United Kingdom is shortly to acquire a UAV capability to replace its ageing and inade-
quate Phoenix platforms. The Watchkeeper, as the system will be known, is expected to be
operational in 2010. In the meantime, the RAF will make use of the Predator UAVs loaned by
the US Air Force. Some aircrew of the RAF train with the Predator at Creech Air Force Base
in the United States, using the Multi-Task Trainer (MTT) and Predator Mission Aircrew
Training System (PMATS).
As the United Kingdom is taking a suspended delivery of the US F-35 aircraft, the procure-
ment of simulators for this aircraft is still unclear.
L a n d
In terms of infantry requirements, the British Army are currently in the process of upgrading
an already extensive Small Arms Trainer (SAT) network. This is in response to current
commitments in Iraq and Afghanistan and includes the addition of 20 Dismounted Close
Combat Trainers (DCCT). The contract will be worth some $5.5 million and has been
awarded to FATS. There also a variety of contracts relating to Command and Control and
other staff functions. These include the Combined Arms Tactical Trainer (CATT) which can
be linked to the German equivalent, the Command and Staff Trainer (CAST) and Battle
Command and Control (BC2T). As well as their work with the Apache, ATIL have been
contracted to train British Army soldiers in the use of Bowman, and they will theoretically
have trained some 70,000 soldiers in the use of the system by 2007. The training product for
Bowman was initially designed by VT Army Training as part of an $8.3 million contract,
initiated in 2003.
Thales also hope to sell their TRUST truck simulator to the British Defence School of
Driving. The largest single simulator program currently in operation with the British Army
concerns armored vehicles. The Landmark consortium (65 per cent held by CAE, 15 per cent
Agusta Westland and 10 per cent by Interserve, as well as minor contributions by Rhein-
metall and some others) have been awarded a contract to develop simulators for use with
British Infantry Fighting Vehicles (IFV)s. These simulators involve driving, gunnery and
command information systems, combined to offer crew a total IFV solution. The contract
was signed by Landmark and the Defence Procurement Agency (DPA) in 2005, includes
support and maintenance over the next thirty years and is worth some $1.84 billion all told.
British Armed Forces are also currently trying to experimenting with simulators for construc-
tion vehicles. The British Army have expressed some interest in related systems such as
Lockheed Martin's Virtual Combat Convoy Trainer (VCCT), and have received demonstra-
tions of this technology. However there has been no firm commitment to aquiring such a
capability to date.
The British Army also fly helicopters, primarily the Apache but also older models such as the
Lynx. Lynx training is partly outsourced to Thales, at a cost of some $47.4 million over
25 years depending on the Lynx's out of service date. This includes the provision of a variety
of simulators, for flight crew training, emergency procedures and maintenance. The simula-
tors also include a variety of real life scenarios such as landings on the Royal Navy's Type
23 frigates, or on HMS Ocean, as well as existing British Army bases. This allows the army
to put together scenario specific training packages prior to deployments. Thales also supply
some of the instructors used in the program, particularly for simulated flights.
The UK have attempted to use Public Private Partnerships (PPP)s and Private Finance Initia-
tives (PFI)s before for some Army aircrew training requirements. This has produced some
problems, most particularly on the British Apache program. The Apache program was
delayed because it was initially intended as an availability style contract, but the Ministry of
Defence (MoD) were undone by an inability to define what they wanted from the training
program. This led to the Apache program being held up until 2006 at a cost of some
$63 million, attracting considerable public criticism. 360 simulation for the Apache is
currently provided by Aviation Training International (ATIL). The RAF also use a Tactical
Control Centre (TCC) supplied by CAE for future joint training programmes.
Ma r i t i m e
The UK MoD recently contracted BAE Systems' Integrated System Technologies to supply
shore-based training facilities for the next ten years under the programme titled Maritime
Composite Training (MCTS). For this purpose, BAE is heading a consortium known as
Seabridge, which also includes Aerosystems International, EDS, Flagship Training, MDA and
Serco. The programme is intended to provide training for Type 45 destroyer crews and will
be based in Collingwood, Portsmouth and Devonport. The contract will be for ten years and
is worth $178 million. This is more necessary than previously conceived as the Type 45 is a
more heavily automated platform than its predecessors. Older vessels such as the Type 23s
and Sandown Class minesweepers are covered by a variety of simulators provided by Flag-
ship Training (a joint venture between BAE and VT Group). However, the next phase of the
programme is expected to be implemented following the experimentation of NEC and would
include networked use of satellites. The use of suites of training systems on new types of
ships is also made. The programme also includes the use of a full range of ground based and
internal simulators. The Collingwood complex includes two ship bridge simulators and four
radar rooms. This specific complex has been established in 2003 by Flagship Training to
provide a variety of simulators which, when taken together, offer a comprehensive training
suite. Systems used include the Sandown Command Operator Trainer (COT), the Vertical
Launch Point Air Defence Trainer (VLPADT) for Seawolf operators and the Type 23 Combat
System Skills Trainer (T23 CSST). These separate trainers were amalgamated into one entity
in 2004. Substantial elements of this programme are also based on COTS technology to
improve the possibility of upgrades with advances in technology.
Training is also provided for submarine crews at Faslane, Plymouth and Portsmouth. The
former AMS SPA (now Selex) had been contracted to provide support for these simulators.
The current contract expires in 2008 and is worth some $4 million every year. This particular
contract is for older submarines. However, a contract has also been awarded to deal with the
new Astute Class submarines, HMS Astute, HMS Ambush and HMS Artful. This contract,
like MCTS, will embrace all aspects of the training cycle, including the provision of both
simulators and classroom training facilities. The contract will be worth $882 million over the
30 year duration of the project, which commenced in 2001. It has been awarded to FAST, a
joint venture between CAE and AMS.
Maritime training is generally coordinated through the Maritime Training Systems Integrated
Project Team (MTS IPT). This IPT deals with e-learning and Computer Based Training (CBT)
and recently contracted Vega to supply Waterfront Training and Education Centres (WTEC).
This contract was to fulfill this function until 2008, with an option to extend up to 2010.
The Royal Navy places considerable emphasis on classroom-based training, primarily in
terms of updating theoretical and practical procedures. This is available via a network of
WTECs at the major naval centres such as Devonport. Another WTEC was opened at Port-
smouth in 2005.
An extensive use of simulators can be observed at the Maritime Warfare School (MWS). This
would enable the facility to become a major centre for the future weapon training
programmes of the Royal Navy. The simulators used include those for ship weapon systems,
a number of ship bridge simulators, several CTTs (which were supplied by AMS and now a
part of BAE Systems' Insyte) and a laser-based small arms simulator system. The Royal Navy
has a system of Synthetic Maintenance Training. CTT trainers for the RN Type 22 and
23 Frigates and the Type 42 Destroyer are available at Southwick. An important recent
offering of all these sites is the international networked training feature. In 2005, the MWS
CTT was used in an operation called BRIMSTONE networked to the US navy ships based in
Virginia. That operation was successful enough for more rehearsals which then took place
later on in March 2006 involving the Canadian, German, as well as other UK units. The
MWS is greatly improving in terms of networked training and can be a key target.
8
Strategic Recommendations
R e c o m m e n d a t i o n o n t h e E u r o p e a n Ma r k e t
Strong Awareness of Joint Training
Having a strong awareness is the key for success in such an evolving market landscape.
Industry participants would need to closely follow the trends in definition of joint doctrines.
In the first stages of joint training in Europe, companies will have to understand the distinct
culture in each country and adopt an approach so as to keep the most malleable factor to
design the most common basis as possible. This however is a very long process as European
countries must together address cultural adjustments and define common doctrines.
Following this definition phase, companies will have to closely work with end users and iden-
tify requirements after the definition phase of collective training. Indeed, as discussions
proceed to crucial stages, they must be attending some NATO workshops or participate in
deliberations between countries in order to assess the complex needs of coalition training.
Although the need for a new generation of networked simulators will be expressed, it is
important to know the design requirements to meet the customer needs efficiently and in a
very pragmatic manner. The best approach to bring about this first wave of simulator tech-
nology for joint training purposes is to ensure quicker delivery of products to meet these
short-term needs.
R e c o m m e n d a t i o n o n C o m p a n y S t r a t e g y
Diversification
Companies will need to expand their product lines so as to have multiple revenue streams.
Having such alternatives to the core offering is extremely important in a competitive market
that is witnessing the domination of one participant in each of its segments. Aside from
design and manufacturing considerations, diversification must also include such areas as
logistics support provision through the system's life cycle and mid life update (MLU) proc-
esses such as frequent maintenance. Effectively, reconfiguration for networked environments
might drive such a need to bring about the next generation of collective training features.
Disposal and replacement of simulation fleet can also be a good source of diversification as
some simulators might go out of date and end users might wish to reward some companies
with life cycle termination contracts, which, in some cases, can be quite significant. In
summary, it is important for a company to think of an additional service provision aimed at
an efficient and low cost full life cycle management. This will also be a good opportunity to
sustain relationships with customers.
N e c e s s i t y t o Wi n a S e g m e n t o f C o n t r a c t s a s
P r i m e o r S u b c o n t r a c t o r
Positioning of Companies in the Market
The market of simulation in Europe is evolving towards scarce but more lucrative contracts.
Indeed, programmes tend to be more regional and more important in terms of costs while
also being less numerous. In terms of major contracts, business opportunities are wide and
relatively open for all of the competitors in their respective domains. However, medium and
small competitors face a stark choice of gaining the opportunity to participate in long-term,
high-budget contracts or exiting the market altogether.
As a consequence, it is important for a company to win a good proportion of the contracts
awarded, either as a prime or subcontractor, as opportunities are quite limited.
S y s t e m D e s i g n
Standardisation of System Design
Most importantly, the key recommendation for companies today is to design standard
systems which do not expose them to a higher risk. Standard designs must be open, easily
upgradeable, and also interoperable for the provision of joint training. It is a true necessity
for companies to design open systems which can keep up with changes immediately and be
linked together in a highly complex network. As a consequence, the research and develop-
ment cost is not exposed to risks and the systems are at a greater state of readiness for
meeting technical requirements.

Military Synthetic Training and Simulation Markets Europe

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