Precision-Guided Rounds Target Mortar Ammunition Market

Serial production of mortar ammunition is ongoing throughout Europe for domestic procurement and export. However, with the ongoing drastic cuts in European defense spending, the more mundane procurement programs - such as mortar ammunition - continue to suffer disproportionately heavy cuts in funding, providing opportunities for an influx of new non- European players on the international market. 

Contributing to the reduction in European mortar ammunition production is the focus of continental players on the development of advanced mortar rounds, including guided projectiles. Europe has shown an enthusiasm for advanced mortar rounds unequaled anywhere else in the world. This emerging market segment is one of the few defense development areas where Europe remains ahead of the United States.

Despite growing international competition, European mortar ammunition producers maintain a healthy level of export sales owing to the enduring worldwide popularity of European (primarily Brandt) mortar designs. The growing acceptance of NATO-pattern 120mm mortars and ammunition as the international standard may now be the greatest asset of the European mortar ammunition market. 

The European market for artillery ammunition remains generally stable. Forecast International expects that the European players will maintain a combined annual production rate averaging nearly 1.6 million rounds. 

Extended-range and terminally guided rounds will ultimately result in lower procurement levels, as fewer advanced-design rounds can achieve the same battlefield effect as conventional mortar ammunition. Nevertheless, the increased unit cost of these advanced munitions will maintain, if not actually increase, the overall value of European production on the international market.

Serial production of mortar ammunition by non-U.S. and non-European manufacturers is ongoing for domestic procurement and export. 

While most non-U.S. and non-European mortar ammunition producers remain primarily focused on domestic procurement, a number of contractors are emerging as real players on the international stage, challenging the traditional dominance of U.S. and European players.

As U.S. and European doctrine increasingly focuses on advanced technology as an alternative to massive conventional munitions stockpiles, a growing number of non-U.S. and non-European players have used the technology and expertise acquired through licensed production of U.S. and European munitions to enter the international market. These international players fill the ever-increasing vacuum left by decreased production on the part of the traditional U.S. and European producers. 

As with the European mortar ammunition market, the growing acceptance of NATO-pattern 120mm mortars and ammunition as the international standard continues to be the single greatest technical factor impacting this market.

Forecast International believes that these non- U.S. and non-European manufacturers will maintain a combined annual production rate averaging 1.7 million rounds. 

Beyond the production of conventional Russian-pattern and NATO-standard ammunition types, many contractors now offer mortar munitions featuring state-of-the-art technology. As international players offer increasingly more advanced designs, the overall value of production of non-U.S. and non-European mortar ammunition will close the gap with the European market.

Serial production of mortar ammunition for U.S. Army and U.S. Marine Corps procurement is ongoing, with the current emphasis on replacing wartime and training stocks of ammunition, both of which had dwindled to dangerously low levels by the late 1990s. 

The operational tempos of Operation Enduring Freedom and Operation Iraqi Freedom/Operation New Dawn precipitated an extended production surge that now appears to be settling down to a new baseline for U.S. mortar ammunition production. 

The most significant technical development on the immediate horizon is the 120mm XM395 Precision-Guided Mortar Munition. With the December 2004 award of the contract for the SDD phase and LRIP, the program appears back on track toward serial production and initial fielding.

On June 11, 2010, the U.S. Army awarded Alliant Techsystems (the XM395 PGMM prime contractor) a contract worth $8.967 million for the 120mm Accelerated Precision Mortar Initiative. The stated goal of the APMI is to field a 120mm precision guided mortar round within 10 months that meets the performance specification for the XM395. This contract specifies production of approximately 1,310 APMI rounds at an estimated value of $18.3 million, using FY09-FY11 funding.

The Forecast International Weapons Group's analysis of U.S. DoD budget request documentation indicates that U.S. Army and U.S. Marine Corps procurement of mortar ammunition will exhibit two distinct trends. 

First, extensive combat use of 81mm mortars in Afghanistan and Iraq has prompted the U.S. Army to plan for extended ammunition procurement for this popular company-level fire support system. 

The second trend involves the increasing employment of 120mm mortar systems at the maneuver battalion level and the anticipated fielding of a precision-guided 120mm mortar round during the forecast period. While U.S. Army doctrine anticipates a growing role for 120mm mortars on the modern asymmetric battlefield, enhanced rounds such as the PGMM will allow the Army to procure 120mm mortar ammunition at lower numerical levels than required to support the 81mm mortar.