STOCKHOLM: Armament Industry across the globe has grown despite worst Coronavirus pandemic, even when all other industries have witnessed worst time during the epidemic.
100 top weapons firms saw their profits rise by 1.3 per cent on 2019 to a record $531 billion, despite the global economy contracting by more than three per cent, said a report of the Stockholm International Peace Research Institute (SIPRI).
It stated that the world’s biggest weapons manufacturers largely avoided the economic downturn caused by COVID-19 and recorded a growth in profits last year for the sixth year in a row,
Governments around the world have continued to buy arms during the pandemic and some also passed measures to help their big weapons firms, SIPRI stated in its report.
It added that overall, the 100 top weapons firms saw their profits rise by 1.3 per cent on 2019 to a record $531 billion, despite the global economy contracting by more than three per cent.
“Military manufacturers were largely shielded by sustained government demand for military goods and services,” said SIPRI researcher Alexandra Marksteiner in the institute’s annual assessment of arms companies.
“In much of the world, military spending grew and some governments even accelerated payments to the arms industry in order to mitigate the impact of the Covid-19 crisis.”
The top five arms firms were all from the United States, Lockheed-Martin — which counts F-35 fighter jets and various types of missiles among its bestsellers — consolidating its first place with sales of $58.2 billion.
Britain’s BAE Systems, in sixth position, was the highest-placed European firm, just ahead of three Chinese groups.
The United States once again hosted the highest number of companies ranked in the Top 100. Together, the arms sales of the 41 US companies amounted to $285 billion—an increase of 1.9 per cent compared with 2019—and accounted for 54 per cent of the Top 100’s total arms sales. Since 2018, the top five companies in the ranking have all been based in the USA.
The US arms industry is undergoing a wave of mergers and acquisitions. To broaden their product portfolios and thus gain a competitive edge when bidding for contracts, many large US arms companies are opting to merge or acquire promising ventures. ‘This trend is particularly pronounced in the space sector,’ said Marksteiner. ‘Northrop Grumman and KBR are among several companies to have acquired high-value firms specialized in space technology in recent years.’
The combined arms sales of the five Chinese companies included in the Top 100 amounted to an estimated $66.8 billion in 2020, 1.5 per cent more than in 2019. Chinese firms accounted for 13 per cent of total Top 100 arms sales in 2020, behind US companies and ahead of companies from the United Kingdom, which made up the third largest share.
‘In recent years, Chinese arms companies have benefited from the country’s military modernization programs and focus on military–civil fusion,’ said Dr Nan Tian, SIPRI Senior Researcher. ‘They have become some of the most advanced military technology producers in the world.’ NORINCO, for example, co-developed the BeiDou military–civil navigation satellite system and deepened its involvement in emerging technologies.
The 26 European arms companies in the Top 100 jointly accounted for 21 per cent of total arms sales, or $109 billion. The seven British companies recorded arms sales of $37.5 billion in 2020, up by 6.2 per cent compared with 2019. Arms sales by BAE Systems – the only European firm in the top 10 – increased by 6.6 per cent to $24.0 billion.
‘Aggregated arms sales by the six French companies in the Top 100 fell by 7.7 per cent,’ said Dr Lucie Béraud-Sudreau, Director of the SIPRI Military Expenditure and Arms Production Programme. ‘This significant drop was largely due to a sharp year-on-year decline in the number of deliveries of Rafale combat aircraft by Dassault. Safran’s arms sales grew, however, driven by increased sales of sighting and navigation systems.’
Arms sales by the four German firms listed in the Top 100 reached $8.9 billion in 2020 – an increase of 1.3 per cent compared with 2019. Together, these firms accounted for 1.7 per cent of the Top 100’s total arms sales. Rheinmetall – the largest German arms manufacturer – recorded an increase in arms sales of 5.2 per cent. Shipbuilder ThyssenKrupp, in contrast, reported a drop of 3.7 per cent.
The combined arms sales of the nine Russian companies ranked in the Top 100 decreased from $28.2 billion in 2019 to $26.4 billion in 2020—a 6.5 per cent decline. This marks a continuation of the downward trend observed since 2017, when arms sales by Russian companies in the Top 100 peaked. Russian firms accounted for 5.0 per cent of total Top 100 arms sales.
Some of the sharpest declines in arms sales among the Top 100 were recorded by Russian firms. This coincided with the end of the State Armament Program 2011–20 and pandemic-related delays in delivery schedules. Almaz-Antey and United Shipbuilding Corporation saw their arms sales fall by 31 per cent and 11 per cent, respectively. Conversely, United Aircraft Corporation increased its arms sales by 16 per cent.
Another key development in the Russian arms industry was the diversification of product lines. Russian companies are currently implementing a government policy to increase their share of civilian sales to 30 per cent of their total sales by 2025 and 50 per cent by 2030.
SIPRI said the firms had benefited from the broad injection of cash into economies, as well as specific measures designed to help arms companies such as accelerated payments or order schedules.
And as military contracts usually span several years, firms were able to make gains before the health crisis took hold.
“However, despite these and other factors, global arms production was not fully immune to the impact of the pandemic,” the report said, pointing to France’s Thales which blamed a 5.8 per cent fall in arms sales on lockdown disruptions.
The report highlighted that the rate of increase in profits had slowed substantially between 2019 and 2020, and noted that measures taken to halt the spread of the virus had disrupted supply chains in the weapons industry just as they had across the wider economy.
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