Despite the global economy contracting amid the upheaval caused by the COVID-19 pandemic, the world’s top 100 arms producers increased sales slightly in 2020, to $531 billion, according to new data released by the Stockholm International Peace Research Institute (SIPRI).
This amounted to an increase of 1.3% in real terms compared with the previous year. The arms sales of the Top 100 arms companies in 2020 were 17% higher than in 2015—the first year for which SIPRI included data on Chinese firms. This marked the sixth consecutive year of growth in arms sales by the Top 100.
Arms sales increased even as the global economy contracted by 3.1% during the first year of the pandemic.
“Industry giants were largely shielded by sustained government demand for military goods and services. In much of the world, military spending grew and some governments even accelerated payments to the arms industry to mitigate the impact of the COVID-19 crisis,” Alexandra Marksteiner, researcher for the SIPRI military expenditure and arms production programme, said.
Operating in the military market did not guarantee immunity to the effects of the pandemic. French arms manufacturer Thales, for example, ascribed a drop in arms sales of 5.8% to lockdown-induced disruptions in the spring of 2020. Some companies reported supply chain disruptions and delayed deliveries.
US companies still dominate ranking
The United States 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% compared to 2019 — and accounted for 54% of the Top 100’s total arms sales. Since 2018, the top five companies in the ranking are all US based, SIPRI noted.
The US arms industry is undergoing a wave of mergers and acquisitions. To broaden product portfolios and gain a competitive edge in bidding for contracts, many large US arms companies opt to merge or acquire promising ventures.
“This trend is particularly pronounced in the space sector. Northrop Grumman and KBR are among several companies to acquire high-value firms specialised in space technology in recent years,” Marksteiner said.
Chinese firms account for second largest share of Top 100 arms sales
The combined arms sales of five Chinese companies in the Top 100 amount to an estimated $66.8 billion in 2020, 1.5% up on 2019. Chinese firms accounted for 13% of total Top 100 arms sales in 2020, behind US companies and ahead of United Kingdom companies, which made up the third largest share.
“In recent years, Chinese arms companies benefited from the country’s military modernisation programmes and focus on military–civil fusion. 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,” SIPRI senior researcher Dr Nan Tian said.
The 26 European arms companies in the Top 100 jointly account for 21% of total arms sales, or $109 billion. The seven British companies recorded arms sales of $37.5 billion in 2020, up by 6.2% compared with 2019. Arms sales by BAE Systems — the only European firm in the top 10 — increased by 6.6% to $24 billion.
“Aggregated arms sales by the six French companies in the Top 100 fell by 7.7%. This drop was largely due to a sharp year-on-year decline in deliveries of Rafale combat aircraft by Dassault. Safran’s arms sales grew driven by increased sales of sighting and navigation systems,” Dr Lucie Béraud-Sudreau, SIPRI military expenditure and arms production programme director, said.
Arms sales by the four German firms in the Top 100 reached $8.9 billion in 2020 — an increase of 1.3% compared with 2019. Together, these firms accounted for 1.7% of the Top 100’s total arms sales. Rheinmetall — the largest German arms manufacturer — recorded an increase of 5.2%. Shipbuilder ThyssenKrupp, in contrast, reported a drop of 3.7%.
Russian arms sales decline for third year in a row
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% 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 account for five percent of total Top 100 arms sales.
Some of the sharpest declines in arms sales in the Top 100 were recorded by Russian firms. This coincided with the end of the State Armament Programme 2011–20 and pandemic-related delays in delivery schedules. Almaz-Antey and United Shipbuilding Corporation saw sales fall by 31 and 11% respectively. Conversely, United Aircraft Corporation increased arms sales by 16%.
Another key development in the Russian arms industry was diversification of product lines. Russian companies are currently implementing government policy to increase civilian sales share to 30% of total sales by 2025 and 50% by 2030.
Collectively, the arms sales of companies in the Top 100 based outside the USA, China, Russia and Europe totalled $43.1 billion in 2020 — an increase of 3.4% since 2019. This represents just over eight percent of the Top 100’s total arms sales.