The 100 largest arms companies saw sales dip 2% in 2013 to $402 billion, according to the Stockholm International Peace Research Institute (SIPRI), which noted this was the third consecutive year of decline.
According to SIPRI data, 2012 saw top 100 arms sales drop 3.9% in real terms, showing a slowing in the pace of decline, partly attributable to significant increases in arms sales by Russian companies and other emerging suppliers.
“Sales by companies headquartered in the United States and Canada have continued to moderately decrease, while sales by Russian-based companies increased by 20% in 2013. Western Europe offered a more mixed picture, with French companies increasing their sales, sales by British companies remaining stable, and Italian and Spanish arms-producing companies’ sales continuing to decline,” according to SIPRI’s new report. Around two thirds of companies in the SIPRI Top 100 for 2013 are based in North America or Western Europe and these accounted for 84% of total arms sales.
“The share of global arms sales for companies outside North America and Western Europe has been increasing since 2005,” said Dr Aude Fleurant, Director of SIPRI’s Arms and Military Expenditure Programme. “For 2013, at 15.5% of Top 100 arms sales, this share is at its highest point in the history of the SIPRI Top 100, which does not include China-based companies due to a lack of reliable data.”
Russia, on the other hand, has recorded strong growth among its defence companies – the total arms sales of the top ten Russian companies in the SIPRI list for 2013 amounted to $31 billion. Their arms sales grew by 20% between 2012 and 2013. The Russian company with the largest increase in sales in 2013 is Tactical Missiles Corporation, with a growth of 118%, followed by Almaz-Antey (34%) and United Aircraft Corporation (20%), according to SIPRI. Almaz-Antey’s arms sales in 2013 make it the 12th-largest arms producer (excluding China) and bring it closer to the top 10, which has been exclusively populated by arms producers from the USA or Western Europe since the end of the cold war. 2013 also saw the introduction of a 10th Russian arms company, communication and electronics manufacturer Sozvezdie, to the SIPRI Top 100.
“The remarkable increases in Russian companies’ arms sales in both 2012 and 2013 are in large part due to uninterrupted investments in military procurement by the Russian Government during the 2000s. These investments are explicitly intended to modernize national production capabilities and weapons in order to bring them on par with major US and Western European arms producers’ capabilities and technologies,” said Siemon Wezeman, Senior Researcher with the SIPRI Arms and Military Expenditure Programme.
Starting in 2011, the combination of limits on US defence spending imposed by the 2011 Budget Control Act and the withdrawal of military forces from Afghanistan and Iraq triggered a gradual decline in US arms companies’ sales. The trend continued in 2013 with a decrease of 4.5% in the total estimated arms sales of US companies ranked in the SIPRI Top 100 compared with sales in 2012. The number of US producers in the Top 100 also reduced from 42 companies in 2011 to 38 in 2013.
“This is a consequence of US companies divesting portfolio activities facing substantial decreases,” said Fleurant.
SIPRI has created a new category for emerging suppliers ranked in the SIPRI Top 100 for 2013 in order to better track their evolution. This new category covers arms-producing companies located in the Global South, including Brazil, India, the Republic of Korea (ROK, South Korea), Singapore and Turkey.
Collectively, emerging suppliers’ arms sales represent a modest share of the Top 100 global sales (around 3.6%). However, the growth in 2013 of some suppliers has been impressive, according to SIPRI. For example, sales by South Korea’s Korean Aerospace Industries (KAI) grew by 31% in 2013, while Brazil’s Embraer and Turkey’s Aselsan continue to increase their respective positions in the Top 100 following their first appearance in the 2011 rankings.
“These trends underline the modest yet continuing relative erosion of the domination of the US and Western European producers,” said Fleurant.
According to SIPRI data, Lockheed Martin is the biggest defence company in the world with arms sales of $35.4 billion in 2013, versus $36 billion in 2012. Lockheed Martin is followed by Boeing, BAE Systems, Raytheon and Northrop Grumman.
Although Chinese companies are not covered by the SIPRI Top 100 due to a lack of data, SIPRI estimated that the ten major state-owned conglomerates under which arms production falls, accumulated total sales of around $268 billion in 2012. “However, these companies each comprise hundreds of individual enterprises and produce a wide range of civil and military products. The latter represent a minority of the total sales – estimated to be 24% in 2006 and 28% in 2007 – and the share is not generally known on a company-by-company level.”
China’s military spending more than quadrupled in real terms between 2000 and 2012, and the country has engaged in major efforts to develop its domestic industry. As a result, since the late 2000s China has been decreasing its arms imports in favour of domestic procurement. In addition, China’s arms exports have grown substantially in the past decade, to the extent that the country is now the fifth largest arms exporter, just after France. Based on the overall industry picture and on limited information on individual companies, at least 9 of these 10 companies would almost certainly be in the Top 100 if figures for arms sales were available. Of these, 4 to 6 would probably be in the top 20, and one – the aviation company AVIC – may be in the top 10, SIPRI noted.