The global supply chain has been seriously disrupted by the coronavirus pandemic that first emerged in China two years ago. It continues to impact the delivery of consumer goods around the globe, yet during the pandemic, the sales of arms and military services by the industry's top one hundred companies still totaled $531 billion in 2020—an increase of 1.3 percent from the previous year.
The arms sales from the industry’s 100 largest companies also increased by 17 percent from 2015, which was the first year that the SIPRI included data from Chinese-based firms, according to data from the Stockholm International Peace Research Institute (SIPRI). The increase in 2020 also marked the sixth consecutive year of growth in global arms sales by those top one hundred companies.
The increase in sales in 2020 also came as the global economy contracted by 3.1 percent.
“The industry giants were largely shielded by sustained government demand for military goods and services,” said Alexandra Marksteiner, a researcher with the SIPRI Military Expenditure and Arms Production Program. “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.”
U.S. Dominates the Market
The United States accounted for the highest number of companies ranked in the top one hundred global arms producers, with forty-one U.S. companies seeing sales of $285 billion. That was a 1.9 percent year-over-year increase from 2019, and accounted for 54 percent of the largest one hundred companies' total arms sales. Since 2018, the top five companies in the SIPRI’s rankings have been based in the United States.
The study also noted that the United States is undergoing a wave of mergers and acquisitions. As an effort to broaden their product portfolios and to gain a competitive advantage when bidding for contracts, many of the largest U.S. arm companies have opted to merge or acquire promising ventures.
"This trend is particularly pronounced in the space sector," added Marksteiner. "Northrop Grumman and KBR are among several companies to have acquired high-value firms specialized in space technology in recent years."
China Rising, Russia Declining
The prospects of two of America's near-peer adversaries are quite different. Russia has remained the second-largest exporter of small arms in the world, after the United States, yet according to the SIRPI, the combined arms sales of the nine Russian companies ranked in the top 100 actually decreased from $28.2 billion in 2019 to $26.4 billion in 2020—a 6.5 percent decline. That marked a continuation of the downward trend observed since 2017, when arms sales by Russian companies in the Top 100 peaked and when Russian firms accounted for 5.0 percent of total top one hundred arms sales.
Moreover, some of the sharpest declines in arms sales among the largest 100 global arms companies were recorded by Russian firms. SIRPI noted that 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 arms sales fall by 31 percent and 11 percent, respectively. However, by contrast, Russia's United Aircraft Corporation increased its arms sales by 16 percent.
One factor in this was the diversification of product lines in the Russian arms industry, as the companies are currently implementing a government policy to increase their share of civilian sales to 30 percent of their total sales by 2025 and 50 percent by 2030.
Nearly half of Russia’s arms exports currently consist of MiG and Sukhoi fighter and bomber aircraft of the fourth generation. About 25 percent is comprised of anti-aircraft equipment such as the S-400 missile complex. Russia continues to seek markets in Asia, including India, for its air-defense system.
However, where Russia saw a decline in its arms sales, China saw an increase—and the combined arms sales of the five Chinese companies included in the top one hundred amounted to an estimated $66.8 billion in 2020, an increase of 1.5 percent from 2019. Chinese firms also accounted for 13 percent of the total top 100 arms sales in 2020, which is behind the U.S. companies yet 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 programmes and focus on military-civil fusion,” Dr. Nan Tian, a senior researcher for SIPRI, said. “They have become some of the most advanced military technology producers in the world.”
SIPRI cited NORINCO as an example; it co-developed the BeiDou military-civil navigation satellite system and deepened its involvement in emerging technologies.
State of Europe’s Arms Market
The SIPRI data found that the 26 European arms companies in the top one hundred jointly accounted for 21 percent of total arms sales, roughly $109 billion. That included seven British companies, which recorded arms sales of $37.5 billion in 2020, an increase of 6.2 percent compared with 2019. Arms sales from BAE Systems, which was the only European firm in the top 10, increased by 6.6 percent to $24.0 billion.
However, the French arms manufacturer Thales saw a decline in arms sales of 5.8 percent due to lockdown-induced disruptions in the spring of 2020. Several European companies had reported supply chain disruptions and delayed deliveries due to the pandemic.
“Aggregated arms sales by the six French companies in the Top 100 fell by 7.7 percent,” said Dr. Lucie Béraud-Sudreau, director of the SIPRI Military Expenditure and Arms Production Program. “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.”
Additionally, arms sales by the four German firms listed in the top one hundred reached $8.9 billion in 2020, a 1.3 percent year-over-year increase from 2019. Together, those firms accounted for 1.7 percent of the total arms sales of the top one hundred companies. Rheinmetall, which remains Germany’s largest arms manufacturer, recorded an increase in arms sales of 5.2 percent; while shipbuilder ThyssenKrupp, in contrast, reported a drop of 3.7 percent.
Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military small arms, and is the author of several books on military headgear including A Gallery of Military Headdress, which is available on Amazon.com.