18 Feb. 2013: SIPRI Top 100 arms sales decreased in 2011: companies pursue diverse strategies in response to austerity measures
Compared to the companies in the Top 100 for 2010, this result represents a 5 per cent decrease in constant dollar terms. Over the period since 2002, arms sales by the Top 100 have nevertheless increased by 51 per cent in real terms.
Arms-producing and military services companies headquartered in North America and Western Europe continued to dominate the Top 100 list, which does not include China-based companies due to lack of available data. Sales by the 44 US-based arms producers amounted to 60 per cent of the total arms sales of the Top 100. The 30 companies based in Western Europe made up another 29 per cent of the total.
Several factors contributed to the decrease in arms sales in 2011. Austerity policies and proposed and actual decreases in military expenditure as well as postponements in weapons programme procurement affected overall arms sales in North America and Western Europe.
Conflict—in particular the drawdowns in Iraq and Afghanistan and the sanctions on arms transfers to Libya—also played a role in the fall in arms sales.
Companies pursue a range of strategies in order to remain competitive
‘Arms producing and military services companies have been taking steps to insulate themselves against austerity measures,’ states SIPRI arms industry expert Dr Susan Jackson. ‘Companies are implementing strategies that accommodate the changes in threat perception since September 2001 while trying to maintain their bottom lines. We see this in the types of acquisitions being made and in the sectors companies are targeting.’
Uncertainties stemming from proposed austerity measures by governments in the Global North have led some companies to pursue military specialization, while others have downsized or diversified into adjacent markets.
A number of companies have also established foreign subsidiaries in order to access new revenue streams in Latin America, the Middle East and Asia.
Cybersecurity emerging as a key market
The expansion of arms producing companies into the cybersecurity market—a clear trend in the first tier of the SIPRI Top 100—is due the growing political and budgetary importance of cybersecurity as a national security issue.
Companies such as Raytheon, BAE System and EADS Cassidian are seeking alternative revenue channels from the civilian sector while maintaining ties to military spending in this market.
These companies’ cybersecurity activities are focused on data and network protection software and services; testing and simulation services; training and consulting services; and operational support.
The SIPRI Arms Industry Database
The SIPRI Arms Industry Database was created in 1989. It contains financial and employment data on arms producing companies in the OECD and developing countries (except China). Since 1990, SIPRI has published data on the arms sales and employment of the 100 largest of these arms-producing companies in the SIPRI Yearbook.
Arms sales are defined by SIPRI as sales of military goods and services to military customers, including sales for domestic procurement and sales for export.
This is the first of three major data set pre-launches in the lead-up to the publication of SIPRI Yearbook 2013. On 18 March SIPRI will release its international arms transfers data (details of all international sales, transfers and gifts of major weapons in 2012) and on 15 April its world military expenditure data (comprehensive information on global, regional and national trends in military spending). Finally, in June, SIPRI will launch its 2013 Yearbook (cutting-edge information and analysis on the state of the world’s nuclear forces, the international peacekeeping agenda and steps to control weapons of mass destruction).