14 Dec. 2015: Global arms industry: West still dominant despite decline; sales surge in rest of the world, says SIPRI
Download the Fact Sheet, 'The SIPRI Top 100 arms-producing and military services companies, 2014'
Access data on the SIPRI Top 100 arms-producing companies for the past 11 years.
For the fourth consecutive year, sales of arms and military services by the SIPRI Top 100—the largest arms-producing companies by arms sales—have decreased. However, with a reduction of 1.5 per cent in real terms between 2013 and 2014, the global decline in SIPRI Top 100 total arms sales remains moderate. Falls in 2014 are due to lower arms sales for companies based in North America and Western Europe, as Top 100 companies located in other regions of the world have collectively increased their arms sales.
US and Western European arms sales declining
Companies based in the United States continue to dominate the Top 100, with a 54.4 per cent share of the total. US companies’ arms sales decreased by 4.1 per cent between 2013 and 2014, which is similar to the rate of decline seen in 2012–13. One company bucking the downward trend is Lockheed Martin, which has occupied the first position in the Top 100 since 2009. Its arms sales grew by 3.9 per cent in 2014 to $37.5 billion. Lockheed Martin’s lead over the second ranked company Boeing, which had total arms sales of $28.3 billion, increased by $4.4 billion in 2014.
‘With the acquisition of helicopter manufacturer Sikorsky Aircraft Corp. in 2015, the gap between Lockheed Martin and other companies ranked in the Top 10 will widen even further next year,’ says Aude Fleurant, Director of SIPRI’s Arms and Military Expenditure Programme.
Western European companies’ arms sales decreased by 7.4 per cent in 2014. Only German (+9.4 per cent) and Swiss (+11.2 per cent) companies show overall growth in their arms sales in real terms. The rise in German arms sales was due to a significant growth in turnover for German shipbuilder ThyssenKrupp (+29.5 per cent), while Switzerland’s Pilatus Aircraft benefited from growing demand for its trainer aircraft, boosting Swiss sales. The companies representing the seven remaining Western European countries in the Top 100 all show an overall decline in their sales.
Growth of Russian arms industry’s sales continues
Despite difficult national economic conditions, the Russian arms industry’s sales continued to rise in 2014. The number of Russian companies ranked in the Top 100 went up from 9 to 11, amounting to a share of 10.2 per cent of total Top 100 arms sales in 2014. The two completely new entrants are High Precision Systems (39th) and RTI (91st), while the newly established United Instrument Manufacturing Corporation (UIMC) has entered the list in 24th position, replacing Sozvezdie, which merged with a number of other companies to form UIMC. The Russian company showing the most significant growth in arms sales is Uralvagonzavod, with an increase of 72.5 per cent in its arms sales. Almaz-Antey, with a near 23 per cent increase in arms sales, is now in 11th position.
‘Russian companies are riding the wave of increasing national military spending and exports. There are now 11 Russian companies in the Top 100 and their combined revenue growth over 2013–14 was 48.4 per cent,’ says SIPRI Senior Researcher Siemon Wezeman.
In contrast, arms sales of Ukrainian companies have substantially declined. UkrOboronProm has fallen from 58th position in 2013 to 90th in 2014, with a drop in sales of 50.2 per cent. Motor Sich, the other Ukrainian company that was ranked in the 2013 Top 100, has left the list altogether. ‘The noticeable decline in sales for Ukrainian companies was largely due to disruption caused by the conflict in eastern Ukraine, the loss of the Russian market, and the fall in the value of the local currency,’ says Siemon Wezeman.
Emerging producers continue to strengthen their presence in the Top 100
In 2013, SIPRI introduced an ‘emerging producers’ category to better track the evolution of companies based in countries that have stated goals of military industrialization. For 2014, this category covers Brazil, India, South Korea and Turkey. The combined arms sales of companies located in these countries represents 3.7 per cent of SIPRI Top 100 total arms sales. Their revenues rose by 5.1 per cent between 2013 and 2014.
There are two Turkish arms-producing companies ranked in the Top 100: ASELSAN, which increased its sales by 5.6 per cent in 2014, but has moved down in the ranking from 66th to 73rd; and Turkish Aerospace Industry (TAI), which has entered the Top 100 at rank 89, with a growth in arms sales of 15.1 per cent. ‘Turkey is seeking more self-sufficiency for its arms supplies and this, coupled with an aggressive export drive, has contributed to the rapid growth in revenue for ASELSAN and TAI,’ says Pieter Wezeman, a Senior Researcher at SIPRI.
South Korean companies have also raised their profile in the Top 100 in 2014. ‘Fifteen companies from Asia (not including China) have made it into the Top 100,’ according to Siemon Wezeman. ‘Many of them showed quite stable levels of sales but South Korean companies increased their total sales in 2014 by 10.5 per cent compared to 2013.’ The latest South Korean entrant to the Top 100 is Hyundai Rotem, a military vehicle manufacturer.
The SIPRI Arms Industry Database
The SIPRI Arms Industry Database was created in 1989. It contains financial and employment data on arms-producing companies worldwide. 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. Changes are calculated in real terms and country comparisons are only for the same companies over different years.
This is the first of three major data set pre-launches in the lead-up to the publication of the next edition of the SIPRI Yearbook. In the first half of 2016, SIPRI will release its international arms transfers data (details of all international sales, transfers and gifts of major weapons in 2015) as well as its world military expenditure data (comprehensive information on global, regional and national trends in military spending). All data will feature in the SIPRI flagship publication SIPRI Yearbook 2016 to be published in late 2016.