The independent resource on global security
6. Arms production
Contents
I. Introduction
II. The SIPRI Top 100 arms-producing companies, 2008
III. Mergers and acquisitions, 2009
IV. The limited impact of the financial crisis on the arms industry
V. Conclusions: continuity despite the crisis
Table 6.1. Trends in arms sales of companies in the SIPRI Top 100 arms-producing companies, 2002–2008
Table 6.2. Regional and national shares of arms sales for the SIPRI Top 100 arms-producing companies, 2008 compared to 2007
Table 6.3. Companies in the SIPRI Top 100 with the largest increases in arms sales in 2008
Table 6.4. The largest acquisitions within OECD arms industries, 2009
Summary
In 2008 the world’s 100 largest arms-producing companies (outside China) maintained the upward trend in their arms sales, which increased by $39 billion to reach $385 billion. While companies headquartered in the United States again dominated the SIPRI Top 100, for the first time a non-US headquartered company registered the highest level of arms sales—BAE Systems of the United Kingdom.
Thirteen companies increased their arms sales by more than $1 billion in 2008, and 23 increased their arms sales by more than 30 per cent. In contrast, only six companies in the SIPRI Top 100 had decreased arms sales in 2008. Two of these companies—SAFRAN of France and Boeing of the USA—experienced decreases of more than $1 billion.
The conflicts in Afghanistan and Iraq continued to heavily influence sales of military equipment such as armoured vehicles, unmanned aerial vehicles (UAVs) and helicopters. At the same time, sales registered by military services companies continued to grow, as did the arms sales of Russian companies to both domestic and foreign customers.
Following peak levels earlier in the decade, the number of large transnational mergers and acquisitions fell again in 2009. The acquisition of US companies by British companies slowed. There was, however, more consolidation in the Israeli, Russian and US industries as well as a continued pattern of arms-producing companies diversifying into the security industry.
Even though more than a year has passed since the onset of the global financial crisis and economic recession, an initial assessment shows that many arms-producing companies continued to increase arms sales in 2009. Sustained high levels of military expenditure (especially in the USA—the largest military spender and arms procurer) and the ongoing conflicts in Afghanistan and Iraq partly explain the continuing increase. However, the monopsonistic structure of the arms industry, the consequent strong relationship between arms producers and governments and the industry’s perceived importance to national security also shield it from the immediate impact of severe economic downturns. This status is reflected in the continued high levels of arms sales, high profits, large backlogs and strong cash flows generated by arms production.
Dr Susan T. Jackson (United States) joined SIPRI’s Military Expenditure and Arms Production Programme in July 2009 as Head of the Arms Production Project.
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