Arms industry sees continued growth despite pandemic - SIPRI

A new report by the Stockholm International Peace Research Institute (SIPRI) has found the arms industry has faced continual growth, despite the effects of the Coronavirus pandemic.

The top 100 providers of arms and military services reportedly made a net profit of around $531 billion (€420 billion) in 2020, an increase of around 1.3% from 2019.

Data collected from the arms industry has noted a 17% increase in sales since 2015, the first year since SIPRI started collecting data from Chinese companies. For 2020, growth still held strong despite most major economies contracting during the worst of the pandemic.

Read more: SIPRI report finds US largest arms exporter, Saudi largest importer

"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 Programme.

"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", she added. 

However, operating within the military market has not shielded all arms companies from losses. The report found that French arms manufacturer Thales, for example, suffered net losses of around 5.8%.

The pandemic also wrought havoc on supply chains, which caused disruptions and delays across pretty much every major global industry.

The US topped SIPRI's list, with 41 of the top 100 arms dealers located within its borders, representing around $285 billion (€252 billion) in arms deals. The top five ranked companies have all been located in the US since 2018.

Read more: Heckler & Koch must pay for illegal Mexican arms sales, says top German court

In addition, SIPRI reports the US arms sector is currently undergoing a number of mergers and acquisitions, helping broaden their portfolios and continuing to stimulate growth.

Marksteiner said these trends could be felt within the space sector, in particular.

"Northrop Grumman and KBR are among several companies to have acquired high-value firms specialised in space technology in recent years", she said. 

Five Chinese companies also found their way into the SIPRI top 100 rankings, seeing a 1.9% increase in profits from 2019, and representing around 13% of sales.

Military modernisation within the nation, as well as the fusion of the military and civil sectors, have caused a boom in the industry and caused Chinese companies to offer some of the most advanced technology on the market.

26 European companies - including seven UK-based ones - accounted for around 26% of profits for 2020, despite many suffering losses, particularly within the French arms industry.

German arms companies also saw an increase of 1.7% on average from 2019, but companies reported more mixed results. For example, the country's largest defence firm Rheinmetall recorded a year-on-year increase of 5.7% while shipbuilder Thyssenkrupp recorded a 3.7% drop in profits.

The country economy ministry released official data back in August revealing the country's arms industry had committed to sales of €22.5 billion since October 2017, when the current legislative period began.

Read more: German Economy Ministry releases arms industry sales data

Finally, combined arms sales from the eight Russian companies in the top 100 reported a 6.5% decline from 2019, in part due to the diversification of offerings, the end of the 2011 State Armament Programme, and complications from the pandemic.

However, Russian companies have pledged to increase their civilian sales by 50% by 2030. 

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