The sales of arms and military services companies in the SIPRI Top 100 have fallen for the fifth consecutive year. However, at only a 0.6 per cent decline, the slight decrease may signal a possible reversal of the downward sales trend observed since 2011.
US companies still way ahead despite falling revenues
Companies based in the United States continue to dominate the Top 100 with total arms sales amounting to $209.7 billion for 2015. Arms sales by US companies in the Top 100 decreased by 2.9 per cent compared with 2014—the fifth consecutive year of decline.
‘Lockheed Martin remains the largest arms producer in the world,’ says Aude Fleurant, Director of SIPRI’s Arms and Military Expenditure Programme. ‘However, US companies’ arms sales are constrained by caps on US military spending, delays in deliveries of major weapon systems and the strength of the US dollar, which has negatively affected export sales.’
Many of the larger US arms-producing companies divested their military services activities after 2010 due to falling demand. A number of the new, smaller companies created by this process have consolidated and have built up sufficient revenue to rank in the Top 100 for 2015; three such companies are CSRA, Engility and Pacific Architects and Engineers.
West European arms sales up in 2015 after falls in 2014
Arms sales by companies in Western Europe listed in the SIPRI Top 100 for 2015 rose by 6.6 per cent in real terms compared with 2014, with total combined revenues from arms sales amounting to $95.7 billion. This increase contrasts with the notable drop in West European companies’ revenues from arms sales recorded between 2013 and 2014.
The combined arms sales of the six French companies listed in the Top 100 totalled $21.4 billion in 2015, a rise of 13.1 per cent compared with 2014, when most of those companies recorded a fall in arms sales. The increase in French companies’ arms sales has acted as an important driver for the recent growth in arms sales in Western Europe.
‘Major arms export deals in 2015, such as those to Egypt and Qatar, have increased French arms companies’ sales,’ says Fleurant. ‘A 67.5 per cent surge in arms sales by Dassault Aviation Group seems to be mainly the result of such exports.’
The three German companies listed in the Top 100 continued to increase their combined sales (by 7.4 per cent) in 2015. Companies in the Top 100 based in the United Kingdom reversed the downward trend recorded in 2014 with a 2.8 per cent rise in their combined arms sales in 2015.
Continued growth in sales by the Russian arms industry
The combined arms sales of the 11 Russian companies in the 2015 Top 100 reached $30.1 billion, representing 8.1 per cent of the total Top 100 arms sales for 2015 and an increase of 6.2 per cent compared with 2014. Ten out of the 11 companies listed have increased their arms sales in 2015.
‘Profiting from the Russian military modernization programme, most of the top Russian companies have increased their arms sales in constant roubles,’ says SIPRI Senior Researcher Siemon Wezeman. ‘However, all Russian companies in the SIPRI Top 100 for 2015 are ranked lower than they were in 2014 because the pace of the growth in their arms sales has slowed.’
South Korea leading the rise of emerging producers in the Top 100
Emerging producers and other established producers account for 9.5 per cent of the Top 100 arms sales for 2015 with a combined total of $34.5 billion.* This represents an increase of 3.0 per cent for other established producers compared with 2014 and a rise of 15.9 per cent for emerging producers. The significant growth in emerging producers’ arms sales is mostly attributable to South Korean companies, which increased sales by 31.7 per cent in 2015.
‘All South Korean companies show higher arms sales in 2015, reflecting their growing capacity to meet the South Korean Ministry of Defense’s demand and their ongoing success in the international market,’ says Wezeman. ‘LIG Nex1 increased its arms sales by 34.7 per cent compared with 2014, and Korea Aerospace Industry’s arms sales rose by 51.7 per cent.’ Poongsan (an ammunition and propellant producer), DSME (a shipbuilder) and Hanwha Thales (a weapon systems producer) were new South Korean entrants to the Top 100 in 2015.
National efforts among the emerging producers to develop their arms industries have shown mixed results in 2015. The combined arms sales of India’s ranked companies grew by 9.3 per cent compared with 2014, while the combined sales of Turkish companies rose by 10.2 per cent. Embraer, the sole Brazilian company in the Top 100, recorded a 28.1 per cent decline in its arms sales in 2015.