Brisk Arms Sale During Covid Times

Brisk Arms Sales During Covid 19

Amidst Covid 19 pandemic, the arms sales across the world did not see any slowing down with a new report by Stockholm International Peace Research Institute (SIPRI) saying that the 100 large companies totalled 531 billion dollars in 2020 in sale of arms and military services.

This was an increase of 1.3 per cent compared with previous year, the report stated. In the report, SIPRI said that there was a continuous upward trend of arms sale since 2015, roughly correlating with rising global military expenditure levels. The sales of top 100 arms companies in 2020 were 17 per cent higher than in 2015, the first year for which SIPRI included data on Chinese firms.

COVID-19 ON GLOBAL ARMS PRODUCTION

Even though the world economy fell by 3.1 per cent in 2020, the aggregated arms sales of the top 100 companies increased. The report attributes this growth of arms sales to three key factors.

  • First, Military manufacturers were largely shielded by sustained government demand for military goods and services.
  • Second, some states rolled out specific measures to mitigate the effects of government-mandated lockdowns on their arms companies, such as accelerated payments or order schedules.
  • Third, several arms companies were able to make gains on orders placed before the outbreak of the health crisis because arms procurement contracts usually span several years.

The SIPRI report also notes that measures taken to slow the spread of COVID 19 virus disrupted supply chains and delayed deliveries. In the first year of the pandemic (2020), several companies involved in both the civilian and the military sectors saw a rise in their arms sales as a proportion of their total sales.

US COMPANIES

Forty one arms companies do business from the United States. The US has the highest number of companies ranked in the Top 100 positions. The companies together amount to 285 billion dollars sales, which is an increase of 1.9 per cent compared with 2019. The companies in the US accounted for 54 per cent of the combined arms sales of the Top 100 companies. Since 2018, the top five arms companies in the world are from the US. Lockheed Martin which is the largest arms company in the world, and top ranking every year since 2009, has 58.2 billion dollars or 11 per cent of the top 100’s total arms sales in 2020, the report said. Raytheon Technologies is the second largest arms company with sales of 36.8 billion dollar. Boeing, one of the world largest military aero-space manufacturers, ranked third. Due to Covid-19 pandemic and the impact of government mandated lockdowns and travel restrictions on commercial aviation, Boeing recorded a loss in total sales of 19.0 billion dollar in 2020. Its arms sales also decreased (by 5.8 per cent) from 34.1 billion dollar in 2019 to 32.1 billion dollar in 2020. Northrop Grumman ranked fourth with arms sales of 30.4 billion dollar or 5.7 per cent of the Top 100 total General Dynamics was in fifth position with arms sales of 25.8 billiond dolar, which is equivalent to 4.9 per cent of the total.

SIPRI also mentions that US arms industry is undergoing a wave of mergers and acquisitions. To reinforce its military advantage and hedge against perceived threats emanating from what it considers to be its strategic competitors (namely China and Russia), the USA has been investing more heavily in research and development and the procurement of next-generation weapon systems.

CHINA

China is rising as a major player in the arms sales. The combined arms sales of five Chinese companies included in the Top ranking list amounted to an estimated 66.8 billion dollars in 2020. This was 1.5 per cent more than in 2019. Chinese arms companies with 13 per cent share of total Top 100 arms sales comes in the second highest position in 2020. The rise of China as a major arms producer has been driven by its aim to become more self-reliant in weapon production and by the implementation of ambitious modernization programmes. All five Chinese arms companies ranked among the top 20, with three in the top 10. NORINCO (ranked 7th) is China’s largest arms company and land systems specialist. NORINCO’s arms sales rose by 12 per cent in 2020. AVIC (ranked 8th), China’s main military aircraft producer, declined by 14 per cent in 2020 to 17.0 billion dollar. However, the decrease is probably due to exchange rate fluctuations as its arms sale increased in nominal terms. CETC (rank nine ) is China’s leading producer of military electronics. It had a sales of 14.0 billion dollar (a fall by 6.0 per cent in 2020). CASIC (ranked 12th), one of China’s leading producers of missile and space systems, also recorded a drop in arms sales. It’s sales of 11.9 billion dollar in 2020 was 2.8 per cent lower than in 2019. The fifth Chinese company in the Top 100 was CSGC (ranked 20th), which manufactures military vehicles. CSGC’s arms sales rose by 13 per cent in 2020 to 5.4 billion dollar.

EUROPE

The report from SIPRI notes that 26 European companies ranked in the Top 100 in 2020 and they accounted for 21 per cent of total arms sales (109 billion Dollar). This was up by 1.0 per cent compared with 2019. Of these firms, seven are headquartered in the United Kingdom, six in France, four in Germany, two in Italy and one each in Norway, Poland, Spain, Sweden and Ukraine.

The arms sales of the seven companies based in the United Kingdom amounted to 37.5 billion dollar in 2020 equivalent to a share of 7.1 per cent of the Top 100 total. Their arms sales were 6.2 per cent higher in 2020 than in 2019. BAE Systems is the only European arms company to rank in the top 10. The six arms companies in France with combined arms sales of 24.7 billion dollar accounted for 4.7 per cent of total Top 100 arms sales. This was a decrease of 7.7 per cent between 2019 and 2020. Four of the six companies included in the ranking saw a decrease in arms sales. Italy accounted for 2.6 per cent of the Top 100 leading arms companies with a total amount of 13.8 billion dollar sales. The arms sales of the four ranked companies headquartered in Germany reached 8.9 billion dollar in 2020, equivalent to 1.7 per cent of the total for the Top 100.

 RUSSIA

The nine Russian companies in the ranking accounted for five per cent of total Top 100 arms sales in 2020. Their combined arms sales fell from 28.2 billion dollar in 2019 to 26.4 billion in 2020, a decrease of 6.5 per cent. Russian arms sales fell in 2020 even though the Russian Government stated that it had provided assistance to the arms industry in order to dampen the negative effects of the Covid-19 pandemic.

OTHER COUNTRIES

The three companies based in Israel had arms sale of 10.4 billion dollar or 2.0 per cent of the Top 100 total. The sales increased by 3.3 per cent compared with 2019. This growth was mainly due to increased sales of military aircraft equipment and the acquisition of the Harris Night Vision business. The aggregated arms sales of the five companies headquartered in Japan were 9.9 billion dollars, equivalent to 1.9 per cent of the total for the Top 100. Their combined arms sales rose by 2.7 per cent in 2020. With combined arms sale of $6.5 billion in 2020, the four companies based in South Korea accounted for 1.2 per cent of the Top 100 total. Their arms sales were 4.6 per cent higher in 2020 than in 2019. Three companies based in India were included in the 2020 ranking. Their aggregated arms sales of $6.5 billion were 1.7 per cent higher in 2020 than in 2019 and accounted for 1.2 per cent of the Top 100 total.

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