Sale of gun giants spared by the Covid economic crisis

The global arms giants were largely spared the effects of the economic crisis caused by the Covid last year, with their sales hitting a new record for the sixth consecutive year.

The turnover of the 100 largest groups in the defense sector reached a new all-time high of USD 531 billion in 2020, more than half of which by US companies, according to a published report by the International Peace Research Institute (Sipri). . on Monday.

Also read: Global arms sales up nearly 5%

This represents a 1.3% year-on-year increase in their sales of arms and military services, while at the same time the global economy has fallen by more than 3%, points out the Sweden-based research body, whose works are benchmarks in what matters. .

Top US Companies

The turnover of the 100 largest arms groups has been steadily increasing since 2015, with a total increase of 17%, according to Sipri. However, growth in 2020 was weaker than in 2019, when sales in the top 100 rose 6.7%. With the exception of Russian (-6.5% turnover) and French (-7.7%) companies, the other major countries saw their large companies advance last year.

Five American giants once again monopolize the top of the world rankings: Lockheed-Martin (F-35 fighter jets, missiles, etc.) consolidated its first place with arms sales of USD 58.2 billion (EUR 51.5 billion), ahead of Raytheon Technologies, new number two after major merger, then Boeing, Northrop Grumman and General Dynamics.

The British BAE Systems is the first European (6th) with Airbus (11th). The Chinese Norinco (7th) Avic (8th) and CETC (9th) and the American L3Harris (10th) complete the top 10.

Supply chains disrupted by Covid

According to the institute, the strong resistance of large companies to the difficult economic situation in 2020 is mainly explained by the budget support policy adopted in light of the pandemic and the consequences of incarceration. The sector “has been largely protected by continued government demand for military equipment,” Sipri said.

The arms market, which is characterized by orders spread over several years, is also less sensitive to the vagaries of the economic situation.

But the defense industry is not completely immune to Covid, especially on the industrial aspect. “In many cases, the measures taken to contain the virus have disrupted supply chains and delayed deliveries,” notes Sipri. The report thus cites the case of Thales, the leading French company – excluding Airbus – in the ranking (14th), which attributed the 6% drop in sales in 2020 to curtailment.

As the logistical problems with the supply have increased in 2021, “it is possible that these difficulties will be reflected in their sales this year”, as planned, for example, Lockheed Martin, emphasizes to AFP Lucie Béraud-Sudreau, responsible for supervising the military expenditure at Sipri.

China’s emergence as an arms producer

Behind the forty-one US companies in the Top 100 and their 54% share, 26 European companies accounted for 21% of total revenue. This is followed by China (13% of the total, with five companies) and Russia (5%, with nine companies). If we count the European countries separately, China is the second country and the United Kingdom the third country (seven companies, 7.1%), ahead of Russia (nine companies, 5%) and France (six companies, 4.7%) .

“China’s progress as a major arms producer has been driven by a desire to become more independent in its production and by ambitious modernization programs for its militaries,” Sipri said.

Also read: Arms exports stabilize, a first since the turn of the century

About fifteen other countries are home to companies that feature in the World Top 100: Japan (5), Germany and South Korea (4), Israel and India (3), Italy (2) as well as Canada, Singapore, Turkey, Sweden , Poland, Spain, Ukraine and the United Arab Emirates (1).

Many groups also have civilian activities, such as Boeing or Airbus, only their military sales are counted by Sipri.

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