“The combined arms sales of the world’s largest arms-producing and military services companies (the SIPRI Top 100) were $531 billion in 2020 (see annex 1). This represents an increase of 1.3 per cent on their arms sales in 2019 (see figure 1). Despite this being the smallest increase in arms sales among the Top 100 in three years, the data shows a continuous upward trend since 2015, roughly correlating with rising global military expenditure levels. The arms sales of the Top 100 were 17 per cent higher in 2020 than in 2015 (the first year for which SIPRI included Chinese firms in its ranking).”
“THE EFFECTS OF COVID-19 ON GLOBAL ARMS PRODUCTION
Global arms production was largely resilient against the shock of the Covid-19 pandemic and the resulting economic downturn. While the global economy contracted by 3.1 per cent in 2020, the aggregated arms sales of the Top 100 increased.”
“REGIONAL DEVELOPMENTS IN THE TOP 100
With 41 arms companies, the USA hosted the highest number of companies ranked in the Top 100 of any country worldwide. Together, their arms sales amounted to $285 billion, an increase of 1.9 per cent compared with 2019 (see figure 2). US companies accounted for 54 per cent of the combined arms sales of the Top 100 (see figure 3). Since 2018, the top five arms companies in the ranking have all been based in the USA. Lockheed Martin, by far the largest arms company in the world, has occupied the top rank every year since 2009. In 2020 its revenue from arms sales and military services totaled $58.2 billion or 11 per cent of the Top 100’s total arms sales. Of the companies included in the 2020 ranking, Lockheed Martin recorded the largest absolute year-on-year growth in arms sales of $4.2 billion (or 7.7 per cent in real terms). Raytheon Technologies is the world’s second largest arms company with arms sales of $36.8 billion. It was formed by the merger of Raytheon Company and United Technologies Corporation in 2020. Compared with the combined (pro forma) arms sales of these two firms in 2019, its arms sales in 2020 were 5.7 per cent lower.
Boeing, one of the world’s largest military aerospace manufacturers, ranked third. Due to the Covid-19 pandemic and the impact of government mandated lockdowns and travel restrictions on commercial aviation, Boeing recorded a loss in total sales of $19.6 billion in 2020. Its arms sales also decreased (by 5.8 per cent) from $34.1 billion in 2019 to $32.1 billion in 2020.
Northrop Grumman ranked fourth with arms sales of $30.4 billion or 5.7 per cent of the Top 100 total. General Dynamics was in fifth position with arms sales of $25.8 billion, equivalent to 4.9 per cent of the
Mergers and acquisitions in the US arms industry
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. This has prompted a wave of mergers and acquisitions in the US arms industry in recent years, with some companies looking to broaden their product portfolios to gain a competitive edge when bidding for contracts (see box 1).
The all-stock merger-of-equals between Raytheon Company and United Technologies Corporation, which was finalized in April 2020, was one of the largest mergers in the history of the arms industry. The multibillion merger of L3 Technologies and Harris Corporation was completed a year earlier, in June 2019. The resulting company, L3Harris Technologies, ranked 10th in 2020. The trend continued in 2021 with the merger of Peraton and Perspecta, valued at $7.1 billion, as well as the acquisition of FLIR Systems by Teledyne Technologies for $8.2 billion.
The combined arms sales of the five Chinese companies included in the ranking amounted to an estimated $66.8 billion in 2020—1.5 per cent more than in 2019. With a 13 per cent share of total Top 100 arms sales, Chinese arms companies had the second highest volume of aggregated arms sales in
2020, behind US firms and ahead of British companies. The rise of China as a major arms producer has been driven by its aim to become more self-reliant in weapons production and by the implementation of ambitious modernization programs. All five Chinese arms companies ranked among the top 20, with three in the top 10……”
“There were 26 European companies ranked in the Top 100 in 2020. Together, they accounted for 21 per cent of total Top 100 arms sales or $109 billion, 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. Two of the 26 companies, Airbus and MBDA, are categorized as ‘trans-European’ since their ownership and control structures are located in more than one European country….”
“The nine Russian companies in the ranking accounted for 5.0 per cent of total Top 100 arms sales in 2020.5 Their combined arms sales fell from $28.2 billion in 2019 to $26.4 billion in 2020—a decrease of 6.5 per cent. This marks a continuation of the downward trend observed since 2017, when the aggregated arms sales of these nine firms peaked at $31.5 billion. 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…..”
ABOUT THE AUTHORS
Alexandra Marksteiner (Austria/Germany) is a Researcher with the SIPRI Military
Expenditure and Arms Production Programme. Dr Lucie Béraud-Sudreau (France) is
the programme’s Director. Dr Nan Tian (South Africa) is a Senior Researcher and
Dr Diego Lopes da Silva (Brazil) is a Researcher with the programme. Alexandra
Kuimova (Russia) is a Researcher with the SIPRI Arms Transfers Programme.