Sales by major arms makers rose last year due to the wars in Ukraine and Gaza and tensions in Asia, with sharp increases for manufacturers based in Russia and the Middle East, a report said on Monday.
Sales of arms and military services by the world’s top 100 arms companies totaled $632 billion in 2023, up 4.2 percent, according to a report by the Stockholm International Peace Research Institute (SIPRI).
Revenues fell in 2022 as the world’s arms makers struggled to meet increased demand, but many of them were able to ramp up production last year, the report’s authors noted.
As a sign of this increase in demand, all 100 monitored companies achieved sales of more than one billion dollars last year for the first time.
“There was a significant increase in arms revenues in 2023, and this is likely to continue in 2024,” Lorenzo Scarazzato, SIPRI’s military expenditure and arms production researcher, said in a statement.
Sales from the world’s top 100 arms companies “still did not fully reflect the scale of demand, and many companies have launched hiring drives, suggesting they are optimistic about future sales,” Scarazzato added.
Smaller producers have been more efficient in meeting demand linked to the wars in Gaza and Ukraine, rising tensions in East Asia and rearmament programs in other regions, the institute said.
“Many of them specialize in either components of something or building systems that require one set of supply chains,” which allows them to react more quickly, Nan Tian, ​​director of SIPRI’s Military Spending and Weapons Production program, told AFP.
Among the leading manufacturers, US companies posted sales growth of 2.5 percent last year and still account for half of the world’s gun revenues, with 41 US gun manufacturers in the top 100 in the world.
On the other hand, Lockheed Martin and RTX (formerly Raytheon Technologies), two of the world’s largest arms manufacturers, recorded revenue declines of 1.6 and 1.3 percent, respectively.
Such giants “often depend on complex, multi-layered supply chains, which has made them vulnerable to protracted supply chain challenges in 2023,” Tian said.
Russian Rostec is growing
In Europe, home to 27 of the top 100, arms manufacturers saw an average increase of just 0.2 percent.
But European groups that make complex weapons systems were still in the process of fulfilling old contracts last year, so revenues do not reflect the influx of orders since then.
“At the same time, a number of other European manufacturers saw significant growth in arms revenues, driven by demand related to the war in Ukraine, particularly for ammunition, artillery and air defense and land systems,” SIPRI noted.
The figures for Russia, although incomplete, give a clear signal that the economy is increasingly turned to war.
Sales of the two Russian groups on the scale rose by 40 percent, largely thanks to a 49 percent increase in sales by state conglomerate Rostec, the report said.
Manufacturers in the Middle East were buoyed by the war in Ukraine and the first months of Israel’s offensive in Gaza after the October 7, 2023, attack by Hamas — and saw an average increase in sales of 18 percent.
The three Israeli manufacturers on the list posted record sales of $13.6 billion, up 15 percent from a year earlier, while three Turkish-based groups, such as drone maker Baykara, saw sales jump 24 percent — boosted by Ukrainian and Turkish investments in your defense.
In Asia, the rearmament trend was particularly visible in the sales growth of four South Korean manufacturers, with average revenue growth of 39 percent, and five Japanese companies, which recorded average growth of 35 percent.
Nine Chinese manufacturers, meanwhile, saw revenue rise by just 0.7 percent “amid a slowing economy,” but their sales still totaled $103 billion.
