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The armaments giants spared by the Covid-19 economic crisis

The world arms giants were largely spared last year by the effects of the economic crisis caused by the Covid-19, with a new record of their sales increasing for the sixth consecutive year.

The turnover of the hundred largest groups in the defense sector in 2020 reached a new high of 531 billion dollars (470 billion euros), of which more than half by American companies, according to a report by the Stockholm International Peace Research Institute (Sipri) published Monday December 6.

This represents a 1.3% increase over one year in their sales of arms and military services while at the same time the world economy has fallen by more than 3%, points out the Swedish-based research organization. whose work is the benchmark in this area.

The turnover of the hundred largest armaments groups has been rising steadily since 2015, with a total increase of 17%, according to Sipri. Growth was weaker in 2020, however, than in 2019, when the top 100 saw sales jump 6.7%.

Lockheed Martin consolidates its first place

With the exception of Russian companies (-6.5% of sales) and French (-7.7%), the other main nations saw their large companies progress last year. Five American giants once again monopolize the top of the world ranking: Lockheed Martin (F-35 combat planes, missiles…) consolidated its first place with arms sales of 58.2 billion dollars, ahead of Raytheon Technologies new number two after a big merger, then Boeing, Northrop Grumman and General Dynamics. The British BAE Systems is the first European (6e) with Airbus (11e). The Chinese Norinco (7e) Avic (8e) and ECCC (9e) and the American L3Harris (10e) round out the top 10.

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According to the institute, the good resistance of large companies to the difficult economic situation in 2020 is explained in particular by the budget support policies taken in the face of the pandemic and the effects of lockdowns. The area “Has been largely protected by the continued demand from governments for military equipment”, underlines Sipri. The armaments market, characterized by orders spread over several years, is also less sensitive to economic fluctuations.

But the defense industry has not been totally immune to the health crisis, especially on the industrial side. “In many cases, measures taken to curb 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 (14e), which attributed to confinement the 6% drop in its 2020 turnover.

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The supply logistics problems having multiplied in 2021, “It is possible that these difficulties are reflected in their sales” this year, as for example Lockheed Martin plans, points out to Agence France-Presse (AFP) Lucie Béraud-Sudreau, responsible for monitoring military spending at Sipri.

Progress on the part of China

Behind the 41 US companies in the Top 100 and their share of 54%, 26 European companies captured 21% of total sales. China (13% of the total, with five companies) and Russia (5%, nine companies) follow. When counting the European countries separately, China is the second country and the United Kingdom third (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 its desire to become more self-dependent in its production and because of ambitious modernization programs” of its armies, underlines Sipri.

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About fifteen other countries are home to companies appearing 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 having civilian activities, such as Boeing or Airbus, only their military sales are recorded by Sipri.

The World with AFP

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