Missiles, guns and radars, tanks and fighter planes as if it were raining… Every day brings its share of requests for military equipment from the Ukrainian government – often accepted, sometimes followed by refusal from Westerners. This avalanche – kyiv figures between 120 and 140 the number of heavy armored vehicles promised – gives the feeling that the stewardship will follow, in other words that Americans and Europeans will be able to meet the demand and that a rain of dollars and euros will fall on their defense industry.
Nothing like that happened in 2022. And 2023 isn’t expected to be much better, despite filling order books. Boeing’s defense division lost money again, mostly due to industrial problems with its KC-46 tanker aircraft. Lockheed Martin, world number one, forecasts a stagnation of its sales in 2023, between 65 billion and 66 billion dollars (60 billion to 61 billion euros).
These major Pentagon suppliers, along with Raytheon Technologies and Northrop Grumman, have been warning for months that shortages of labor and components (including microprocessors) will curb production needed to bolster defenses and offset deliveries to kyiv.
“Long term growth”
In Europe, “we must now, entering a period of war, know how to produce some of our equipment faster and stronger”, underlined the French President, Emmanuel Macron, in July 2022, at the NATO summit. The Directorate General for Armaments is working on “simplify and lighten the standards” equipment to respond more quickly to the needs of the armies.
The 2024-2030 military programming law, endowed with 413 billion euros, opens up prospects for manufacturers, who are also subject to tensions in certain professions, shortages and the surge in raw materials. They demand orders, which often only arrive in dribs and drabs. But they can calmly await the dividends of war. The Russian-Ukrainian conflict has accelerated the rearmament of Westerners, which began in 2015. Credits will increase by 10% in the United States in 2023.
“This budgetary development is positive for the future, and we expect growth to materialize in the longer term, starting in 2024”, welcomed the CEO of Lockheed Martin, James Taiclet, presenting his 2022 results. The Old Continent, India and Japan are also stepping up their efforts. The arms market is already colossal, with sales of $592 billion in 2021 (+2%) for the top hundred global companies. What would happen if China invaded Taiwan?