Ukraine war is not all good news for arms industry – DW – 12/05/2022

The world’s top 100 arms producers continued to increase sales in 2021, but supply issues are slowing growth in this sector, according to a new report from the Stockholm International Peace Research Institute (SIPRI).

The slowdown caused by the COVID-19 pandemic played a role in limiting growth to 1.9% in 2021 compared to 2020, a report published on Monday noted. SIPRI predicted that the war in Ukraine could cause similar problems for the industry in the near to medium term.

What was predicted by the report on Ukraine

While the invasions of Russia and Ukraine and the Western response have driven demand for weapons, they have left manufacturers facing challenges in obtaining raw materials and parts.

SIPRI, an international institute that specializes in research on conflicts, weapons, arms control and disarmament, noted that Russia is a major exporter of materials used in the production of weapons.

“This could derail ongoing efforts by the United States and Europe to bolster their armed forces and replenish their forces after sending billions of dollars worth of ammunition and other weapons to Ukraine,” the report said.

Although Russian companies increased production because of the war, the SIPRI report noted that they had difficulty accessing semiconductors. Companies are also affected by war-related sanctions, for example when it comes to receiving payments.

Also Read :  Global Economy Slows, but Seems to Be Faring Better Than Feared

“Increasing production takes time,” said Diego Lopes da Silva, SIPRI’s senior researcher. “If the disruption of the supply chain continues, it may take several years for some of the major weapons producers to meet the new demand created by the war in Ukraine.”

Who profits from the global arms trade?

To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video

What happens in 2021

The main report focused on business patterns in 2021, when it found that supply issues related to the pandemic appear to be growing slowly.

“We can expect even greater growth in the arms market in 2021 despite ongoing supply issues,” said Lucie Beraud-Sudreau, director of SIPRI’s military spending and arms production program. “Both large and small equipment companies say their sales have been affected this year. Other companies, such as Airbus and General Dynamics, also reported labor shortages.”

North America

United States companies dominate the list of top 100 equipment sellers, with 40 firms based there. They also took more than half of the market, 299 billion dollars ($284 billion) of the 592 billion worldwide. As of 2018, five of the top 100 companies are based in the United States.

North America was the only region to see a decline in equipment sales compared to 2020. The decline in real terms by 0.8% was partly due to higher inflation in the US economy in 2021.

Europe

In 2021, 27 of the top 100 arms suppliers were based in Europe. This region saw sales of integrated arms increase by 4.2% compared to 2020, totaling 123 billion dollars.

Although it was a profitable year for shipbuilders, aircraft manufacturers in the region did not fare so well.

“Most European companies working in military aerospace have reported losses in 2021, which they blame on supply disruptions,” said Lorenzo Scarazzato, SIPRI researcher. In contrast, European shipbuilders seem less affected by the pandemic and have managed to increase their sales in 2021.

With equipment sales of $4.5 billion, Rheinmetall (ranked 31) remained Germany’s largest equipment company. However, sales of its arms decreased by 1.7% in 2021 due to the pandemic and disruption of the supply chain.

The US unveils a new stealth bomb

To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video

In Asia

The sales of the combined arms of the 21 companies in Asia and Oceania included in the top 100 reached 136 billion in 2021 – an increase of 5.8% over 2020. The eight listed Chinese arm companies have a total arm value of 109 billion dollars, an increase of 6.3%.

These include China’s CSSC, now the world’s largest military shipbuilder, and an arms sale worth $11.1 billion, following the merger of two existing companies.

The combined sales of the four South Korean companies in the top 100 grew by 3.6% compared to 2020, reaching 7.2 billion dollars. They include a 7.6% increase in the sales of cross-sector conglomerate Hanwha, which is expected to see further growth after a major arms deal with Poland following Russia’s invasion of Ukraine.

It was the first year that the Taiwanese firm, NCSIST, specialized in missiles and military electronics, appeared on the list – with sales of arms of 2 billion dollars.

Russia and the Middle East

Six Russian companies were included in the top 100 of 2021 with sales that reached 17.8 billion dollars – an increase of 0.4% over 2020. SIPRI noted that, before Russia’s invasion of Ukraine, there were signs that a slowdown was common throughout the Russian arms industry. .

Five companies based in the Middle East generated $15.0 billion in equipment sales in 2021. This was an increase of 6.5% compared to 2020, the fastest growth rate of all regions represented in the Top 100.

Edited by: Sean Sinico

Source

Leave a Reply

Your email address will not be published.