Global Arms Sales Hit New Highs Amid Pandemic: Report

A company sign is posted at a Raytheon Co. campus in El Segundo, Calif., on June 10, 2019. Mario Tama/Getty Images

The top 100 largest arms dealers earned $531 billion in 2020, according to the Stockholm International Peace Research Institute (SIPRI).

The 2020 earnings marked the sixth straight year of growth and a 17 percent increase from 2015, when SIPRI began tracking Chinese firms.

The 41 U.S. contractors on the list sold the most arms and military services, earning $285 billion—a 1.9 percent increase over 2019, SIPRI said. Of those, Lockheed Martin Corp., Raytheon Technologies, Boeing Co., Northrop Grumman Corp, and General Dynamics Corp. accounted for more than a combined $180 billion in sales during 2020—about one-third of all sales.

Chinese firms were the second-most active, with the country’s five largest companies selling an estimated combined $66.8 billion of arms in 2020—1.5 percent more than in 2019, according to the Stockholm-based conflict research institute.

“In recent years, Chinese arms companies have benefited from the country’s military modernization programs and focus on military-civil fusion,” said SIPRI senior researcher Nan Tian. “They have become some of the most advanced military technology producers in the world.”

SIPRI noted that other Chinese companies may have arms sales high enough to rank among the Top 100, but said there is insufficient data to include them in the ranking.

The 26 European arms companies in the Top 100 jointly accounted for $109 billion in sales. The seven largest British firms made up $37.5 billion of those sales—up by 6.2 percent over 2019—dominated by BAE System’s $24 billion.

In contrast to the growth in the United States, Europe, and China, arms sales from Russia fell to $26.4 billion in 2020 from $28.2 billion in 2019.

“This marks a continuation of the downward trend observed since 2017, when arms sales by Russian companies in the Top 100 peaked,” SIPRI stated.

“Some of the sharpest declines in arms sales among the Top 100 were recorded by Russian firms. This coincided with the end of the State Armament Program 2011–20 and pandemic-related delays in delivery schedules,” the research center stated.

The arms sales of companies in the Top 100 based outside the United States, China, Russia, and Europe totaled $43.1 billion in 2020—an increase of 3.4 percent since 2019, SIPRI added.

SIPRI noted that lockdowns disrupted the arms industry in 2020.

“Thales, for example, ascribed a drop in arms sales of 5.8 percent to lockdown-induced disruptions in the spring of 2020,” SIPRI stated. “Some companies also reported supply chain disruptions and delayed deliveries.”

However, an increase in government spending more than made up for lockdown-related disruptions, according to SIPRI.

‘The industry giants were largely shielded by sustained government demand for military goods and services,’ said Alexandra Marksteiner, a researcher with SIPRI’s military expenditure and arms production program. “In much of the world, military spending grew and some governments even accelerated payments to the arms industry in order to mitigate the impact of the COVID-19 crisis.”

With the 2022 U.S. military budget set to be some $768 billion—an increase from the estimated $733 billion being spent this year and the $714 billion in 2020—U.S. contractors could see more earnings increases in future SIPRI reports.

Many national security officials are advocating for an indefinite 5 percent increase in military spending to both maintain the global war on terror and confront China and Russia.

However, critics have argued that an indefinite 5 percent increase would soon balloon out of control—costing an extra $1.2 trillion over 10 years above the current long-term budget forecast.

Advocates for spending cuts have encouraged policymakers to follow a recent Congressional Budget Office (CBO) report, which found that the Pentagon can save $1 trillion over 10 years by cutting the number of active-duty troops while maintaining reserves, reallocating global resources from relatively safe areas to where perceived threats are located, and relying more heavily on alliances.

“The new CBO report marks a refreshing departure from the cries for more Pentagon spending emanating from Capitol Hill, and lays out practical steps for achieving real reductions in military outlays,” William Hartung, director of the Arms and Security Program at the Center for International Policy, said when the report was published in October. “It should mark the beginning of a debate over how much to reduce the Pentagon budget, not whether to do so.”