Since the conclusion of World War II, the United States and a number of Western European nations have maintained extremely costly military industrial complexes — both in peacetime and during the numerous other conflicts since. The United States is far and away the largest defense market, and U.S.-based companies disproportionately comprise the top global arms producers.
Global military sales from the 100 largest dealers totalled $401 billion in 2014, down by 1.5% — but still substantially higher than in 2002 — according to the latest estimates released by the Stockholm International Peace Research Institute (SIPRI). 24/7 Wall St. reviewed the 10 companies with the largest military equipment sales worldwide. Lockheed Martin, with annual arms sales of $37.5 billion, maintains its dominant and long-standing lead as the largest corporate arms dealer in the world.
Lockheed Martin is one of only two arms sellers among the top 10 to have reported an increase in military equipment revenue in 2014. In an interview with 24/7 Wall St., Aude Fleurant, director of the Arms and Military Expenditure Programme at SIPRI, explained that the global decline was driven by weak economic conditions in the U.S. and Europe, where arms dealers have an outsized impact on global trends.
North America is by far the largest military market on the planet. The continent spent $40.5 billion less on defense in 2014 than in 2013. The rest of the world spent $32.9 billion more in the same period, leading to a global decline of $7.6 billion in military expenditures overall.
These companies are truly massive and are by no means failing, however. Also, while sales at the world’s top arms dealers declined, arms sales at other companies around the world are on the rise. “We’re not exactly looking at the kind of creeping de-militarization by reduction of procurement budgets,” Fleurant said.
Notably, Russian-based arms dealers Almaz-Antey and United Aircraft Corp. narrowly missed this year’s list, at 11th and 15th respectively. The global drop in oil prices, as well as the depreciation of the ruble and international sanctions in the case of Russia, will likely impact sales next year. Fleurant added that even if sales from non-Western arms companies were to continue to increase, the list of top arms dealers is not likely to change substantially any time soon.
“[These companies] have been there for a very long time, they know how to do business in this market and they know what to expect. They’re familiar with long cycles of production. Barriers to entry to any other company in this market are very, very, very high,” Fleurant explained.
The arms industry is uniquely dependent on national governments. The weapons produced by these companies are extremely costly. One of Lockheed Martin’s F-35 combat aircrafts, for example, costs nearly $100 million. Also, not only are governments frequently the largest customers of these companies, but also the majority of these sales need to be approved by government bodies.
“This is not an industry that works like any other,” Fleurant noted. For these companies, “no big decisions can be made without approval from relevant authority.”
While most of the world’s top defense companies rely heavily on arms sales, this is not always the case. Arms sales comprise more than half of total sales for seven of the 10 companies. For Boeing, Airbus Group, and United Technologies Corp., arms sales comprise less than a third of overall revenue.
To determine the companies profiting the most from war, 24/7 Wall St. analyzed data provided by the Stockholm International Peace Research Institute (SIPRI) in its annual SIPRI Top 100, a review of the the largest arms-producing and military services companies by arms sales. Due to a lack of sufficient data, SIPRI excluded Chinese companies from the report. Employment data, profit figures, and arms sales as a percentage of total sales also came from the SIPRI report.
These are the 10 companies profiting the most from war.