20 Companies Profiting the Most From War
It is no coincidence that the majority of the largest defense contractors in the world are based in the United States. In an email exchange with 24/7 Wall St., Dr. Aude Fleurant, programme director at SIPRI, explained that “as a general rule, arms companies make a significant share of their arms sales with their national ministry of defence or equivalent agency.” And the Department of Defense’s demand for arms and military services is immense.
The United States spends more on defense than the next eight biggest spenders combined — including countries like Russia, China, France, and the United Kingdom. “The U.S. is by far the largest market in the world for arms,” said Fleurant, “so the size of demand will correlate with companies’ arms sales.” Reflecting the large U.S. defense expenditure, arms revenue of American companies account for over 73% of all arms sales of the 20 contractors on this list.
While the U.S. government is the largest client of American defense contractors, weapons makers in other countries have to rely on sales outside of their domestic market. “Contrary to the U.S., the French national market is narrow and insufficient to support the industry therefore, exports are being approved sometimes to countries which are considered problematic,” Fleurant said. Thales is the only French company to make the list of the 20 largest defense contractors.
One major factor driving arms sales are wars. “There are a number of wars now into which several countries are involved, including the U.S.” Fleurant said. These conflicts include the intervention in Syria and ongoing civil wars in Libya and Yemen. “Specific military equipment is in demand for these wars, this tends to increase arms sales.”
Another factor driving arms sales and this year’s uptick in defense company revenue is geopolitical tensions and threat perception. “Regional tensions such as the ones we have been observing for several years in the South China Sea and the East China Sea regarding territorial sovereignty over some part of the sea have led countries in that region to import new weapons such as submarines and maritime patrol aircraft, creating demand,” Fleurant said.
Racking up a tab with defense companies is not difficult. A single F-35 fighter jet from Lockheed Martin costs just under $100 million, and a single Northrop Grumman B-2 bomber cost an estimated $2 billion, adjusted for inflation.
To identify the companies profiting the most from war, 24/7 Wall St. reviewed data provided by the Stockholm International Peace Research Institute 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 and are for the 2016 calendar year. Other company-specific data were obtained from annual financial reports.