Arms industry

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Workers assemble Browning-Inglis Hi-Power pistols at the John Inglis munitions plant, Canada, April 1944

The arms industry is a global business that manufactures weapons and military technology and equipment. It consists of commercial industry involved in research, development, production, and the service of military material, equipment, and facilities. Arms producing companies, also referred to as defense contractors or military industry, produce arms mainly for the armed forces of states. Departments of government also operate in the arms industry, buying and selling weapons, munitions and other military items. Products include guns, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, and more. The arms industry also conducts significant research and development and provides other logistics and operations support.

It is estimated that yearly, over 1.5 trillion US dollars are spent on military expenditures worldwide (2.7% of World GDP).[1] This represents a decline from 1990 when military expenditures made up 4% of world GDP. Part of this goes to the procurement of military hardware and services from the military industry. The combined arms sales of the top 100 largest arms producing companies amounted to an estimated $315 billion in 2006.[2] In 2004 over $30 billion were spent in the international arms trade (a figure that excludes domestic sales of arms).[3] The arms trade has also been one of the sectors impacted by the credit crunch, with total deal value in the market halving from US$32.9 billion to US$14.3 billion in 2008.[4] Many industrialized countries have a domestic arms industry to supply their own military forces. Some countries also have a substantial legal or illegal domestic trade in weapons for use by its citizens. An illegal trade in small arms is prevalent in many countries and regions affected by political instability. The Small Arms Survey estimates 875 million small arms in circulation worldwide, produced by more than 1,000 companies from nearly 100 countries.[5]

Contracts to supply a given country's military are awarded by the government, making arms contracts of substantial political importance. The link between politics and the arms trade can result in the development of what U.S. President Dwight D. Eisenhower described as a military-industrial complex, where the armed forces, commerce, and politics become closely linked, similarly to the European defence procurement. Various corporations, some publicly held, others private, bid for these contracts, which are often worth many billions of dollars. Sometimes, such as the contract for the new Joint Strike Fighter, a competitive tendering process takes place, where the decision is made on the merits of the design submitted by the companies involved. Other times, no bidding or competition takes place.

Unimog truck at IDEF in 2007.

History[edit]

Painting shells in a shell filling factory during World War I.

Trade in arms and technological diffusion is as old as the history of war itself. During the early modern period, France, England, Netherlands and some states in Germany became self-sufficient in arms production, with diffusion and migration of skilled workers to more peripheral countries such as Portugal and Russia.

The modern arms industry emerged in the second half of the nineteenth century as a product of the creation and expansion of the first large military-industrial companies. As smaller countries (and even newly industrializing countries like Russia and Japan) could no longer produce cutting-edge military equipment with their indigenous resources and capacity, they increasingly began to contract the manufacture of military equipment, such as battleships, artillery pieces and rifles to foreign firms.

In 1854, the British government awarded a contract to the Elswick Ordnance Company of industrialist William Armstrong for the supply of his latest breech loading rifled artillery pieces. This decision galvanised the private sector into weapons production, with the surplus being increasingly exported to foreign countries. Armstrong became one of the first international arms dealers, selling his weapon systems to governments across the world, from Brazil to Japan.[6] In 1884 he opened a shipyard at Elswick to specialise in warship production—at the time, it was the only factory in the world that could build a battleship and arm it completely.[7] The factory produced warships for many navies, including the Imperial Japanese Navy—several Armstrong cruisers played an important role in defeating the Russian fleet at the Battle of Tsushima in 1905.

In 1885, France decided to capitalize on this increasingly lucrative form of trade and repealed its ban on weapon exports. The regulatory framework for the period up to the First World War was characterized by a laissez-faire policy that placed little obstruction in the way of weapons exports. Due to the carnage of World War I, arms traders began to be regarded with odium as "merchants of death", and were accused of having instigated and perpetuated the war in order to maximise their profits from arms sales. An inquiry into these allegations in Britain failed to find evidence to support these allegations. However, the sea change in attitude about war more generally, meant that governments began to control and regulate the trade themselves.

Stacks of shells in the shell filling factory at Chilwell during World War I.

The volume of the arms trade greatly increased during the 20th century and it began to be used as a political tool, especially during the Cold War where the United States and the USSR supplied weapons to their proxies across the world, particularly third world countries (see Nixon Doctrine).[8]

Sectors[edit]

The AK series of weapons have been produced in greater numbers than any other firearm and have been used in conflicts all over the world.

Land-based weapons[edit]

This category includes everything from light arms to heavy artillery, and the majority of producers are small. Many are located in third world countries. International trade in handguns, machine guns, tanks, armored personnel carriers, and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many weapons fall into the hands of organised crime, rebel forces, terrorists, or regimes under sanctions.[9]

Small arms[edit]

The Control Arms Campaign, founded by Amnesty International, Oxfam, and the International Action Network on Small Arms, estimated in 2003 that there are over 639 million small arms in circulation, and that over 1,135 companies based in more than 98 different countries manufacture small arms as well as their various components and ammunition.[10]

Aerospace systems[edit]

A T-45 Goshawk on the assembly line at McDonnell Douglas.

Encompassing military aircraft (both land-based and naval aviation), conventional missiles, and military satellites, this is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the western world and Russia, with the United States easily in first place. Prominent aerospace firms include Dassault Aviation, Sukhoi, Mikoyan, EADS, Finmeccanica, Thales Group, Lockheed Martin, Northrop Grumman, Boeing, and BAE Systems. There are also several multinational consortia mostly involved in the manufacturing of fighter jets, such as the Eurofighter. The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter.[9]

Naval systems[edit]

All of the world's major powers maintain substantial maritime forces to provide a global presence, with the largest nations possessing aircraft carriers, nuclear submarines and advanced anti-air defense systems. The vast majority of military ships are conventionally powered, but some are nuclear-powered. There is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments.[9]

World's largest defense budgets[edit]

This is a list of the fifteen countries with the highest defence budgets for the year 2013. The information is from the Stockholm International Peace Research Institute.

List by the Stockholm International Peace Research Institute (2013)[11]
RankCountrySpending ($ Bn.)% of GDPWorld share (%)
World total1747.02.4100
1United States United States640.03.836.6
2China People's Republic of China188.02.010.8
3Russia Russia87.84.15.0
4Saudi Arabia Saudi Arabia67.09.33.8
5France France61.22.23.5
6United Kingdom United Kingdom57.92.33.3
7Germany Germany48.81.42.8
8Japan Japan48.61.02.8
9India India47.42.52.7
10South Korea South Korea33.92.81.9
11Italy Italy32.71.61.9
12Brazil Brazil31.51.41.8
13Australia Australia24.01.61.4
14Turkey Turkey19.12.31.1
15United Arab Emirates United Arab Emirates19.04.71.1

World's largest arms exporters[edit]

The units in this table are so-called trend indicator values expressed in millions of U.S. dollars at 1990s prices. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid. Ordered by descending 2013 values. The information is from the Stockholm International Peace Research Institute.[11]

2013 rankSupplierArms exports
1 Russia8283
2 United States6153
3 China1837
4 France1489
5 United Kingdom1394
6 Germany972
7 Italy807
8 Israel773
9 Spain605
10 Ukraine589
11 Sweden505
12 Belarus338
13 South Korea307
14 Netherlands302
15  Switzerland205

The units in this table are so-called trend indicator values expressed in millions of U.S. dollars at 1990s prices. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid. Ordered by descending 2000–2010 values. The information is from the Stockholm International Peace Research Institute.[11]

2001–12 RankSupplier200120022003200420052006200720082009201020112012
1 United States59085229Decrease5698Increase6866Increase6700Decrease7453Increase8003Increase6288Decrease6658Increase8641Increase9984Increase8760Decrease
2 Russia58965705Decrease5236Decrease6178Increase5134Decrease5095Decrease5426Increase5953Increase5575Decrease6039Increase7874Increase8003Increase
3 Germany850916Increase1713Increase1105Decrease2080Increase2567Increase3194Increase2500Decrease2432Decrease2340Decrease1206Decrease1193Decrease
4 France12971368Increase1345Decrease2219Increase1724Decrease1643Decrease2432Increase1994Decrease1865Decrease1834Decrease2437Increase1139Decrease
5 China499509Increase665Increase292Decrease303Increase597Increase430Decrease586Increase1000Increase1423Increase1354Increase1783Increase
6 Ukraine700311Decrease442Increase200Decrease290Increase553Increase728Increase330Decrease320Decrease201Decrease484Increase1344Increase
7 United Kingdom13681068Decrease741Decrease1316Increase1039Decrease855Decrease1018Increase982Decrease1022Increase1054Increase1070Increase863Decrease
8 Italy880191Decrease526Increase314Decrease538Increase432Decrease366Decrease454Increase383Decrease8061046Increase847Decrease
9 Spain7120Increase150Increase56Decrease108Decrease843Increase590Decrease610Increase998Increase513Decrease927Increase720Decrease
10 Israel203239Increase342Increase209Decrease583Increase1187Increase1326Increase530Decrease545Increase503Decrease531Increase533Increase
11 Sweden216426Increase341Decrease212Decrease774Increase502Decrease684Increase417Decrease514Increase806Decrease686Decrease496Decrease
12 Canada129170Increase263Increase265Increase226Decrease226Steady334Increase227Increase169Decrease258Increase292Increase276Decrease
13  Switzerland193Increase157Increase181Increase243Increase246Increase285Increase301Increase482Increase255Decrease137Decrease297Increase210Decrease
14 South Korea165N/A10029Decrease48Increase94Increase220Increase80Decrease163Increase95Decrease225Increase183Decrease
Sgraffito at the Lambert Sevart weapons factory, in Liege (Belgium) (early 20th Century).

Next to SIPRI there are several other sources that provide data on international transfers of arms. These include national reports by national governments about arms exports, the UN register on conventional arms and an annual publication by the U.S. Congressional Research Service that includes data on arms exports to developing countries as compiled by U.S. intelligence agencies. A list of such sources can be found at the SIPRI website.[12] Due to the different methodologies and definitions used different sources often provide significantly different data. For example, according to Statistisk sentralbyrå (Norway state statistics), Norway exports a greater value (in USD) of arms than many of the nations listed above.

Some of the differences are possibly due to deliberate over- or under-reporting by some of the sources. Governments may claim high arms exports as part of their role in marketing efforts of their national arms industry or they may claim low arms exports in order to be perceived as a responsible international actor.

As of 2008, Britain has become the world's leading developer of arms with British company BAE Systems.[13] Defence group BAE Systems is the first company outside the United States to reach the top position, thanks to a deal with the Pentagon for mine-resistant vehicles to be used in Iraq and Afghanistan. According to the Stockholm International Peace Research Institute, a defence think tank, the former British Aerospace group's arms sales are ahead of American market leaders Lockheed Martin and Boeing. The report reveals BAE's U.S. subsidiary was alone responsible for 61.5% of the group's arms sales and around 58.5% of total group sales. This demonstrates BAE's increasing reliance on orders for conventional weapons as the United States cuts back on its nuclear arsenal. The British figures were also boosted by orders for Eurofighter Typhoon jets from Saudi Arabia.

World's largest arms importers[edit]

The units in this table are so-called trend indicator values expressed in millions of U.S. dollars. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid.

2013 rankRecipientArms imports
1 India8283
2 United Arab Emirates6153
3 China1534
4 Saudi Arabia1486
7 Pakistan1002
5 Azerbaijan921
6 Indonesia774
8 United States759
9 Bangladesh672
10 Taiwan633
11 Turkey604
12 Egypt501
13 Oman490
14 Venezuela476
15 United Kingdom438

List of major weapon manufacturers[edit]

For a complete list, see List of modern armament manufacturers.
For a Top-Ten list, see List of defense contractors.

Private military contractors are private companies that provide logistics, manpower, and other expenditures for a military force.

Major arms industry corporations by nation[edit]

Largest arms industry companies[edit]

This is a list of the world's top 10 arms manufacturers and other military service companies. The information is based on a list published by the Stockholm International Peace Research Institute for 2012.[14] The list provided by the SIPRI excludes companies based in China.

RankCompanyCountryArms sales (US$ m.)Total company employment
1Lockheed Martin United States36,000120,000
2Boeing United States27,610174,400
3BAE Systems United Kingdom26,85088,200
4Raytheon United States22,50067,800
5General Dynamics United States20,94092,200
6Northrop Grumman United States19,40068,100
7Airbus Group European Union15,400140,000
8United Technologies Corporation United States13,460218,300
9Finmeccanica Italy12,53067,408
10L-3 Communications United States10,84051,000

Institutes participating in weapon research and warfare simulation[edit]

Arms control[edit]

Oscar Arias Sanchez President of Costa Rica (awarded the Nobel Peace Prize in 1987 for his efforts to end civil wars across Central America through the Esquipulas II Accords) has stated:

International treaties for arms control[edit]

Global weapons sales from 1950-2006

The European Council stated to the United Nations General Assembly:

See also[edit]

References[edit]

  1. ^ World Military Spending. www.globalissues.org. Retrieved on 2012-05-09.
  2. ^ Stockholm International Peace Research Institute. Sipri.org. Retrieved on 2012-05-09.
  3. ^ Arms trade key statistics. BBC News (2005-09-15). Retrieved on 2012-05-09.
  4. ^ Defence sector deal-making is finding itself in a war zone, warns report. 12 March 2009. BriskFox. Briskfox.com. Retrieved on 2012-05-09.
  5. ^ [1]
  6. ^ "William George Armstrong (1810–1900)". 
  7. ^ Dougan, David (1970). The Great Gun-Maker: The Story of Lord Armstrong. Sandhill Press Ltd. ISBN 0-946098-23-9. 
  8. ^ Stohl, Rachel; Grillot, Suzette (2013). The International Arms Trade. Wiley Press. Retrieved 2013-02-07. 
  9. ^ a b c International Defense Industry at the Wayback Machine (archived July 26, 2011). www.fpa.org
  10. ^ Debbie Hillier, Brian Wood (2003). "Shattered Lives – the case for tough international arms control" (PDF). Control Arms Campaign. p. 19. Retrieved 2009-03-28. 
  11. ^ a b c "The 15 countries with the highest military expenditure in 2013 (table)" (PDF). Stockholm International Peace Research Institute. Retrieved 14 April 2014. 
  12. ^ armstrad — www.sipri.org. Sipri.org. Retrieved on 2012-05-09.
  13. ^ The SIPRI Top 100 arms-producing companies, 2008 — www.sipri.org. Sipri.org. Retrieved on 2012-05-09.
  14. ^ "The SIPRI Top 100 arms-producing and military services companies in the world excluding China". Stockholm International Peace Research Institute. 2012. Retrieved February 9, 2014. 
  15. ^ TNO Defence, Security and Safety at the Wayback Machine (archived September 23, 2006). tno.nl
  16. ^ Anonymous. The Global Arms Trade: Strengthening International Regulations. Interview with Oscar Arias Sanchez. Harvard International Review Date: Tuesday, July 1, 2008 http://www.allbusiness.com/government/government-bodies-offices/11664335-1.html accessed 10 Feb 2010
  17. ^ EU@UN – EU Presidency Statement – United Nations 62nd General Assembly: General Debate. Europa-eu-un.org. Retrieved on 2012-05-09.

External links[edit]