Defence spending: the boom times are back
Spending in the military world may once again be on the uptick after five consecutive years of decline according to a new report by SIPRI.
Over the past few years we’ve all heard the defence industry rumblings about sequestration, budget squeezes and cost efficiency but it seems that these terms might be in the past, for now.
You only have to look at some of the ongoing regional tensions to guess why defence spending might be increasing, that accompanied with various major national weapons programmes and ongoing military operations.
Recently, there have been reports of the US Military conducting operations in almost every African nation. Tensions in Eastern Europe have led to nations neighbouring Russia to increase their military capabilities and in Asia tensions over the South China Sea and North Korean aggression continues to help spur on defence spending.
Specifically SIPRI looks at the top 100 arms-producing companies from 2016 with sales totalling $374.8 billion for the year.
In line with increased spending the report found that arms sales by US-based companies in the top 100 rose by 4% in 2016 to $217.2 billion.
With a belligerent neighbour to the north, South Korean companies in the Top 100 increased their arms sales by 20.6% to $8.4 billion in 2016.
Moreover, the Ukraine, with its ongoing Russia issues, saw its national defence developer, Ukroboronprom, increase arms sales by 25.1% in 2016. This is primarily a result of high local demand as a result of conflict in the east of the country.
As for the companies themselves, Lockheed Martin, Boeing and Raytheon, all for the US, come in the top three. Followed by the UK’s BAE Systems at four and Northrop Grumman in at number five.
Lockheed Martin increased its arms sales by 10.7% in 2016, reaching $40.8 billion, according to the report. Notably, the company is lead in one of the largest international programmes, the F-35 stealth fighter, which has seen increased order and the company’s acquisition of Sikorsky has helped bolster its profits.
With Trump in the Whitehouse promising to increase defence spending, amid all the other mentioned global issues, I think defence spending has truly taken a turn and for now spending will only continue to increase.