SIPRI Annual Arms Sales Report Reflects Surge in Russian Military Production

While global sales of arms and military services have decreased for the fourth consecutive year, Russian arms industry’s sales continued to rise in 2014. The number of Russian companies ranked in the Top 100 went up from 9 to 11, amounting to a share of 10.2 per cent of total Top 100 arms sales in 2014. Growth markets in Brazil, India, South Korea and Turkey also reflect growth, as combined arms sales of companies located in these countries represents 3.7 per cent of the arms sales covered by the annual SIPRI report.

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Growth of Russian arms industry’s sales continues

Russian companies have been a key driver of the arms sales growth outside of the USA and Western Europe, with an increase of 48.4 per cent in their total revenues. This is the result of three new entrants to the Top 100 in 2014 as well as higher arms sales figures from the companies that were ranked in 2013.
Russian companies have been a key driver of the arms sales growth outside of the USA and Western Europe, with an increase of 48.4 per cent in their total revenues. This is the result of three new entrants to the Top 100 in 2014 as well as higher arms sales figures from the companies that were ranked in 2013.

Despite difficult national economic conditions, the Russian arms industry’s sales continued to rise in 2014. The number of Russian companies ranked in the Top 100 went up from 9 to 11, amounting to a share of 10.2 per cent of total Top 100 arms sales in 2014. The two completely new entrants are High Precision Systems (39th) and RTI (91st), while the newly established United Instrument Manufacturing Corporation (UIMC) has entered the list in 24th position, replacing Sozvezdie, which merged with a number of other companies to form UIMC. The Russian company showing the most significant growth in arms sales is Uralvagonzavod, with an increase of 72.5 per cent in its arms sales. Almaz-Antey, with a near 23 per cent increase in arms sales, is now in 11th position.

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The general fall in US and Western European companies’ revenues is partially offset by a 25.1 per cent growth in revenues for 36 companies in the Top 100 based in other parts of the world, including Russia, South Korea and Germany (primarily ship and submarine building).

“Russian companies are riding the wave of increasing national military spending and exports. There are now 11 Russian companies in the Top 100 and their combined revenue growth over 2013–14 was 48.4 per cent,” says SIPRI Senior Researcher Siemon Wezeman.

In contrast, arms sales of Ukrainian companies have substantially declined. UkrOboronProm has fallen from 58th position in 2013 to 90th in 2014, with a drop in sales of 50.2 per cent. Motor Sich, the other Ukrainian company that was ranked in the 2013 Top 100, has left the list altogether. “The noticeable decline in sales for Ukrainian companies was largely due to disruption caused by the conflict in eastern Ukraine, the loss of the Russian market, and the fall in the value of the local currency,” says Siemon Wezeman.

Growth in Emerging Markets

In 2013, SIPRI introduced an ‘emerging producers’ category to better track the evolution of companies based in countries that have stated goals of military industrialization. For 2014, this category covers Brazil, India, South Korea and Turkey. The combined arms sales of companies located in these countries represents 3.7 per cent of SIPRI Top 100 total arms sales. Their revenues rose by 5.1 per cent between 2013 and 2014.

There are two Turkish arms-producing companies ranked in the Top 100: ASELSAN, which increased its sales by 5.6 per cent in 2014, but has moved down in the ranking from 66th to 73rd; and Turkish Aerospace Industry (TAI), which has entered the Top 100 at rank 89, with a growth in arms sales of 15.1 per cent. “Turkey is seeking more self-sufficiency for its arms supplies and this, coupled with an aggressive export drive, has contributed to the rapid growth in revenue for ASELSAN and TAI,” says Pieter Wezeman, a Senior Researcher at SIPRI.

South Korean companies have also raised their profile in the Top 100 in 2014. “Fifteen companies from Asia (not including China) have made it into the Top 100,” according to Siemon Wezeman. “Many of them showed quite stable levels of sales but South Korean companies increased their total sales in 2014 by 10.5 per cent compared to 2013.” The latest South Korean entrant to the Top 100 is Hyundai Rotem, a military vehicle manufacturer.

Two Israeli companies improved their ranking from 2013, as IAI is now ranked in 32 place (up from 38) and Elbit Systems in 33 (up from 35). Rafael Advanced Defense Systems dropped one notch from 51 to 52.

The SIPRI Arms Industry Database

The SIPRI Arms Industry Database was created in 1989. It contains financial and employment data on arms-producing companies worldwide. Since 1990, SIPRI has published data on the arms sales and employment of the 100 largest of these arms-producing companies in the SIPRI Yearbook.

Arms sales are defined by SIPRI as sales of military goods and services to military customers, including sales for domestic procurement and sales for export. Changes are calculated in real terms and country comparisons are only for the same companies over different years.

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