Arms sales rise during downturn to more than $400bn

Sales of weapons and military services by the world's biggest arms companies have continued to rise during the downturn and now exceed $400bn (£250bn), a leading independent research body has reported. Though the increase has slowed, just 1% year-on-year in 2010, the rise in sales has been 60% in real terms since 2002, figures released by the Stockholm International Peace Research Institute (Sipri) showed. The total sales, including military services, of the top 100 arms companies, reached $ 411.1bn (£257.6bn) in 2010, Sipri said. However, its report did not include Chinese arms supplies worldwide and has only limited data on Russian arms manufacturers who are vying with US firms in Latin America and other regional arms markets. The global arms industry is also increasingly concentrated, through mergers and acquisitions, and the top ten arms producing companies now account for 56% of sales – $230bn (£144bn) – Sipri said. Significantly, the entry point for inclusion in the top 100 companies rose from $280m (£175m) worth of sales in 2002 to $640m (£400m) in 2010. Sipri's arms industry expert, Susan Jackson, said: "The data for 2010 demonstrates, once again, the major players' ability to continue selling arms and military services despite the financial crises currently affecting other industries." The report highlighted Oshkosh, a US company, which recorded an 87% sales increase after winning the contract for the US mine-resistant ambush-protected all-terrain vehicle. Sales by Vertolety Rossii, a Russian helicopter-maker, rose more than 135% following sales to the Russian military, and exports to Afghanistan, Azerbaijan, and Iraq. Lockheed Martin, an American company, heads Sipri's list of the top 100 arms and military service companies, with $35.7bn (£22.4bn) worth of arms sales in 2010, followed by Britain's BAE Systems ($32.8bn/£20.6bn), and US firms Boeing ($31.3bn/£19.6bn) and Northrop Grumman ($28.5bn/£17.9bn). Other European companies in the top eleven include the European Aeronautic Defence and Space Company, Italy's Finmeccanica, and France's Thales. Though the figures show arms sales have been thriving despite global economic troubles, the next few years do not look so profitable for weapons makers, at least those who depend on the US and European markets. The withdrawal of foreign troops from Iraq and Afghanistan after 2014 could lead to fewer orders by US and UK companies, which are also facing defence cuts. BAE, Europe's biggest arms company and Britain's largest manufacturing employer, warned last month of "little sales growth" this year with US and UK military spending cutbacks leading to a 14% fall in 2011 revenues. The company reported a fall in sales to £19.2bn, as a result of lower demand for US army vehicles and a £500m reduction in turnover from the Ministry of Defence. Pointing to BAE's earnings in the UK and the US, chief executive Ian King said: "Affordability has become the priority for our customers."