Gun sales grow despite supply chain challenges

In 2021, the seventh consecutive year of increase in arms sales in the world was registered. Sipri, a Swedish

By Ground report 06 Dec 2022

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Gun sales grow despite supply chain challenges

In 2021, the seventh consecutive year of increase in arms sales in the world was registered. Sipri, a Swedish organization that oversees the buying and selling of weapons, has said that arms manufacturers also face some challenges.

The Stockholm Peace Research Institute, Sipri, has said that 2021 saw an increase of around two percent in global arms sales. This is the seventh consecutive year that gun sales have increased. The SIPRI report says that due to the Ukraine war, an increase was seen in the last year. However, there are also signs that arms manufacturers are also struggling with supply chain disruptions due to the war, as Russia is a major supplier of raw materials for this industry.

SIPRI estimates that the disruption in the supply chain could have an impact on arms manufacturing and efforts by the US and Europe to further strengthen their stockpiles. Both sides have supplied billions of dollars worth of weapons and ammunition to Ukraine.

"It takes time to ramp up arms production. If supply chain disruptions continue, it could take years for some arms producers to meet the demand created by the Ukraine war," says Diego Lope Sada Silva, SIPRI Principal Researcher .

Impact of supply chain disruptions

SIPRI has emphasized that it has been said in some news that because of the Ukrainian war, Russian companies are increasing production, but they are not getting semiconductors. At the same time, they are also concerned about the sanctions imposed by Western countries due to the war. The report cited the example of a company that said it had not received funds for the delivery of some of its weapons.

In 2021, arms worth 592,000 million dollars were sold, 1.9 percent more than in 2020. Although it is lower than the general average of four years before Covid. In the report published on Monday, SIPRI said that many parts of the arms industry "are still dealing with supply chain disruptions in 2021 caused by the pandemic. These include shortages of essential parts and disruption to global transportation."

Dr. Lucie Béraud-Sudero, head of SIPRI's Military Expenditure and Arms Production Programme, said: "We were projecting even higher growth in arms sales in 2021 were it not for the supply chain issues." She cited the example of companies like Airbus and General Dynamics facing labor shortages.

100 largest companies

SIPRI has also compiled a list of the 100 largest companies in the world that provide weapons or related services. Among these, the United States has the top 40 companies, which sold $299 billion worth of weapons in 2021. However, a 0.9 percent drop in arms sales from North America has been observed.

In 2021, 27 of the 100 largest arms suppliers are based in Europe. Compared to 2020, arms sales from this region were 4.2 percent higher and a total of $123 billion was sold. France and Italy sold a record 15 percent more weapons, which is the highest increase in history.

There are 21 companies in Asia and Oceania that are among the top 100 companies. In 2021, these companies sold arms worth $136 billion, 5.8% more than last year. Six of these 100 companies are from Russia, which sold $17.8 billion worth of weapons, 0.4 percent more than in 2020.

Europe: aerospace sales fall, shipbuilding increases

In 2021, there were 27 Top 100 companies based in Europe. Its combined arms sales increased 4.2% compared to 2020, reaching $123 billion.

"Most of the European companies specialized in the military aerospace industry reported losses for 2021, which they attributed to supply chain disruptions," confirmed Lorenzo Scarazzato, a researcher at SIPRI's Military Expenditure and Arms Production Program, adding: " By contrast, European shipbuilders seem to have been less affected by the consequences of the pandemic and have been able to increase their sales in 2021."

Dassault Aviation Group bucked the trend in the military aerospace sector. The company's arms sales rose 59% to $6.3 billion in 2021, driven by deliveries of a total of 25 Rafale fighter jets.

Chinese companies drive rapid growth in arms sales in Asia

Combined arms sales of the 21 Asia-Oceania companies included in the Top 100 reached $136 billion in 2021, up 5.8% from 2020. The eight Chinese arms companies on the list had a total of arms sales of 109,000 million dollars, 6.3% increase.

"There has been a wave of consolidation in the Chinese arms industry since the mid-2010s," said Xiao Liang, a researcher at SIPRI's Military Expenditure and Arms Production Program. "In 2021, China's CSSC became the world's largest military shipbuilder, with arms sales of $11.1 billion, following a merger between two existing companies," he detailed.

Combined arms sales of the four South Korean companies in the Top 100 grew 3.6% compared to 2020, reaching $7.2 billion. This was largely due to a 7.6% increase in Hanwha Aerospace arms sales to $2.6 billion. Hanwha's arms sales are expected to grow significantly in the coming years, after it signed a major arms deal with Poland in 2022, following Russia's invasion of Ukraine.