Europe is struggling to keep pace in a booming industry. While arms sales are exploding on a global scale, European companies, hampered by complex production processes and old contracts, are slow to adapt to new market demands.
The constantly evolving arms industry
The 100 largest arms companies generated cumulative revenues of $632 billion in 2023according to the latest report from the Stockholm International Peace Research Institute (Sipri). An increase of 4.2% compared to 2022, marked by increased demand in a context of conflicts in Ukraine and the Middle East. If the United States still largely dominates this sector, the most impressive growth goes to the Russian company Rostec, with an increase of 49.3% in one year.
The Sipri report highlights a generalized increase in income in all regions of the globe. This growth is particularly marked in Russia and the Middle East, where arms companies have been able to respond quickly to demand. Lorenzo Scarazzato, researcher at the institute, explains that this dynamic will likely continue in 2024, supported by recruitment campaigns and adjusted production strategies.
However, not all businesses are in the same boat. In the United States, industry giants like Lockheed Martin and RTX (formerly Raytheon Technologies) posted declines of 1.6% and 1.3%, respectively, due to complex supply chains. Nan Tian, director of the Sipri military expenditure program, specifies that these difficulties have mainly affected the aeronautics and missiles sectors.
In Asia, South Korean and Japanese manufacturers are performing well, with combined revenue increases of 39% and 35% respectively. This dynamic reflects a general rearmament in response to growing tensions in the region.
A sector shaped by conflicts
Unlike other regions, Europe is struggling to adapt to growing demand. The 27 largest European companies (excluding Russia) recorded an insignificant increase of 0.2% in revenue, reaching a total of $133 billion in 2023. This weak increase is explained by previous contracts still in progress , as well as longer production times for complex weapon systems.
Among these European companies, five are French: Thales, Naval Group, Safran, Dassault Aviation and the CEA. Their presence in the ranking demonstrates recognized expertise, but their ability to react quickly to new orders remains limited.
Geopolitical tensions play a central role in the expansion of this industry. The war in Ukraine and the conflict in Gaza have strongly stimulated arms sales in the regions concerned. In the Middle East, the six companies in the ranking saw their revenues increase by 18%, reaching $19.6 billion. In Israel, the top three companies made a record $13.6 billion, while Turkish manufacturers saw growth of 24%, driven by rising exports.
