Arms industry

Workers assemble Browning-Inglis Hi-Power pistols at the John Inglis munitions plant, Canada, April 1944

The arms industry is a global business which manufactures weapons and military technology and equipment. It consists of commercial industry involved in research, development, production, and the service of military material, equipment, and facilities. Arms producing companies, also referred to as defense contractors or military industry, produce arms mainly for the armed forces of states. Departments of government also operate in the arms industry, buying and selling weapons, munitions and other military items. Products include guns, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, and more. The arms industry also conducts significant research and development.

It is estimated that yearly, over 1.5 trillion dollars are spent on military expenditures worldwide (2.7% of World GDP). This represents a decline from 1990 when military expenditures made up 4% of world GDP. Part of this goes to the procurement of military hardware and services from the military industry. The combined arms sales of the top 100 largest arms producing companies amounted to an estimated $315 billion in 2006. In 2004 over $30 billion were spent in the international arms trade (a figure that excludes domestic sales of arms). The arms trade has also been one of the sectors impacted by the credit crunch, with total deal value in the market halving from US$32.9 billion to US$14.3 billion in 2008. Many industrialized countries have a domestic arms industry to supply their own military forces. Some countries also have a substantial legal or illegal domestic trade in weapons for use by its citizens. An illegal trade in small arms is prevalent in many countries and regions affected by political instability. The Small Arms Survey estimates 875 million small arms in circulation worldwide, produced by more than 1,000 companies from nearly 100 countries.

Contracts to supply a given country's military are awarded by the government, making arms contracts of substantial political importance. The link between politics and the arms trade can result in the development of what U.S. President Dwight D. Eisenhower described as a military-industrial-congressional complex, where the armed forces, commerce, and politics become closely linked. The European defence procurement is more or less analogous to the U.S. military-industrial complex. Various corporations, some publicly held, others private, bid for these contracts, which are often worth many billions of dollars. Sometimes, such as the contract for the new Joint Strike Fighter, a competitive tendering process takes place, where the decision is made on the merits of the design submitted by the companies involved. Other times, no bidding or competition takes place.

Unimog truck at IDEF in 2007.

History

Trade in arms and technological diffusion is as old as the history of war itself. During the early modern period, France, England, Netherlands and some states in Germany became self-sufficient in arms production, with diffusion and migration of skilled workers to more peripheral countries such as Portugal and Russia.

The modern arms industry emerged in the second half of the nineteenth century as a product of the creation and expansion of the first large military-industrial companies. As smaller countries (and even newly industrializing countries like Russia and Japan) could no longer produce cutting-edge military equipment with their indigenous resources and capacity, they increasingly began to contract the manufacture of military equipment, such as battleships, artillery pieces and rifles to foreign firms.

Armstrong gun deployed by Japan during the Boshin war (1868–69).

In 1854, the British government awarded a contract to the Elswick Ordnance Company of industrialist William Armstrong for the supply of his latest breech loading rifled artillery pieces. This decision galvanised the private sector into weapons production, with the surplus being increasingly exported to foreign countries. Armstrong became one of the first international arms dealers, selling his weapon systems to governments across the world, from Brazil to Japan. In 1884 he opened a shipyard at Elswick to specialise in warship production—at the time, it was the only factory in the world that could build a battleship and arm it completely. The factory produced warships for many navies, including the Imperial Japanese Navy—several Armstrong cruisers played an important role in defeating the Russian fleet at the Battle of Tsushima in 1905. In 1885, France decided to capitalize on this increasingly lucrative form of trade and repealed it's ban on weapon exports. The regulatory framework for the period up to the First World War was characterized by a laissez-faire policy that placed little obstruction in the way of weapons exports. Due to the carnage of World War I, arms traders began to be regarded with odium as "merchants of death", and were accused of having instigated and perpetuated the war in order to maximise their profits from arms sales. An inquiry into these allegations in Britain failed to find evidence to support these allegations. However, the sea change in attitude about war more generally, meant that governments began to control and regulate the trade themselves. The volume of the arms trade greatly increased during the 20th century and it began to be used as a political tool, especially during the Cold War where the United States and the USSR supplied weapons to their proxies across the world, particularly third world countries (see Nixon Doctrine).

Sectors

The AK series of weapons have been produced in greater numbers than any other firearm and have been used in conflicts all over the world.

Land-based weapons

This category includes everything from light arms to heavy artillery, and the majority of producers are small. Many are located in third world countries. International trade in handguns, machine guns, tanks, armored personnel carriers, and other relatively inexpensive weapons is substantial. There is relatively little regulation at the international level, and as a result, many weapons fall into the hands of organised crime, rebel forces, terrorists, or regimes under sanctions.

Small arms

The Control Arms Campaign, founded by Amnesty International, Oxfam, and the International Action Network on Small Arms, estimated in 2003 that there are over 639 million small arms in circulation, and that over 1,135 companies based in more than 98 different countries manufacture small arms as well as their various components and ammunition.

Aerospace systems

A T-45 Goshawk on the assembly line at McDonnell Douglas.

Main article: Aerospace manufacturer

Encompassing military aircraft (both land-based and naval aviation), conventional missiles, and military satellites, this is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the western world and Russia, with the United States easily in first place. Prominent aerospace firms include Dassault Aviation, Sukhoi, Mikoyan, EADS, Finmeccanica, Thales Group, Lockheed Martin, Boeing, and BAE Systems. There are also several multinational consortia mostly involved in the manufacturing of fighter jets, such as the Eurofighter. The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter.

Naval systems

All of the world's major powers maintain substantial maritime forces to provide a global presence, with the largest nations possessing aircraft carriers, nuclear submarines and advanced anti-air defense systems. The vast majority of military ships are conventionally powered, but some are nuclear-powered. There is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments.

World's largest defense budgets

Main article: List of countries by military expenditures

This is a list of the ten countries with the highest defence budgets for the year 2011, which is $1.29 trillion or 74% of total world expenditures. The information is from the Stockholm International Peace Research Institute. Total world spending amounted to $1.74 trillion USD in 2011.

Rank	Country	Spending ($ b.)	World Share (%)	% of GDP, 2011
1	United States	711.0	41.0	4.7
2	China	143.0	8.2	2.0
3	Russia	71.9	4.1	3.9
4	United Kingdom	62.7	3.6	2.6
5	France	62.5	3.6	2.3
6	Japan	59.3	3.4	1.0
7	India	48.9	2.8	2.5
8	Saudi Arabia	48.5	2.8	8.7
9	Germany	46.7	2.7	1.3
10	Brazil	35.4	2.0	1.5
	World Total	1735	74.3	2.5

^a SIPRI estimates

^b SIPRI: "The figures for Saudi Arabia include expenditure on public order and safety and might be slight overestimates"

World's largest arms exporters

The units in this table are so-called trend indicator values expressed in millions of US$s at 1990s prices. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid. Ordered by descending 2000–2010 values. The information is from the Stockholm International Peace Research Institute.

2001–12 Rank	Supplier	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
1	United States	5908	5229	5698	6866	6700	7453	8003	6288	6658	8641	9984	8760
2	Russia	5896	5705	5236	6178	5134	5095	5426	5953	5575	6039	7874	8003
3	Germany	850	916	1713	1105	2080	2567	3194	2500	2432	2340	1206	1193
4	France	1297	1368	1345	2219	1724	1643	2432	1994	1865	1834	2437	1139
5	China	499	509	665	292	303	597	430	586	1000	1423	1354	1783
6	Turkey	-	-	-	196	337	352	420	576	670	634	817	1262
7	Italy	880	191	526	314	538	432	366	454	383	806	1046	847
8	Israel	203	239	342	209	583	1187	1326	530	545	503	531	533
9	Sweden	216	426	341	212	774	502	684	417	514	806	686	496
10	Ukraine	700	311	442	200	290	553	728	330	320	201	484	1344
11	Spain	7	120	150	56	108	843	590	610	998	513	927	720
12	Switzerland	193	157	181	243	246	285	301	482	255	137	297	210
13	Canada	129	170	263	265	226	226	334	227	169	258	292	276
14	South Korea	165	N/A	100	29	48	94	220	80	163	95	225	183

The information is also from the Stockholm International Peace Research Institute or from the national defence commissions where available and is updated at least once a year.

Sgraffito at the Lambert Sevart weapons factory, in Liege (Belgium) (early 20th Century).

Next to SIPRI there are several other sources that provide data on international transfers of arms. These include national reports by national governments about arms exports, the UN register on conventional arms and an annual publication by the U.S. Congressional Research Service that includes data on arms exports to developing countries as compiled by U.S. intelligence agencies. A list of such sources can be found at the SIPRI website. Due to the different methodologies and definitions used different sources often provide significantly different data. For example, according to Statistisk sentralbyrå (Norway state statistics), Norway exports a greater value (in USD) of arms than many of the nations listed above.

Some of the differences are possibly due to deliberate over- or under-reporting by some of the sources. Governments may claim high arms exports as part of their role in marketing efforts of their national arms industry or they may claim low arms exports in order to be perceived as a responsible international actor.

As of 2008, Britain has become the worlds leading developer of arms with British company BAE Systems. Defence group BAE Systems is the first company outside the United States to reach the top position, thanks to a deal with the Pentagon for mine-resistant vehicles to be used in Iraq and Afghanistan. According to the Stockholm International Peace Research Institute, a defence think tank, the former British Aerospace group's arms sales are ahead of American market leaders Lockheed Martin and Boeing. The report reveals BAE's U.S. subsidiary was alone responsible for 61.5% of the group's arms sales and around 58.5% of total group sales. This demonstrates BAE's increasing reliance on orders for conventional weapons as the United States cuts back on its nuclear arsenal. The British figures were also boosted by orders for Eurofighter Typhoon jets from Saudi Arabia.

World's largest arms importers

The units in this table are so-called trend indicator values expressed in millions of US$s. These values do not represent real financial flows but are a crude instrument to estimate volumes of arms transfers, regardless of the contracted prices, which can be as low as zero in the case of military aid.

Current Rank	Importer	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
1	India	911	1242	1872	2802	2227	1036	1257	2179	1810	2116	3337
2	Australia	364	1191	647	798	505	470	682	629	380	757	1677
3	South Korea	1262	623	461	680	986	686	1650	1758	1821	1172	1131
4	Singapore	622	220	235	88	384	543	52	368	1123	1729	1078
5	United States	301	449	453	533	512	501	581	731	808	831	893
6	Algeria	418	553	237	197	272	156	308	471	1518	942	791
7	Saudi Arabia	158	397	533	592	385	332	262	613	939	1146	2580
8	Greece	710	725	491	2241	1528	389	598	1796	563	1269	703
9	China	2015	3366	2819	2207	3080	3511	3831	1474	1481	595	559
10	United Arab Emirates	243	186	213	695	1246	2198	2026	938	748	604	493
11	Pakistan	80	59	555	159	1161	148	185	64	115	626	787
12	Turkey	1170	553	1009	438	187	1005	422	585	578	675	468
13	Malaysia	30	26	131	135	48	51	410	546	541	1494	411
14	Norway	263	148	92	4	6	14	469	494	536	576	205
15	Indonesia	171	27	63	398	82	31	58	577	241	452	198

List of major weapon manufacturers

For a complete list, see List of modern armament manufacturers.

For a Top-Ten list, see Defense contractor.

Private military contractors are private companies that provide logistics, manpower, and other expenditures for a military force.

Major arms industry corporations by nation

For a complete list, see Major arms industry corporations by nation.

Institutes participating in weapon research and warfare simulation

• Netherlands Organisation for Applied Scientific Research
• Bolt, Beranek and Newman
• QinetiQ
• World Security Institute

Arms control

Oscar Arias Sanchez President of Costa Rica (awarded the Nobel Peace Prize in 1987 for his efforts to end civil wars across Central America through the Esquipulas II Accords) has stated:

“

When a country decides to invest in arms, rather than in education, housing, the environment, and health services for its people, it is depriving a whole generation of its right to prosperity and happiness. We have produced one firearm for every ten inhabitants of this planet, and yet we have not bothered to end hunger when such a feat is well within our reach. Our international regulations allow almost three-quarters of all global arms sales to pour into the developing world with no binding international guidelines whatsoever. Our regulations do not hold countries accountable for what is done with the weapons they sell, even when the probable use of such weapons is obvious.

”

International treaties for arms control

• The Arms Trade Treaty is the name of a potential multilateral treaty that would control the international trade of conventional weapons. The treaty is in the preliminary stages of development and has not yet been officially negotiated.
• The Missile Technology Control Regime (MTCR) is an informal and voluntary partnership between 34 countries to prevent the proliferation of missile and unmanned aerial vehicle technology capable of carrying a 500 kg payload at least 300 km.
• The Limitation of Naval Armament included many separate treaties. In general, the treaties involved the United States, United Kingdom, Japan, and France.
• The Convention on Cluster Munitions (CCM) is an international treaty that prohibits the use of cluster bombs, a type of explosive weapon which scatters submunitions ("bomblets") over an area.
• The Outer Space Treaty, formally known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies, is a treaty that forms the basis of international space law.
• The Ottawa Treaty or the Mine Ban Treaty, formally the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction, completely bans all anti-personnel landmines (AP-mines).
• The New START Treaty (for Strategic Arms Reduction Treaty) (Russian: СНВ-III) is a bilateral nuclear arms reduction treaty between the United States and the Russian Federation that was signed in Prague on April 8, 2010.
• The Protocol for the Prohibition of the Use in War of Asphyxiating, Poisonous or other Gases, and of Bacteriological Methods of Warfare, usually called the Geneva Protocol, is a treaty prohibiting the first use of chemical and biological weapons. It was signed at Geneva on June 17, 1925, and entered into force on February 8, 1928. It was registered in League of Nations Treaty Series on September 7, 1929.

• The Chemical Weapons Convention (CWC) is an arms control agreement which outlaws the production, stockpiling and use of chemical weapons.

• The Biological Weapons Convention (or Biological and Toxin Weapons Convention) was the first multilateral disarmament treaty banning the production of an entire category of weapons. It was the result of prolonged efforts by the international community to establish a new instrument that would supplement the 1925 Geneva Protocol.

The European Council stated to the United Nations General Assembly:

“

We are committed to upholding, implementing and further strengthening the multilateral disarmament and non-proliferation framework in the fight against threats which are tending to escape the control of national sovereignty, the challenges deriving from destabilising accumulation and spread of small arms and light weapons, from illicit or irresponsible arms trade, and from the proliferation of weapons of mass destruction, which are creating new and growing hot-spots of international tension. In this regard, the EU welcomes the growing support in all parts of the world for an International Arms Trade Treaty and is firmly committed to this process.

”

See also

• Category:Defence companies by country
• Defense contractor – list of largest defense companies in the world
• Small arms proliferation
• MMRCA (Sale of 126–200 Fighter Aircraft for Indian Airforce)
• Arms Trade Treaty
• European Union arms embargo on China
• List of National Defense Industries
• Defence industry of Russia
• Private military company
• Campaign Against Arms Trade
• Canadian Arms trade
• Permanent arms economy
• Military funding of science
• Military Keynesianism
• Offset agreement
• Peace dividend
• Guns versus butter theory
• Al-Yamamah arms deal (United Kingdom sales to Saudi Arabia)
• Arms control
• Arms trafficking
• Torture trade

External links

• Defense Sector Investment Benchmark – SPADE Defense Index (AMEX: DXS)
• World Security Institute's Center for Defense Information
• Campaign Against Arms Trade (UK)
• U.S. Arms Sales to the Third World from the Dean Peter Krogh Foreign Affairs Digital Archives
• SIPRI arms industry reports and database
• SIPRI list of Top 100 arms-producing companies
• The Guardian's arms trade report
• List of participators of the Defense System and Equipment international conference in London, 2003
• Viktor Bout arms trade case
• FAS's Arms Sales Monitoring Project
• UN Office for Disarmament Affairs
• ControlArms.org
• Defense Industrial Base Blog
• Amnesty International: Arms Trade Treaty
• The British Library – Defence Industry Guide (sources of information)
• Z. Yihdego, Arms Trade and International Law, Hart: OXford, 2007
• World Map and Chart of Arms exports per country by Lebanese-economy-forum, World Bank data