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Production problems slow down income from arms sales in the world in 2022, according to SIPRI

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Production problems and delays stopped the sale of weapons by the main companies in the sector during 2022, as indicated this Monday by the Stockholm International Peace Research Institute (SIPRI), which highlighted that last year’s income was 3.5 percent lower than in 2021 “in real terms”, despite the fact that “demand increased considerably.” The agency has specified that the decrease in income in the hundred largest companies in the arms sector was mainly due to the fall in income in the main companies in the United States, while income increased “substantially” in Asia, Oceania and the Middle East. . “The pending orders and the increase in new contracts suggest that global arms revenues could increase significantly in the coming years,” he said, before recalling that Russia’s invasion of Ukraine and global geopolitical tensions “increased a sharp increase in demand for weapons and military equipment in 2022.” However, he explained that, despite the increase in orders, “many American and European arms companies were unable to significantly increase their production capacity due to labor shortages, rising costs and disruptions in the supply chain, aggravated by the war in Ukraine. “In addition, countries placed new orders at the end of the year and the gap between orders and production meant that in 2022 the increase in demand was not reflected in the income of these companies,” the agency stated in its annual report on the situation of arms sales in the world. Thus, the director of SIPRI’s Military Expenditure and Arms Production Program, Lucie Béraud-Sudreau, has maintained that “many arms companies encountered obstacles in adapting to the production required by high-intensity war,” although “they signed new contracts, especially for ammunition, which could translate into higher revenues starting in 2023.” SIPRI has therefore pointed out that the “significant” increase in the income of arms companies in Asia, Oceania and the Middle East “demonstrates their ability to respond to greater demand in a shorter period of time”, something especially accentuated in “countries in “where companies always keep their manufacturing capacity on point, such as Israel and South Korea, and where companies often rely on short supply chains.” FALL IN INCOME IN THE USA The situation contrasts with that experienced by the 42 American companies included in the Top 100, whose income fell 7.9 percent to 302,000 million dollars (about 278,000 million euros) in 2022, a figure which represents 51 percent of the total companies in the aforementioned ranking. The agency has detailed that 32 of the 42 US companies registered a year-on-year drop in arms revenue, attributed “in most cases” to “continued problems in the supply chain and labor shortages derived from the COVID-19 pandemic. Nan Tian, ​​a researcher at SIPRI, has reported that during 2022 there was “an influx of new orders related to the war in Ukraine”, although “due to the pending order portfolio of these companies and the difficulties in increasing production capacity , the income from these orders will probably not be reflected in the accounts for two or three years. For their part, the revenues of the 22 arms companies in Asia and Oceania included in the classification increased by 3.1 percent to reach 134 billion dollars (around 123.3 billion euros), which marks the second consecutive year. in which income in these regions exceeds that of Europe. “Domestic demand and dependence on local suppliers protected Asian arms companies from supply chain disruptions in 2022,” said Xiao Liang, researcher at SIPRI’s Military Expenditure and Arms Production Program, who has explained that “companies in China, India, Japan and Taiwan benefited from sustained government investment in military modernization.” China accounted for the second-largest share of combined revenue by country on the list, at 18 percent. The combined income of the eight arms companies of the Asian giant included in the classification increased by 2.7 percent, to 108 billion dollars (about 99.4 billion euros). SLIGHT INCREASE IN INCOME IN EUROPE In the case of Europe, the arms income of the 25 companies on the continent included in the lists increased by 0.9 percent to reach 121,000 million dollars (approximately 111,355 million euros) in 2022. “The war in Ukraine created a demand for material for a war of attrition, such as ammunition and armored vehicles. Many European producers of these items saw their income increase,” said Lorenzo Scarazzato, researcher at the Military Expenditure and Production Program of SIPRI weapons. “Among them are companies based in Germany, Norway and Poland,” he detailed. SIPRI has pointed out that due to a lack of data, there are only two Russian companies in the 2022 ranking, with a twelve percent drop in their combined revenue, while highlighting that “transparency among Russian companies continues to decline.” “. For its part, there is only one Ukrainian company on the list, UkrOboronProm, which experienced a ten percent drop in real terms in its revenues and, “while its arms revenues increased in nominal terms, this was more than offset by the country’s high inflation. Regarding Spanish companies, only Navantia is on the list, where it occupies 90th place with arms revenues of 990 million dollars (about 911 million euros), a figure that represents a decrease of 5.3 percent. relative to 2021, mainly due to inflation, as its income grew in nominal terms. Finally, Middle East companies recorded the largest percentage increase in revenue of all regions, with an eleven percent year-on-year increase for a combined revenue of $17.9 billion (around €16.475 billion) across the seven companies included. in the listing. The total arms revenue of the four Turkish companies reached $5.5 billion (about €5.06 billion), 22 percent more than in 2021, while the total arms revenue of the three Israeli companies in the ranking reached 12.4 billion dollars (about 11.41 billion euros) in 2022, 6.5 percent more than in 2021. “Middle Eastern companies specializing in less technologically sophisticated products were able to increase their production more quickly in response to the increase in demand,” stressed Diego Lopes da Silva, senior researcher at SIPRI. An example would be Turkey’s Baykar, which makes the Bayraktar TB-2 drone and entered the Top 100 list for the first time after its weapons revenue increased 94 percent, the fastest growth rate of all companies. ranking companies.



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