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For Your Information Production and Sale of War MaterielThe U.S. and other governments generally contract for the purchase of war materiel from private companies. This means political control is fundamentally important for those who profit from the production of war materiel and services. A recent example of the importance of political control is Amazon losing a $10 billion Pentagon "cloud" contract to its competitor Microsoft. Amazon immediately launched a legal challenge to the decision and directly attacked the Trump administration accusing it of interference in the awarding of the contract. The antagonism between President Trump and Amazon and in particular its CEO Jeff Bezos, the owner and publisher of the Washington Post is intense.[1]
The Stockholm International Peace Research Institute (SIPRI) annually compiles data on global military sales, excluding China. The data for 2018 show 43 companies based in the U.S. had a total gross income of $246 billion from the sale of military goods and services at home and abroad. This represents a 7.2 per cent increase in sales compared with 2017 and accounts for 59 per cent of the total gross income from arms sales of the largest 100 companies worldwide. The data does not include the research, production and sales at government owned military enterprises or "in-house" maintenance of military assets. Regarding the significance of arms sales in relation to total military spending, SIPRI writes, "In general, spending on weapons, weapons systems and platforms, and other specifically military equipment (including the research and development for such equipment) forms no more than a third of military spending, and much less in non-arms producing countries. In the USA, procurement and research and development have usually accounted for about 30 per cent of total 'National Defense' outlays since 2005." The five biggest arms producers in the world are based in the United States and alone accounted for $148 billion in gross income and 35 percent of the total arms sales of the top 100 companies in 2018. They are: Lockheed Martin Corp. $47.26 billion in military gross income: Lockheed Martin, the largest arms producer in the world saw its arms sales grow 5.2 per cent in 2018, which amounted to 11 per cent of the gross income of the top 100 companies worldwide. Lockheed Martin produces the F-35 combat aircraft purchased by many countries within the U.S.-led imperialist system of states. Boeing $29.15 billion: The arms sales of Boeing, the second-largest arms producer in the world, grew 5.7 per cent in 2018 and totalled 6.9 per cent of global sales of the 100 biggest companies. Northrop Grumman Corp. $26.19 billion: Northrop Grumman's arms sales grew by 14 per cent in 2018, an increase of $3.3 billion. This was driven in part by its acquisition of arms producer Orbital-ATK and strong domestic and international demand for its weapons, including intercontinental ballistic missiles and missile defence systems.[2] Arms sales by Raytheon at $23.44 billion (ranked fourth) rose by 3.9 per cent. Arms sales at General Dynamics Corp climbed 10 per cent to $22 billion (ranked fifth). Notes1. The newspaper Business Insider headlined on December 9, "Amazon recently lost out to Microsoft on a $10 billion cloud-computing contract for the Department of Defense. "Amazon has challenged the decision on the Joint Enterprise Defense Infrastructure contract, alleging in court that President Donald Trump's bias against Amazon played a role in the decision. "In documents made public Monday, Amazon said Trump led ‘repeated public and behind-the-scenes attacks' to ensure Amazon didn't get the contract in order to harm CEO Jeff Bezos, ‘his perceived political enemy.' "Trump has not hidden his dislike of Amazon: He's accused the company of 'getting away with murder on tax' and accused Bezos of using the publication he owns, the Washington Post, as a 'lobbyist weapon.'" 2. A development in the U.S. arms industry in 2018 was the growing trend in consolidations among some of the largest arms producers. For example, two of the top five, Northrop Grumman and General Dynamics, made multibillion-dollar acquisitions in 2018. SIPRI writes, "'U.S. companies are preparing for the new arms modernization programme that was announced in 2017 by President Trump,' says Aude Fleurant, Director of SIPRI's Arms and Military Expenditure Programme. 'Large U.S. companies are merging to be able to produce the new generation of weapon systems and therefore be in a better position to win contracts from the U.S. Government.' "The summary of the U.S. 2018 National Defense Strategy published by the administration of President Donald J. Trump stated that the current security environment was characterized by ‘Inter-state strategic competition' and that the U.S. military advantage had atrophied and needed to be rebuilt in order to address the strategic competition from China and Russia. This document emphasized the USA's commitment to continue with and strengthen its large-scale arms modernization programme announced in 2017. Following this announcement, several U.S. arms companies included in the Top 100 merged or acquired other companies' business segments in 2017 and 2018, partly with the aim of gaining an advantage over their competitors. The larger deals included Northrop Grumman's acquisition of Orbital-ATK, United Technologies' acquisition of Rockwell Collins, and General Dynamics' acquisition of CSRA. There were also transactions of a smaller scale such as CACI International's acquisition of a business unit of General Dynamics, and Engility's acquisition of the information technology (IT) segment of SAIC." "The main motivation for the consolidations in 2017 and 2018 was the USA's comprehensive and ambitious arms modernization programme aimed at designing and producing a new generation of weapon systems." 3. In addition to details on the 100 largest arms-producing and military services companies: "SIPRI has information on total military expenditure for each country with a specific category for spending on arms. Military expenditure is defined as spending on the military in general, including spending on personnel (i.e. the salaries and benefits of troops and civilian staff), operations and maintenance (i.e. spending on general supplies, services and transport), equipment (e.g. arms, other military equipment and non-military equipment), construction (e.g. of military bases) and research and development." For the full report from SIPRI for 2018, click here.
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Many of the largest
companies involved in the war economy use
the guaranteed state military contracts as a base
to build their
sales in non-military goods and services. An
example is Boeing,
the second-largest arms producer in the world. It
registered
$29.2 billion in arms sales at home and abroad in
2018, which
acted as a 29 per cent anchor or platform for its
total realized
gross income from sales of $101.1 billion.