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Production issues are causing difficulties for arms sales, even amidst the ongoing war in Ukraine.
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Production issues are causing difficulties for arms sales, even amidst the ongoing war in Ukraine.

According to a watchdog group, despite a rise in demand for weapons and military equipment, numerous Western arms companies were unsuccessful in increasing their production in 2022. This was due to various challenges such as labor shortages, rising costs, and supply chain disruptions, which were further aggravated by Russia’s invasion of Ukraine.

SIPRI, the Stockholm International Peace Research Institute, reported that the top 100 arms-producing and military services companies generated $597 billion in revenue last year, representing a 3.5% decrease from 2021.

According to Lucie Beraud-Sudreau, director of the Military Expenditure and Arms Production Program at an independent institute, numerous arms companies encountered challenges when transitioning to manufacturing for intense warfare.

According to SIPRI, the profits of the 42 American companies listed, which make up 51% of all arms sales, decreased by 7.9% to $302 billion in 2022. Out of these companies, 32 reported a decline in their annual arms revenue, with many attributing it to ongoing problems with their supply chains and a lack of labor due to the COVID-19 crisis.

According to Nan Tian, a senior researcher at SIPRI, there has been a rise in new orders related to the conflict in Ukraine.

According to him, major American corporations like Lockheed Martin and Raytheon Technologies were mentioned. He also stated that due to current order backlogs and challenges in increasing production capacity, the income from these orders may only be seen in the companies’ financial statements in two to three years.

According to the institute’s evaluation, businesses in Asia and the Middle East experienced a significant increase in their arms sales in 2022, showcasing their agility in meeting a rise in demand within a shorter period of time. SIPRI specifically mentioned Israel and South Korea.

“Although there was a decrease compared to the previous year, the overall arms revenue for the Top 100 companies in 2022 was still 14% higher than in 2015. This was the first year that Chinese companies were included in SIPRI’s ranking.”

According to SIPRI, nations made new purchases towards the end of the year, but due to the delay between ordering and production, the increase in demand did not impact these companies’ 2022 earnings.

Beraud-Sudreau stated that new agreements were made, specifically for ammunition, which may result in increased earnings in 2023 and beyond.