Original by Mikhail Melnikov published by Russkaya Planeta; translated from Russian by J.Hawk
All of Russia’s defense enterprises increased their standing in international ratings over the last year.
Stockholm-based SIPRI issued its annual arms market report. Its main part is the rating of top 100 arms manufacturers (excluding China, whose data is highly classified). The latest documents concerns 2014–one can’t say the Swedes were in a hurry to publish it. Nevertheless, it is of enormous interest. Russkaya Planeta undertook to study the report.
Second in the world
The first place is occupied by the legendary Lockheed-Martin, the combat aircraft and global bribery king. There’s no country without a Lockheed-gate of its own, with officials of all ranks from all over the world living off its handouts. 7 out of 10 top firms are American, plus one British, Italian, and simply European (Airbus Group). For half of them, weapons are their main product, for the other half, including Airbus, a secondary one. All of the Russian firms on the list, except of the Uralvagonzavod, military products are their core business.
Right after the first ten firms, comes the top-ranking Russian firm, Almaz-Antey which specializes in air defense weapons whose deliveries increased by 10% in 2014 over 2013. There are two more Russian holding companies in the top 20, United Aircraft Corp. and United Shipbuilding Corp, which took the 14th and 15th place, having risen by 1 or 2 spots just like Almaz-Antey. The three holding firms produced $21 billion. Almaz-Antey profits are unknown, the other two firms’ profits exceed $500 million. In other words, profits represent 4-5% of the overall volume of sales.
The 23rd place is occupied by Russia’s Helicopters which immediately after the rating’s publication received a new member of the board of directors, Anatoliy Serdyukov.
In the 24th place is the United Instrument Corporation, the 34 is taken by the Tactical Missiles, 38th and 39th by United Engine Corp. and High-Precision Systems. Sukhoi, judging by its volume of sales, shoudl have taken the 45th or 46th spot, but it was counted as part of the United Aircraft Corp. There are 10 Russian firms in the top 50, 9 of which are independent firms.
Our next representative is Uralvagonzavod which suffered considerable losses in 2014 but which still managed to increase its rating (from 80th to 61st). From then on Russian firms in the list are mainly subsidiary companies, the only corporation is the Radiotechnical and Information Systems which takes the 91st spot. The subsidiaries include Sozvezdiye, Irkut, Ufa Engine Manufacturing Corporation, Sevmash, Zvezdochka, and Admiralty Yards. Overall, Russia is represented by a more than respectable 18 firms. Less than the 44 US firms, but enough to win a solid second place.
One is especially pleased to see that all of the Russian firms, without exception, increased their rating in the last year which means they increased their share of the market. Still, if one is to judge by the top-100, while Russia represents 10.2% of total arms sales, the US has 54.4% of total sales. That gap is even larger if one is to consider firms outside the top 100. US has many tiny firms, while our export-oriented firms (over 700 in 54 of Russia’s regions) are united into holdings mentioned above.
But looking simply at money doesn’t provide the whole picture. Russian weapons are far cheaper than similar US ones, therefore Russia’s share of the market is considerably higher. In the 2010-2014 half-decade, Russia controlled 27% of the market in terms of number of weapons sold, behind the US only by 5%. Russia continues to specialize in air and air defense systems, which comprise more than half of its defense export. The main buyers are India and China.
Two thirds–domestic, one third–abroad
The main customer for Russia’s defense products is the Russian MOD. No detailed information on the defense procurement has been published, instead its spread throughout “general and special machine-building,” “transport equipment,” and other rubrics. But military officials don’t find it hard to name some actual numbers. Thus in 2014 defense orders totaled up to 1.7 trillion rubles. Russian firms sent weapons abroad worth 15 billion USD. With the average exchange rate of 37.97 rubles per dollar, it amounts to 570 billion rubles. Thus Russia exports only a third of military equipment it produces. Arms sales have a relatively moderate share of the overall Russian exports of 3%. But they are the mainstay of Russia’s high-tech exports.