Tags: 247 Wall St | Profits | Business | War

24/7 Wall St: There's Still Plenty of Profits in the Business of War

By    |   Wednesday, 05 March 2014 10:33 AM

The business of war remains a good one despite cuts in military spending, and 24/7 Wall St. took a close look to determine the companies that are making the most money from it.

Estimated global military spending was lower in 2012 for the first time since 1998. But the largest producers still made $395 billion in arms sales in 2012, according to industry figures.

The wind down of U.S. involvement in Iran and Afghanistan has contributed to the fall-off, but some developing nations plus Russia have been picking up some of the slack by boosting their arms sales, 24/7 Wall St. said.

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Based on data from the Stockholm International Peace Research Institute (SIPRI), two of the world’s three largest military contractors are American, and the third one is British.

At the top of the list is Lockheed Martin, with $36 billion in arm sales in 2012, which was 95 percent of the company’s revenues. The Maryland company produces aerospace, global security and IT systems and services.

24/7 Wall St. noted the company has warned it could have to lay off thousands of workers on account of military spending cutbacks, and concluded the company is “exposed to changes in the federal budget.”

The number two company is Boeing, with $27.6 billion in arms sales out of $81.7 total revenues in 2012. Not all is well on the horizon with Boeing, either — 24/7 Wall St. noted the aerospace giant, which employs about 174,400 people, has been embroiled in heated negotiations with union workers over their pension plans.

The third-largest company on the list is BAE Systems, a British company that is the largest non-U.S. military contractor in the world with $26.9 billion in 2012 arms sales. 24/7 Wall St. said British defense cuts “have taken a toll on the company. In 2012, BAE announced it would shutter its Armstrong plant, which made tanks for World War I and had been operating since 1847.

The Fiscal Times reported that proposed cutbacks to some decades-old weapons systems — some of them left over from the Cold War and clearly obsolete — are receiving the usual Congressional pushback as Washington D.C. jockeys over federal spending.

“Anything the Pentagon wants to get rid of, there is some constituency that’s willing to fight for it,” said Steve Ellis, vice president at Taxpayers for Common Sense. “You see time and time again the Pentagon is actually being forced to take some weapons systems that they don’t need.”

The Los Angeles Times reported that Rep. Howard P. "Buck" McKeon (R-Calif.), chairman of the House Armed Services Committee, apparently supports reversing some scheduled Pentagon cuts.

"While we cut nearly one-fifth of our defense resources, Russia and China are arming at an alarming rate. Russia's military spending is up roughly 30%, and China's has more than doubled in recent years," he said.

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The business of war remains a good one despite cuts in military spending, and 24/7 Wall St. took a close look to determine the companies that are making the most money from it.
247 Wall St,Profits,Business,War
505
2014-33-05
Wednesday, 05 March 2014 10:33 AM
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