American arms industry soars amid global conflicts and politics

The majority of American arms companies' revenue comes from one client - the U.S. government. This client has deep pockets and a long history of reliably paying its bills. The stability of the federal government provides arms companies and investors with predictability in terms of regular income.

The previous year was record-breaking in almost every aspect, and the American arms industry earned £197 billion—16% more than in 2022. The current year is expected to be even better due to ongoing conflicts and increased global orders.

All countries spent just under £66 billion in the United States, gaining much greater benefits for their domestic arms industries.

The war in Ukraine facilitated the sale of equipment to Kyiv and provided an excellent showcase to NATO allies. Many manufacturers benefited from this. However, it was the Americans who, thanks to excellent political support, lobbying, and above all, a well-functioning arms industry, took the biggest share.

Leading the pack is primarily Lockheed Martin, which produces, among others, the M142 HIMARS and M270 MLRS rocket systems along with a wide range of different types of missiles. The effectiveness displayed by these systems during the battles for the western bank of the Dnieper and the paralysis of Russian forces served as the best recommendation.

There is significant interest in acquiring them, despite the relatively low production capacity compared to demand in the American industry. Last year, about 420 HIMARS systems were produced, with a demand estimated at 900 units.

HIMARS launchers are adapted to be transported aboard C-130 Hercules aircraft. GMLRS missiles guarantee effective range at distances from 14 to 84 kilometres, and MGM-140 ATACMS at distances from 69 to 299 kilometres, hitting targets with an accuracy of up to 2 metres. Currently, Lockheed Martin is working on additional versions capable of engaging targets up to 500 kilometres away.

The MIM-104 Patriot air and missile defence systems were already well-regarded. Recent nights defending Kyiv demonstrated to the world that Raytheon's product, even when operated by inexperienced staff and equipped with older missiles, is capable of effectively countering the latest Russian cruise and ballistic missile threats.

For the MIM-104, PAC-3 missiles are produced by Lockheed Martin. Their price is around £3.3 million. These missiles are just over 5 metres long, weigh 320 kilograms, and are guided to the target by radar. Depending on the needs, the missile can carry either a kinetic warhead, which must hit the target directly, or a 73-kilogram fragmentation warhead, which can explode near the target, showering it with fragments. The latter stopped Russian attacks on the Ukrainian capital.

Lockheed Martin guarantees a range—depending on the missile type—of up to 160 kilometres and a maximum altitude of 19 kilometres. It flies towards the target at speeds of up to Mach 5. The PAC-3 can shoot down almost anything in the air and is one of the most popular Western air defence systems.

In the last two years alone, systems have been purchased by Poland, Switzerland, and Morocco, among others.

In recent years, Lockheed Martin has become the world's largest arms company and the biggest beneficiary of U.S. government orders. It is the main producer of the F-35 Lightning II multirole fighters that have been gaining popularity in recent years.

The aircraft had been of interest to many countries for years, but it was the Russian aggression that caused a surge in orders. Even countries that previously spent cautiously on defence, such as the Czech Republic, Germany, or Romania, which will soon become the largest F-35 user, initially ordered 32 units and, after the outbreak of the Russian-Ukrainian war, another 16 units.

In its most popular version, the F-35A Lightning II can carry a maximum of 12,560 kilograms of armament, including external hardpoints. In stealth configuration, it can carry about 2,500 kilograms for a mission within a 1,100-kilometre radius. Currently, it is the world's only mass-produced fifth-generation combat aircraft, capable of penetrating the most advanced air defence systems and attacking the most strategically important targets, according to the manufacturer.

Orders for the F-35, F-16, C-130, and associated weapons have led the Air Force's foreign arms sales department to expect weapon sales worth over £38 billion in fiscal year 2024, compared to £24 billion in 2023.

After Donald Trump was elected the 47th President of the United States, there were concerns that he might limit military aid to Ukraine. On the other hand, those connected with the American arms industry note that Trump is above all a businessman, and the industry may explain to him that limiting aid could negatively affect the stock value of defence companies.

Nothing drives business like war, and Americans are well aware of this.