Governments just can’t stop *adds military jet to cart* spending on defence these days, and the industry’s largest companies are racing to deliver on new orders.
Driving the news: Last year, NATO members spent US$1.3 trillion on defence, the most since the fall of the Soviet Union. As countries arm up, the 15 biggest defence companies are on track to generate $52 billion in cash by 2026, nearly double what they made in 2021.
In recent months…
- Lockheed Martin won a $17 billion contract to develop a system to shield America from intercontinental ballistic missiles.
- Boeing won a $3.4 billion contract to manufacture 17 P-8A Poseidon maritime patrol aircraft for Canada and Germany.
- Rheinmetall and Leonardo teamed up to bid for future Italian government contracts for hundreds of armoured vehicles, worth up to €20 billion.
Why it matters: Defence companies are making big profits, but the supply chain for military equipment, weapons, and ammunition is complex and slow-moving, which means it can take a while for taxpayer money to translate into better security or immediate economic benefit.
Big picture: Meanwhile, demand comes down to how threatened governments feel today. That’s why ongoing wars are being fought, partially, with older equipment sent between countries. Orders for new, better items are rolling in, but now companies have to deliver.—SB