Usually the challenge of reporting about the Defense News Top 100 is recognizing the significance of the subtle changes — why a drop of two spots in the rankings could reflect some broader shift in approach, or how a modest increase or decrease in geographic representation may be tied to geopolitical tensions.
The truth is that usually we don’t see major changes. The big guys typically stay big, and the smaller ones either remain at the bottom or on occasion drop off or get bought up. Shifts are subtle.
But the 2019 Top 100, which ranks companies based on defense-related revenue, brings the opposite challenge: huge changes. Much of this is because we (finally) were able to include Chinese companies, thanks to a partnership with the International Institute for Strategic Studies. Suddenly the top 10, which historically remained relatively consistent year after year, is blown up. We also have quite a few new U.S. companies on the list, thanks to a more concentrated effort to expand the list’s reach and scope.
But as new companies are added, others disappear. Almost all Japanese companies, which we rank according to total value of contracts awarded by the Japanese Defense Ministry, are off the list. The reason for that is interesting: According to ministerial data, while Tokyo awarded roughly $12 billion to Japan’s top 20 contractors in fiscal 2017, it awarded only $1 billion in contracts to its top 20 in fiscal 2018.
Also missing is most of the Russian companies, which either declined to participate or just ignored requests entirely. And then there’s the sizable players that, thanks to acquisitions, are now part of even bigger players: Engility is part of SAIC; IMI Systems in Israel got bought by Elbit Systems; Orbital ATK and Rockwell Collins are now owned by Northrop Grumman and United Technologies, respectively.
So in a sense, what we have here is a new list — one that provides a newfound spotlight on defense investments of one of the United States’ most sophisticated challengers, and one that demonstrates in no uncertain terms how the M&A market is redefining the industrial base.