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US defence contractors see longer term benefits from war in Ukraine

NEW YORK (AFP) – United States (US) arms manufacturers are not cashing in directly from the thousands of missiles, drones and other weapons being sent to Ukraine, but they do stand to profit big-time over the long run by supplying countries eager to boost their defences against Russia.

Like other Western countries, the US has turned to its own stocks to furnish Ukraine with shoulder-fired Stinger and Javelin missiles, for instance. These weapons from Lockheed-Martin and Raytheon Technologies were paid for some time ago.

So these companies’ first quarter results, due to be released in coming weeks, should not be especially fatter because of the rush to arm Ukraine as it fights off the Russian invasion.

But those US military weapons stockpiles being tapped for Kyiv will need to be replenished.

The Pentagon plans to use USD3.5 billion earmarked for this purpose in a spending bill approved in mid-March, a Defence Department spokesman told AFP.

The Javelin anti-tank missile is made by a joint venture between Lockheed and Raytheon.

The latter’s Stinger anti-aircraft missile had ceased to be produced until the Pentagon ordered USD340 million of them last summer.

A Ukrainian solider unloads Javelin missiles at the Boryspil Airport in Kyiv. PHOTO: AFP

“We are exploring options to more quickly replenish US inventories and backfill depleted stocks of allies and partners,” the spokesman said.

“It will take time to revive the industrial base – at the prime and at sub-tier suppliers – to enable production to resume,” he added. The profits that the companies make from these missiles, known for being simple to use, will not exactly be staggering, defence industry experts told AFP.

“If 1,000 Stingers and 1,000 Javelins get shipped to Eastern Europe each month for the next year, which is not unlikely given the current pace, in our view, we think it would equate to USD1 billion to USD2 billion in revenue for both programme manufacturers, which is material,” said CFRA’s Colin Scarola, an investment research firm.

Raytheon’s and Lockheed’s revenue figures last year dwarf that amount, however: USD64 billion and USD67 billion, respectively.

“Raytheon probably made more money off selling a Patriot missile system to Saudi Arabia than they will from making Stinger missiles,” said arms sales specialist at the Cato InstituteJordan Cohen.

“They’re only going to put so much effort into producing those weapons that are not that valuable,” Cohen told AFP.