Archive:Arms and ammunition production statistics - NACE Rev. 1.1
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This article belongs to a set of statistical articles which analyse the structure, development and characteristics of the various economic activities in the European Union (EU). According to the statistical classification of economic activities in the EU (NACE Rev 1.1), the present article covers the production of arms and ammunition, corresponding to NACE Group 29.6, which is part of the machinery and equipment sector. The activities covered in this article are the production of:
- tanks and other fighting vehicles;
- artillery material and ballistic missiles;
- military small arms and ammunition;
- hunting, sporting or protective firearms and ammunition;
- explosive devices such as bombs, mines and torpedoes.
This article does not cover military aircraft and warships, which are classified instead as transport equipment – see Transport equipment production statistics - NACE Rev. 1.1.
Main statistical findings
Structural profile
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In the EU-27, the arms and ammunition (NACE Group 29.6) manufacturing sector was the smallest of the NACE groups that make up machinery and equipment (NACE Subsection DK) manufacturing. In 2006, it generated EUR 4.7 billion of value added and employed 97.3 thousand persons, and thereby accounted for only 2.4 % of the total value added generated across machinery and equipment manufacturing as a whole and 2.7 % of its workforce. There were 1.3 thousand enterprises registered in the EU-27’s arms and ammunition manufacturing sector in 2006, less than 1 % of all the machinery and equipment manufacturing enterprises in the EU-27.
The arms and ammunition manufacturing sector generated more value added in the United Kingdom than in any other Member State, accounting for well over one third (37.3 %) of EU-27 value added in 2006. The next largest contribution in this sector was made by Germany, with a 22.4 % share, and no other Member State recorded a double-digit share of the EU-27 total. The contribution made by the manufacture of arms and ammunition to the value added of the non-financial business economy (NACE Sections C to I and K) reached 0.6 % in Bulgaria, more than three times its share in the next most specialised Member State[1], namely Sweden. In employment terms, this sector was less concentrated: although the United Kingdom was again the largest by this measure (16.6 thousand persons employed), its share of the EU-27 total was just 17.0 %, less than half its share in value added terms. Bulgaria had the second largest workforce, 14.1 thousand persons employed, slightly more than in Germany.
Over the period between 1997 and 2007, the production index for arms and ammunition manufacturing grew by an average 1.3 % per year in the EU-27, the second slowest rate of growth among the NACE groups that comprise machinery and equipment manufacturing, faster only than for the manufacture of domestic appliances (NACE Group 29.7). However, there were three distinct periods of output development: the first was characterised by falling output after 1997 through until 2000; the second was the subsequent, sustained strong growth through until 2006, at an average rate of 5.3 % per year; the third and most recent was a return to negative rates of change in 2007 when output contracted by 4.9 %.
Expenditure and productivity
Gross tangible investment by the EU-27's arms and ammunition manufacturing sector was valued at EUR 326 million in 2006, 1.9 % of the machinery and equipment manufacturing total. This level of investment was equivalent to just 6.9 % of the sector's value added, which was the lowest investment rate among all of the EU-27's machinery and equipment manufacturing NACE groups in 2006. In Slovenia and Cyprus, the investment rate in this sector was much higher than the average for machinery and equipment manufacturing, more than three times as high in Slovenia, and more than twice as high in Cyprus.
An analysis of expenditure shows that personnel costs accounted for 28.1 % of operating expenditure in the EU-27's arms and ammunition manufacturing sector in 2006, higher than the average 23.6 % share for machinery and equipment manufacturing. Average personnel costs were EUR 37.8 thousand per employee in the EU-27's arms and ammunition manufacturing sector in 2006, while apparent labour productivity was EUR 48.2 thousand per person employed: both of these were below the averages for machinery and equipment manufacturing as a whole, particularly the apparent labour productivity. The wage-adjusted labour productivity ratio of the EU-27’s arms and ammunition manufacturing sector was 127.3 % in 2006, the lowest of any of the NACE groups that make up machinery and equipment manufacturing. The United Kingdom, Slovenia, the Czech Republic and Spain were the only Member States[2] to record higher wage-adjusted labour productivity ratios for arms and ammunition manufacturing than for machinery and equipment manufacturing as a whole in 2006. Several Member States, namely Romania, France, Greece and Lithuania, reported wage-adjusted labour productivity ratios below 100 % in this sector, indicating that average personnel costs exceeded apparent labour productivity.
Data sources and availability
The main part of the analysis in this article is derived from structural business statistics (SBS), including core, business statistics which are disseminated regularly, as well as information compiled on a multi-yearly basis, and the latest results from development projects.
Context
Technological advancements in the machinery and equipment that is used in other sectors of the economy (particularly in mining, manufacturing, energy provision and construction) can have a considerable impact upon the speed, quality and quantity of what is produced, thereby impacting on downstream productivity and profitability. The machinery and equipment sector is sensitive, therefore, to overall economic conditions and investment patterns both within the European Union and across the world (the two arguably being more intertwined than ever).
In comparison to many other sectors of the economy, the availability of data on the arms and ammunition sector is often restricted by issues of confidentiality. Therefore, the likelihood of an under-reporting of arms production and sales must be borne in mind by readers.