Supply Chain Research

The U.S. House Armed Services Committee will consider the 2019 National Defense Act on May 9. The Act should authorize $717 billion of spending if passed in its current form but may prove controversial in including measures such as banning weapons sales to Turkey, Reuters reports.

A temporary ban on sales to Turkey may complicate the geopolitical situation in the region, including Syria, but won’t have a significant impact on the U.S. arms industry. Panjiva data shows exports to Turkey of weapons systems (including vehicles) and military aircraft were worth an average of $191 million per year over the three years to March 31. That was just 1.9% of the total despite a recent surge in weapons systems deliveries.

Chart shows U.S. exports of military weapons systems and aircraft to Turkey on a monthly (left hand axis) and 12 month trailing total (right hand) basis. Source: Panjiva

There’s been a marked acceleration in the rate of weapons export approvals during the administration of President Trump. Panjiva analysis of DSCA data shows year-to-date approvals reached $25.8 billion vs. $6.68 billion a year earlier and $9.8 billion for the same period in 2016.

Chart segments U.S. weapons export approvals by type. Calculations based on Defense Strategic Cooperation Agency data. Source: Panjiva

The positive impact of the approvals is much needed. Aggregate exports continued their long-term decline with a 10.0% drop in the first quarter. That included a 3.5% rise in shipments of vehicles and weapons, offset by a 31.4% drop in aircraft.

Chart shows U.S. exports of military weapons systems and aircraft globally on a monthly (dotted) and 12 month average (solid) basis. Source: Panjiva