Lords of War: Demand for U.S. Weapons Hits All-Time High

In spite of news that the Federal Government is cutting back on its arms budget, U.S. defense companies and weapons makers are seeing record profits this year driven by surging demand overseas. According to the LA Times, “U.S. arms manufacturers are expected to sell a record $46.1 billion in military hardware to foreign governments in 2011, a nearly 50% jump from $31.6 billion last year.”

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Arms control advocates are firing back, warning that a proliferation of guns foreign governments without stable leadership could lead to human rights violations and increased crime rates. The Pentagon claims that it regulates defense businesses’ arms sales, limiting sales to foreign allies and national security partners.

Navy Vice Adm. William E. Landay III, who oversees foreign military sales, commented, “As a country continues to strengthen its ability to defend its borders, to protect itself and, potentially, to operate with partners in the region or with the U.S. — all of that strengthens the U.S. from a security perspective.”

More from the L.A. Times, “The largest-ever U.S. foreign arms deal was announced last October, when Saudi Arabia ordered $60 billion in military hardware in a multiyear pact. The Saudis’ laundry list of weaponry included Raytheon Co.’s 2,000-pound bunker-busting bombs, Boeing’s F-15 fighter jets and Sikorsky Aircraft Corp.’s Black Hawk helicopters.”

“More deals are in the works. Australia wants two dozen Navy Seahawk helicopters valued at $1.6 billion. Saudi Arabia is eager to get $330 million in thermal-imaging and night-vision equipment. And Britain is looking to purchase $137 million in upgrades for its U.S.-made ship-mounted guns. Orders are also in from Morocco, Iraq and the United Arab Emirates.”

With defense spending and arms purchases booming in foreign markets, expect these leading manufacturers to see appreciable gains this year:

The Boeing Company (NYSE:BA), Lockheed-Martin (NYSE:LMT), Northropp Grumman Corp (NYSE:NOC), Kratos Defense and Security (NASDAQ:KTOS), General Dynamics Corp. (NYSE:GD).

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