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52-623: In 1897, Adolphus Busch acquired rights to build diesel engines in the United States, with Rudolph Diesel as a consultant. The first companies resulting from this were the Diesel Motor Company (1898–1902) of New York City and the American Diesel Engine Company (1902–1911), which relocated to St. Louis , Missouri in 1908 and was succeeded by Busch-Sulzer. Although Busch acquired

104-569: A French license were not to be exported to other foreign nations without its express approval. Yet another form of common licensing restriction related solely to the licensing activity, regulating whether the specified product was fully produced or partly assembled, and whether entire products or their individual components were manufactured. The governments of Germany and Switzerland imposed similar restrictions on military vehicles manufactured in Argentina and Chile under license. In some cases,

156-413: A licensee who is authorized to use such rights under certain conditions. The licensee is manufacturing a product for which it has been granted production rights under specific conditions, while the licensor retains ownership of the intellectual property thereof. In some cases the licensor will supply the necessary technical data, prototypes, and/or machine tools to the licensee. While licensed production

208-546: A matter of policy, many governments of industrialized countries maintain or support a network of organizations, facilities, and resources to produce weapons and equipment for their military forces (and sometimes those of other countries). This is often referred to as a defense industrial base . Entities involved in arms production for military purposes vary widely, and include private sector commercial firms , state-owned enterprises and public sector organizations, and scientific and academic institutions. Such entities perform

260-438: A poor quality licensed product may damage the reputation of the original licensor. However, this is not considered a form of consumer fraud unless the product is unlicensed or counterfeit . Unlicensed production is the utilization of foreign manufacturing technology without a license, achieved through industrial espionage or reverse engineering . Products in high demand on the international market can be reproduced, based on

312-666: A shipyard at Elswick to specialize in warship production – at the time, it was the only factory in the world that could build a battleship and arm it completely. The factory produced warships for foreign naval forces, including the Imperial Japanese Navy . Several Armstrong cruisers played an important role in defeating the Russian fleet at the Battle of Tsushima in 1905. In the American Civil War in 1861

364-440: A starting point for indigenous industrial development. While licensed production in developing nations provides stimulus to the production and technical capabilities of local industry, in many cases it remains at least partly dependent on foreign support. The four most common applications of licensed production have historically been automotive engines and parts, weaponry, aircraft, and pharmaceuticals. During World War I , it

416-522: A wide variety of functions, including research and development , engineering , production, and servicing of military material, equipment, and facilities. The weapons they produce are often made, maintained, and stored in arsenals. In 2024, the Stockholm International Peace Research Institute (SIPRI) estimated global military expenditure at $ 2.443 trillion, the highest level ever recorded by SIPRI and

468-462: Is also a large global market in second-hand naval vessels, generally purchased by developing countries from Western governments. The cybersecurity industry is expected to be of increasing importance to defense, intelligence, and homeland security agencies. According to research institute SIPRI , the volume of international transfers of major weapons in 2010–14 was 16 percent higher than in 2005–2009. The five biggest exporters in 2010–2014 were

520-526: Is defined as an overseas production arrangement, usually as a direct result of inter-state trade agreements, that permits a foreign government or entity to acquire the technical information to manufacture all or part of an equipment or component patented in the exporting country. According to the World Intellectual Property Organization (WIPO), it must constitute a partnership between an intellectual property owner and

572-410: Is often dependent on the appropriate technology transfers , it does not necessarily entail ownership and management of the overseas production by the technology supplier. However, the licensor does retain the right to continue to use the licensed property, and to attribute further licenses to third parties. Occasionally, licensees may themselves sub-license a third party with or without the agreement of

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624-485: Is presented by 5-year moving averages. Next to SIPRI, there are several other sources that provide data on international transfers of arms. These include national reports by national governments about arms exports, the UN register on conventional arms, and an annual publication by the U.S. Congressional Research Service that includes data on arms exports to developing countries as compiled by U.S. intelligence agencies. Due to

676-760: Is substantial. There is relatively little regulation at the international level, and as a result, many weapons fall into the hands of organized crime, rebel forces, terrorists, or regimes under sanctions. The Control Arms Campaign , founded by Amnesty International , Oxfam , and the International Action Network on Small Arms , estimated in 2003 that there are over 639 million small arms in circulation and that over 1,135 companies based in more than 98 countries manufacture small arms as well as their various components and ammunition. Encompassing military aircraft (both land-based and naval aviation ), conventional missiles, and military satellites , this

728-618: Is the most technologically advanced sector of the market. It is also the least competitive from an economic standpoint, with a handful of companies dominating the entire market. The top clients and major producers are virtually all located in the western world and Russia, with the United States easily in the first place. Prominent aerospace firms include Rolls-Royce , BAE Systems , Saab AB , Dassault Aviation , Sukhoi , Mikoyan , EADS , Leonardo , Thales Group , Lockheed Martin , Northrop Grumman , RTX Corporation , and Boeing . There are also several multinational consortia mostly involved in

780-402: Is the production under license of technology developed elsewhere. The licensee provides the licensor of a specific product with legal production rights, technical information, process technology, and any other proprietary components that cannot be sourced by the licensor. This is an especially prominent commercial practice in developing nations , which often approach licensed production as

832-547: The defense (or defence) industry , military industry , or the arms trade , is a global industry which manufactures and sells weapons and other military technology to a variety of customers, including the armed forces of states and civilian individuals and organizations. Products of the arms industry include weapons , munitions , weapons platforms , communications systems , and other electronics, and related equipment. The arms industry also provides defense-related services, such as logistical and operational support. As

884-542: The British government awarded a contract to the Elswick Ordnance Company to supply the latest loading artillery pieces. This galvanized the private sector into weapons production, with the surplus increasingly exported to foreign countries. William Armstrong became one of the first international arms dealers, selling his systems to governments across the world from Brazil to Japan. In 1884, he opened

936-561: The Cold War when the United States and the USSR supplied weapons to their proxies across the world, particularly third world countries (see Nixon Doctrine ). This category includes everything from light arms to heavy artillery , and the majority of producers are small. Many are located in third-world countries. International trade in handguns , machine guns , tanks , armored personnel carriers , and other relatively inexpensive weapons

988-760: The National Shooting Sports Foundation members' ability to obtain an export license from taking a month to taking just four days. This was due to the United States Department of Commerce and agencies associated with ITAR expediting weapons shipments to Ukraine. In addition, the time it took to obtain a permit to buy a firearm in Ukraine also decreased from a few months to a few days. Figures are SIPRI Trend Indicator Values (TIVs) expressed in millions. These numbers may not represent real financial flows as prices for

1040-631: The Nordberg Manufacturing Company of Milwaukee, Wisconsin . Then-Lieutenant (and future Admiral) Chester W. Nimitz studied Diesel engines in Germany for the United States Navy in 1913. Busch-Sulzer tried to hire him, but he turned them down. This United States manufacturing company–related article is a stub . You can help Misplaced Pages by expanding it . Licensed production Licensed production

1092-510: The United Nations Office on Drugs and Crime has noted that while licensing companies often provide quality control measures, and there is some incentive for licensees to comply or risk legal action and the ensuing damage to their own profit, manufacturers who engage in unlicensed production are under no such obligations. Another method of circumventing the need for a license involves a manufacturer making slight modifications in

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1144-653: The North had about ten times the manufacturing capacity of the economy of the Confederate States of America . This advantage over the South included the ability to produce (in relatively small numbers) breech-loading rifles for use against the muzzle-loading rifled muskets of the South. This began the transition to industrially produced mechanized weapons such as the Gatling gun. This industrial innovation in

1196-651: The United States, Russia, China, Germany, and France, and the five biggest importers were India, Saudi Arabia, China, the United Arab Emirates, and Pakistan. The flow of arms to the Middle East increased by 87 percent between 2009–13 and 2014–18, while there was a decrease in flows to all other regions: Africa, the Americas, Asia and Oceania, and Europe. SIPRI has identified 67 countries as exporters of major weapons in 2014–18. The top 5 exporters during

1248-528: The allies. In 1885, France decided to capitalize on this increasingly lucrative trade and repealed its ban on weapon exports. The regulatory framework for the period up to the First World War was characterized by a laissez-faire policy that placed little obstruction in the way of weapons exports. Due to the carnage of World War I, arms traders began to be regarded with odium as "merchants of death" and were accused of having instigated and perpetuated

1300-546: The defense industry was adopted by Prussia in its 1864, 1866, and 1870–71 defeats of Denmark, Austria, and, France respectively. By this time the machine gun had begun entering arsenals. The first examples of its effectiveness were in 1899 during the Boer War and in 1905 during the Russo-Japanese War . However, Germany led the innovation of weapons and this advantage in the weapons of World War I nearly defeated

1352-856: The design or function of an existing product, before reproducing it. The manufacturer could then argue that the resulting product is not an unlicensed copy, but a new product not subject to license. Also need to be noted that once the terms of the patent for the particular technology or invention has expired, any manufacturer could legally reverse-engineer and reproduce said technology without needing to negotiate license agreements with former patent holder. However, even after patent terms have lapsed some manufacturers do opt for licensed production, since such agreements also confer transfer of full manufacturing plans and expertise which may prove to be cheaper than acquiring those via reverse engineering. Industrial products which have been built under license include: Arms industry The arms industry , also known as

1404-557: The different methodologies and definitions used different sources often provide significantly different data. SIPRI uses the "trend-indicator values" (TIV). These are based on the known unit production costs of weapons and represent the transfer of military resources rather than the financial value of the transfer. Units are in Trend Indicator Values expressed as millions of U.S. dollars at 1990s prices. These numbers may not represent real financial flows as prices for

1456-422: The domestic manufacture of preexisting overseas designs. This allowed for a much higher rate of production, and was considerably cheaper than national sourcing and off-the-shelf acquisition. European automobile manufacturers were the first to adopt this practice, producing a number of specialized American components for their passenger cars under license. The United States not only supplied European factories with

1508-403: The economic life of the product. Developing nations began accounting for a significant percentage of licensed production during the late twentieth century. Governments of developing nations often sought to encourage rapid industrialization, reduce dependence on foreign imports, and combat high levels of unemployment by creating and retaining local jobs. However, in many of these nations there

1560-402: The explicit licensing of technological information. Knock-down kits are regarded as a prerequisite to licensed production; they consist of products assembled locally from imported, pre-manufactured parts. Some licensors find it difficult to regulate the quality of their products manufactured under license. It is not always made clear to consumers where exactly a particular good originated, and

1612-443: The intellectual property owner. Licensing agreements determine the form and scope of compensation to the intellectual property owner, which usually takes the form of a flat licensing fee or a running royalty payment derived from a share of the licensee's revenue. The licenses can be terminated by the licensor, or may expire after a set date; however, the technology and knowledge, once transferred, cannot be rescinded, so even if

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1664-491: The licensee. The United States began inserting pro forma statements into licensing agreements known as "side letters" , which required the free sharing of any improvements made to American technology. Other attempts were also made to control the destination of licensed products, particularly with regards to the arms industry . For instance, France stipulated that military vehicles manufactured in South Africa under

1716-449: The licensing agreement expires they remain in the licensee's possession. Two related commercial practices are foreign subcontractor production and the proliferation of knock-down kits . Foreign subcontracting occurs when a product's original manufacturer contracts the production of its individual parts and components to a second party overseas. Such arrangements are not considered examples of licensed production because they do not involve

1768-698: The manufacturing of fighter jets , such as the Eurofighter . The largest military contract in history, signed in October 2001, involved the development of the Joint Strike Fighter . Several of the world's great powers maintain substantial naval forces to provide a global presence, with the largest nations possessing aircraft carriers , nuclear submarines and advanced anti-air defense systems . The vast majority of military ships are conventionally powered, but some are nuclear-powered . There

1820-676: The necessary blueprints and licenses, but also sourced American-made tooling equipment accordingly, which allowed the automobile companies to optimize their production lines. By the 1960s it was not uncommon for an entire specialized industry—such as the manufacture of rotary aircraft in the United Kingdom —to be dependent wholly on foreign-licensed components. A number of countries began making improvements to foreign products manufactured under license, and were even able to re-export them successfully. This trend resulted in some technology suppliers imposing additional conditions on

1872-469: The number of firearms in circulation had increased significantly between 2006 and 2017, primarily due to increases in civilian possession. During the early modern period , England, France, Sweden, and the Netherlands became self-sufficient in arms production, with diffusion and migration of skilled workers to more peripheral countries such as Portugal and Russia. The modern arms industry emerged in

1924-479: The original technology supplier did not need to manufacture the product itself—it merely patented a specific design, then sold the actual production rights to multiple clients. This resulted in different companies separately manufacturing identical products licensed from the same licensee. For many licensee companies, licensed production by other firms provides a continuous outlet for their proprietary technology, increasing their return on investment and prolonging

1976-619: The period were responsible for 75 percent of all arms exports. The composition of the five largest exporters of arms changed between 2014 and 2018 and remained unchanged compared to 2009–13, although their combined total exports of major arms were 10 percent higher. In 2014–18, significant increases in arms exports from the US, France and Germany were seen, while Chinese exports rose marginally and Russian exports decreased. In 2014–18, 155 countries (about three-quarters of all countries) imported major weapons. The top 5 recipients accounted for 33 percent of

2028-700: The rights to build Sulzer designs with the formation of Busch-Sulzer, the American joint venture preferred its own designs. The first submarines with Busch-Sulzer engines were the United States L-class submarines L-5 through L-8, designed by the Lake Torpedo Boat Company and launched 1916–17. Busch-Sulzer continued to produce engines for the US Navy and other customers through World War II , after which its assets were sold to

2080-614: The risks inherent in the development of new products by taking advantage of the proven reputation of products which had already achieved success in foreign markets. The economic life of many products, namely in the automotive and defense sectors, have been prolonged by overseas licensed production long after they were considered obsolete in their countries of origin. Developing nations such as Pakistan and Singapore which built important segments of their industry on licensed production have now themselves become licensors of technology and products to less developed states. Licensed production

2132-448: The same or similar design, and branded in ways to make them indistinguishable from the original. When copied and reproduced without a license, certain items are sometimes recopied in a similar manner by a third party. The manufacturers responsible may also grant legitimately registered sub-licenses for their unlicensed products, profiting at the expense of the real intellectual property owner. The quality of unlicensed goods varies greatly;

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2184-507: The second half of the nineteenth century as a product of the creation and expansion of the first large military–industrial companies. As smaller countries and even newly industrializing countries like Russia and Japan could no longer produce cutting-edge military equipment with their Indigenous capacity-based resources, they increasingly began to contract the manufacturers of military equipment, such as battleships , artillery pieces and rifles to foreign government military entities. In 1854,

2236-571: The steepest year-on-year increase since 2009. SIPRI further found that the combined revenues of the top 100 largest defense companies totaled $ 597 billion in 2022, with the five largest companies by revenue being Lockheed Martin , RTX , Northrop Grumman , Boeing , and General Dynamics . SIPRI's data also showed that, between 2019 and 2023, the five largest arms exporting nations were the United States , France , Russia , China and Germany (taken together, they supplied approximately 75% of

2288-451: The total arms imports during the period. The top five arms importers – Saudi Arabia, India, Egypt, Australia, and Algeria – accounted for 35 percent of total arms imports in 2014–18. Of these, Saudi Arabia and India were among the top five importers in both 2009–13 and 2014–18. In 2014–18, the volume of major arms international transfers was 7.8 percent higher than in 2009–13 and 23 percent higher than that in 2004–08. The largest arms importer

2340-400: The underlying arms can be as low as zero in the case of military aid. Arms import rankings fluctuate heavily as countries enter and exit wars. Export data tend to be less volatile as exporters tend to be more technologically advanced and have stable production flows. 5-year moving averages present a much more accurate picture of import volume, free from yearly fluctuations. This is a list of

2392-502: The underlying arms can be as low as zero in the case of military aid. The following are estimates from Stockholm International Peace Research Institute . Overall global arms exports rose of about 6 per-cent in the last 5 years compared to the period 2010-2014 and increased by 20 per-cent since 2005–2009. Rankings for exporters below a billion dollars are less meaningful, as they can be swayed by single contracts. A much more accurate picture of export volume, free from yearly fluctuations,

2444-467: The war for earning their profits from weapons sales. An inquiry into these allegations in Britain failed to find evidence to support them. However, the sea change in attitude about war more generally meant that governments began to control and regulate the trade themselves. The volume of the arms trade greatly increased during the 20th century, and it began to be used as a political tool, especially during

2496-741: The world's arms exports during this period). In some regions of the world, there is a substantial trade in firearms for use by individuals (where such trade is legal, commonly cited purposes include self-defense and hunting/sporting). Trade in small arms , both legal and illegal, may be associated with violent crime and political instability . In 2017, the Small Arms Survey estimated that approximately one billion firearms were in global circulation; of those, 857 million (85%) were possessed by civilians, 133 million (13%) were possessed by national militaries, and 23 million (2%) belonged to law enforcement agencies. The Small Arms Survey also found that

2548-464: The world's largest arms manufacturers and other military service companies who profit the most from the war economy , their origin is shown as well. The information is based on a list published by the Stockholm International Peace Research Institute for 2022. Arms control refers to international restrictions upon the development, production, stockpiling, proliferation, and usage of small arms, conventional weapons, and weapons of mass destruction . It

2600-459: Was Saudi Arabia, importing arms primarily from the United States, United Kingdom, and France. Between 2009–13 and 2014–18, the flow of arms to the Middle East increased by 87 percent. Also including India, Egypt, Australia, and Algeria, the top five importers received 35 percent of the total arms imports, during 2014–18. The five largest exporters were the United States, Russia, France, Germany and China. The 2022 Russian invasion of Ukraine changed

2652-564: Was more common for licensing agreements to take place between companies in the same country; for example, Opel was granted a license to produce BMW -designed aircraft engines for the German war effort. During the 1920s, European economists began advocating licensed production of foreign goods as the cure for "industrial particularism" —it allowed countries to bypass the costly research and development stage of acquiring products with which their own industries were unfamiliar, and refocus on

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2704-492: Was not a strong tradition of technology-based industrial development, and local firms were seldom active participants in creating indigenous technology through research and development. Since their research capacity was typically too limited to meet their goals, adopting licensing agreements for foreign technology was an especially attractive option. Manufacturing licensed products generated employment and empowered local industry while reducing dependence on imports. It also avoided

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