Nearly 10 months into Russia’s full-scale invasion of Ukraine, the allies that have backed Kyiv’s war effort are increasingly concerned by the struggle to increase ammunition production as the conflict chews through their stockpiles.
At stake is not only the west’s ability to continue supplying Ukraine with the weapons it needs but also allies’ capacity to show adversaries such as China that they have an industrial base that can produce sufficient weaponry to mount a credible defence against possible attack.
After sending more than $40bn of military support to Ukraine, mostly from existing stocks, Nato members’ defence ministries are discovering that dormant weapons production lines cannot be switched on overnight. Increasing capacity requires investment which, in turn, depends on securing long-term production contracts.
There are two main reasons western nations are struggling to source fresh military supplies, said defence officials and corporate executives.
The first is structural. Since the end of the cold war, these countries have reaped a peace dividend by slashing military spending, downsizing defence industries and moving to lean, “just-in-time” production and low inventories of equipment such as munitions. That is because combating insurgents and terrorists did not require the same kind of heavy weaponry needed in high-intensity land conflicts.
Ukraine has changed that assumption. During intense fighting in the eastern Donbas region this summer, Russia used more ammunition in two days than the British military has in stock. Under Ukrainian rates of artillery consumption, British stockpiles might last a week and the UK’s European allies are in no better position, according to a report by the Royal United Services Institute think-tank in London.
“The west has a problem with constrained defence industrial capacity,” said Mick Ryan, a former major general in the Australian army. “A major industrial expansion programme will be required if the nations of the west are to rebuild the capacity to design, produce and stockpile . . . large quantities of munitions.”
The second factor is bureaucracy. Governments say they are committed to bigger defence budgets. Yet, amid so much economic uncertainty, they have been slow to write the multiyear procurement contracts that defence groups need to accelerate production.
“It’s a corporate finance problem,” said a senior European defence official. “No company wants to invest in a second factory line to boost production without long-term, contractual certainty. Will Russia still be a threat in five years and, if it’s not, will governments still be buying arms from the companies then?”
This lack of certainty holds on both sides of the Atlantic, say corporate executives. Saab, the Swedish defence and aerospace company which makes NLAWs and Gripen fighter jets, says it has been in talks with several governments about new orders but progress on signing contracts has been slow.
“They are in a situation of ‘show me the money’,” said Mark Cancian, senior adviser at the Center for Strategic and International Studies in Washington. “What they [the defence companies] are worried about is that they will expand capacity, then the war will end and the defence department will cut the contracts.”