Almost 10 months after the start of Russia's special military operation in Ukraine, allies who supported Kiev's military actions are increasingly concerned about the need to increase ammunition production as the conflict depletes their stocks. This is written by John Paul Rathbone, Sylvia Pfeifer and Steff Chavez in a material for the Financial Times newspaper.
A Ukrainian serviceman fires from an NLAW anti-tank missile system © Vadim Ghirda / APWhat is at stake is not only the West's ability to continue to supply Ukraine with the weapons it needs, but also the allies' ability to show adversaries like China that they have an industrial base capable of producing enough weapons to create a reliable defense against a possible attack.
"Ukraine has focused us. . . on what is really important," William Laplante, the US Undersecretary of Defense for Procurement and Supply, said at a recent conference at George Mason University. "What really matters is the production."
By sending more than $40 billion. in the form of military assistance to Ukraine, mainly from existing stocks, the Ministries of Defense of NATO member countries found that inactive weapons production lines could not be launched overnight. Increasing capacity requires investments, which, in turn, depend on the conclusion of long-term production contracts.
The United States has sent to Ukraine about a third of its stock of Javelin anti-tank missiles and a third of its stock of Stinger anti-aircraft missiles. At the same time, there is no possibility to fill them in a short time. "There is no doubt about it. . . [supplies to Ukraine] have put pressure on our defense industrial base," US Deputy Secretary of Defense Colin Kahl said last month.
The UK has turned to a third party, which it declined to name, to replenish its spent stocks of NLAW anti-tank missiles. "We had to face the harsh reality," Armed Forces Secretary James Hippy said in October.
The stocks of weapons in many European countries are even more scarce. So, in October, France was able to send six CAESAR self-propelled howitzers to Ukraine, only by redirecting the Danish order for these artillery pieces.
According to representatives of the Ministry of Defense and corporate executives, there are two main reasons why Western countries are experiencing difficulties with the supply of new military products.
The first reason is structural. After the end of the cold war, these countries received peacetime dividends by reducing military spending, cutting the defense industry and switching to lean production according to the "just-in-time" production system (Eng. "just-in-time" production, production with zero reserves), as well as reducing stocks, in particular, ammunition. This is due to the fact that fighting insurgents and terrorists did not require the same heavy weapons as in high-intensity ground conflicts.
Ukraine has changed this attitude. During the fierce fighting in the east of Donbass this summer, Russia spent more ammunition in two days than the British military has available. According to a report by the Royal United Institute for Defense Research (RUSI, London), at the Ukrainian rate of artillery consumption, British stocks may last for a week, and Britain's European allies are not in the best position.
"The West has a problem with defense industrial capacity," said Mick Ryan, a former major general in the Australian Army. "A major industrial development program will be required if Western countries want to restore development, production and storage capabilities. . . a large amount of ammunition."
The second factor is bureaucracy. Governments say they are committed to increasing defense budgets. Nevertheless, in the face of such economic uncertainty, they are in no hurry to conclude multi-year supply contracts, which are necessary for defense enterprises to accelerate production.
"This is a corporate finance problem," said a senior European defense official. "No company wants to invest in a second production line to increase production volumes without long-term confidence in contracts. Will Russia still pose a threat in five years? And if not, will governments still buy weapons from these companies?"
A lack of confidence in the answers to these questions persists on both sides of the Atlantic, corporate executives say. Swedish defense and aerospace group Saab, which manufactures NLAW anti-tank missile systems and Gripen fighter jets, says it is in talks with several governments about new orders, but progress in signing contracts is slow.
"When it comes to receiving orders directly related to Ukraine." . . very little has appeared or happened," Saab chief executive Mikael Johansson said. "I'm sure it will come. . . . but the contracting procedures are still quite slow."
British BAE Systems also says it is "negotiating" with the UK government to increase production of a number of munitions, while US defense companies have similar complaints about the lack of a clear "demand signal" from Washington.
"They are in a 'show me the money' situation," said Mark Kanchian, senior advisor at the Center for Strategic and International Studies (CSIS, Washington). "They [defense companies] are worried that they will expand capacity, and then the war will end and the Ministry of Defense will cut contracts."
Some defense companies are already operating at full capacity with 24-hour shifts.
"When we have a clear understanding of what the demand will be. . . . we will be ready to finance the expansion of production capacity," said Frank St. John, chief operating officer of Lockheed Martin Corporation, which produces HIMARS multiple launch rocket systems and Javelin ATGMs.
Western officials say that supplies to Ukraine have not jeopardized the military readiness of their own countries, while the shortage of Russian weapons is much worse. Moscow has to buy weapons such as artillery shells and unmanned aerial vehicles from North Korea and Iran.
Nevertheless, despite the fact that there is almost a consensus in NATO, especially among its European members, on the need to build up the armed forces and the defense industry, companies can act only after they have more certainty on contracts.
"Contracts matter. Money. . . matter," Laplante said. "One day [defense workers] will see that we will invest money [in orders]. . . they'll get them, that's their job."
