22
April
2024
The Ukrainian arms industry has grown strongly since the beginning of the war. According to the Minister of Strategic Industry, Oleksandr Kamyshin, around 500 Ukrainian companies now produce armaments, including a good 100 state-owned. The largest group is the conglomerate Ukroboronprom, which has officially been called Ukrainian Defense Industries (UDI) since March 2023; it includes about 130 individual companies with a total of a good five-digit number of employees. 1] Although the industry has now succeeded in massively expanding its production, it is struggling with all kinds of difficulties. Some of them are war-related. For example, Russia repeatedly attacks Ukrainian gunsmiths with drones and missiles; some entrepreneurs have moved to moving their factories to a new location every three months. 2] In addition, there are power outages, which are currently increasing again - a result of the recent Russian attacks on the Ukrainian energy supply. Last but not least, Ukrainian defense companies complain of a shortage of labor, which results from the fact that hundreds of thousands of Ukrainians are fighting at the front and millions more have fled abroad - often permanently.
Other difficulties that are currently inhibiting Ukrainian arms production are homemade. For example, Ukrainian entrepreneurs complain about excessive bureaucratic obstacles and about disagreements between ministries involved in the award of contracts. 3] In addition, the required raw materials cannot always be imported in sufficient quantities, and problems with the granting of licenses by Western corporations are reported, especially in the efforts to produce much-needed 155mm artillery ammunition on their own. Perhaps the most serious difficulty is the lack of money. For example, Kamyschin states that the Ukrainian arms industry is now able to produce products worth 18 to 20 billion US dollars annually. However, the government can only finance a third of it. The demand of various Ukrainian gunsmiths to be allowed to sell the additional output abroad has so far been deaf to deaf ears in Kiev - also because it is not considered to be mediable to export war equipment, but at the same time to demand expensive Western armaments. Last week, Denmark announced that it would grant Kiev $28.5 million for the purchase of weapons from Ukrainian manufacturers. 4]
Regardless of this, the construction of the arms alliance of Ukraine founded in September 2023 with companies from Western countries is progressing (german-foreign-policy.com reported [5]). The aim is to stee Western corporations to establish factories or To move joint ventures with Ukrainian companies in order, on the one hand, to bring urgently needed investments into the country, on the other hand to energetically modernize the Ukrainian industry, which was once strong, but which has become dilapidated in the past three decades. According to reports, almost 100 companies from over 20 countries have now joined the armaments alliance, including BAE Systems, the French Thales Group, the Italian Leonardo, Saab from Sweden and the Turkish drone manufacturer Baykar. Baykar announced in February that construction of a factory had already begun; the building itself should be completed in twelve months, followed by the equipment with machines. In the future, around 500 employees should manufacture about 120 drones per year there; it is only unclear whether the proven models Bayraktar TB2 or the new development TB3 will be produced. 6] Other Western companies are still limited to carrying out repairs and maintenance in Ukraine; production is to follow later.
Rheinmetall, the largest German armaments company, has also practiced this approach. Rheinmetall has on the 24th October last year in the presence of Chancellor Olaf Scholz together with Ukroboronprom/Ukrainian Defense Industries (UDI) completed the foundation of the joint venture Rheinmetall Ukrainian Defense Industry LLC. Only recently, a company spokesman confirmed that the company has been "operative" since then. 7] Rheinmetall Ukrainian Defense Industry is also initially about repairs of armored vehicles, which are now to be carried out in Ukraine in order to avoid long, time-consuming and costly transport to workshops in neighboring countries such as Poland or Slovakia. Production is then to be started. Rheinmetall boss Armin Papperger recently explained that from late summer 2024, the Fuchs transport tank will be able to be assembled from individual parts manufactured in Germany in a factory in Ukraine; in the summer of 2025, this will be possible with the Lynx infantry fighting vehicle. In the long term, the production of the Panther battle tank in Ukraine is also planned. In addition, the company wants to produce a six-digit number of 155 caliber artillery projectiles annually in Ukraine. 8] So far, the construction of four factories in the country is planned.
The German tank builder Krauss-Maffei Wegmann or his joint venture with the French gunsmith Nexter, KNDS, takes a similar path to Rheinmetall. In mid-November 2022, KNDS had initially announced that a logistics base would be built in Slovakia to provide spare parts and repair damaged tanks. 9] In March, it was said that an offshoot would be founded in Ukraine; spare parts were to be produced there first, later ammunition and in the long term also complete weapon systems.[ 10] The Munich drone manufacturer Quantum Systems, which had also initially opened a site for the repair and training of its drones in Ukraine after the delivery of numerous reconnaissance drones, put a factory into operation on Thursday last week in the presence of Federal Minister of Economics Robert Habeck, which is to employ almost 100 employees by the end of 2024 and produce up to 1,000 drones per year in the future. 11] The drone defense, on the other hand, is served by a cooperation between MBDA Germany and UDI, on which both sides already agreed in February. 12] The examples show that the German arms industry is looking to secure a prominent role in building the Ukrainian industry.
[1] Othmara Glas, Gregor Grosse, Robert Putzbach: Then Ukraine helps itself. Frankfurter Allgemeine Zeitung 03/14/2024.
[2], [3] Max Hunder: Ukraine's growing arms sector thwarted by cash shortages and attacks. reuters.com 19.04.2024.
[4] Denmark to purchase arms for AFU from Ukrainian manufacturers. au.news.yahoo.com 18.04.2024.
[5] S. about the armaments hub Ukraine.
[6] Turkish drone magnate Baykar begins to build plant in Ukraine. dailysabah.com 07.02.2024.
[7] Othmara Glas, Gregor Grosse, Robert Putzbach: Then Ukraine helps itself. Frankfurter Allgemeine Zeitung 03/14/2024.
[8] Joint venture with Ukrainian partner: Rheinmetall to produce artillery ammunition in Ukraine. rheinmetall.com 19.02.2024.
[9] KMW establishes KNDS service base in Slovakia for Ukraine. knds.com 15.11.2022.
[10] Franco-German Defence Group KNDS To Produce Arms In Ukraine. barrons.com 22.03.2024.
[11] Habeck opens German drone factory in Ukraine. t-online.de 20.04.2024.
[12] Frank Specht: MBDA cooperates with German state corporation. handelsblatt.com 22.02.2024.