Ukraine’s fight against Russia is consuming ammunition at an unprecedented rate, with the country firing more than 5,000 cannons every day – the equivalent of a small European country’s orders for an entire year in peacetime.
The dramatic change in war footing is causing a supply chain crisis in Europe as defense manufacturers struggle to replenish national stockpiles as well as increase production to maintain supplies to Ukraine.
Nearly a year after Russia’s invasion, the pace of demand for ammunition and explosives is turning into a test of Europe’s industrial production capacity in the race to rearm.
“This is a war about industrial capacity,” said Morten Brandtzag, chief executive of Norway’s Nammo, which makes ammunition and shoulder-carrying weapons.
He estimates that Ukraine is firing an estimated 5,000–6,000 cannons a day, which he said is similar to the annual orders of a small European state before the war.
Supply chain bottlenecks, lack of production capacity and shortages of key raw materials for some explosives following the coronavirus pandemic haven’t helped the pressure on producers, which is stalling efforts to ramp up production.
Brandtzæg said that some components are in such high demand that their delivery times have increased from months to years.
This has led to a scramble to source materials, from chemicals for explosives to metals and plastics for fuses and artillery shell casings. Most companies have shifted production ahead of expected orders from national governments, hiring more people, another challenge since the start of the pandemic.
Yves Trassac, deputy chief executive of military explosives maker Urenco, said the company was looking at increasing production capacity to meet higher demand from customers that include Germany’s Rheinmetall and Britain’s BAE Systems.
“We are currently managing a ramp-up to meet the demand of our customers. It is a challenge but we are working on it.
A particular challenge is sourcing nitric acid, which the company uses to make explosives in small quantities, but which is also a key ingredient in the manufacture of fertiliser. With parts of Europe reducing fertilizer production due to the high cost of energy, the supply of nitric acid “must be secured with our suppliers”, Trisec said. Urenko, he said, is working to “source additional critical raw materials”.
Germany’s largest defense contractor Rheinmetall announced last month that it would build a new explosives factory in Hungary in a joint venture with the government to address the shortfall.
The explosives produced at the new plant will be used for artillery, tank and mortar ammunition, among other things. The company has also restarted decommissioned ammunition production facilities, it told the Financial Times, and “purchased large stocks of critical materials”.
Mick Ord, chief executive of Britain’s Chamering, which supplies a variety of explosives and propellants to defense contractors, said some customers have asked whether “it is possible to increase production”. [of certain materials] up to 100–200 percent”.
According to Ord, “a lot of the supply chain challenges are starting to subside” after the pandemic.
“The big challenge is that our capacity has been shaped by our customer demand and the industry is very broadly driven on a basis where capacity meets demand”.
New plants take a lot of time and investment to increase production, he said. “These are quite capital intensive projects, which take a few years to build, commission and bring online. It’s not the kind of supply chain where you can just flick a switch.”
UK-based Denroy, which makes shell casings and other components for a range of defense companies, has benefited from pre-ordering some materials such as polymers and composites.
The challenge, said chief executive Kevin McNamee, “is that our capacity is not that high, but the lead times of some materials are very long – it can be six months lead time on certain materials”.
“Companies may do batches once or twice a year, so if you miss that batch, you will have to wait.”
The crisis has prompted companies to work more closely with their suppliers and with those further down the chain. Several industry executives said they were spending more time on a daily basis ensuring that individual suppliers were able to deliver.
Huge investment demand is also prompting changes in the way governments handle purchases, with officials saying they require longer-term contracts.
Nammo, which is co-owned by the governments of Norway and Finland, usually receives annual contracts from state customers. The company began investing in its facilities early last year and has been able to meet the demand of its customers. Nevertheless, Brandtzæg said that the scale of the investments is such that they are a “huge strain on the financial condition of an otherwise healthy defense company”.
Investments for the company were “three times higher in 2022 than in the previous year”. The defense industry needs long, multi-year contracts, he said, “so they can invest in a big way”.
In the UK, BAE Systems has been in talks with the Ministry of Defense for months to speed up production of a range of munitions. The company is the main supplier to the British armed forces and in January launched a new 15-year supply contract but it is still waiting for a formal agreement to cover additional production needed by Ukraine.
Lee Smurthwaite, program director of munitions at BAE, said the company had already increased the number of shifts at its plants, in addition to hiring temporary workers in anticipation of more work, as well as meeting the demands of the new contract. Is. The company’s three main munitions plants typically operate in two to three shifts, 24 hours a day, five days a week.
The rush to re-arm and the prospect of a prolonged war have prompted debate about the need for purchases across the EU, despite their varying industrial bases.
The countries are also looking for further cooperation, with France announcing late last month that it would work with Australia to jointly produce and send several thousand 155mm artillery shells to Ukraine. The shells will be produced by Nexter of France.
“You’ll never end up with just one propellant plant in Europe, but if there was ever a time to say, we should cooperate on weapons,” Francis Tusa, editor of Defense Analysis, pointed to a recent ” Speech by French President Emmanuel Macron where he reveals that the number of shells manufactured in France each year corresponds to a week of shells sent by Russia to Ukraine.
He said an agreement on common procurement of weapons such as ammunition or explosives could have merit.
Work is going on on this. The European Defense Agency, set up in 2004, is part of an EU effort launched late last year to explore with industry how member states can coordinate purchases of some critical equipment, including ammunition.
“It was clear that there was an urgent need for a number of capabilities,” said Peter Tal, head of the EDA’s Industry, Strategy and European Policy unit.
Although progress will take time, he acknowledged, “there is always a lot of talking back and forth” between member states.
Trevor Taylor of the Royal United Services Institute said: “Scale matters in defense production and the functional case for Europeans (including the British) working together is very clear.”
But he warned: “The political barriers to such collaboration are significant: deciding who will pay for what will be challenging.”