Financial Times: The supply chain challenges of arming Ukraine

In this FT article, ASD highlights the need for long-term contracts and investments to boost ammunition production amid rising global demand and supply chain challenges

A Financial Times article this week featured quotations from ASD Secretary General Jan Pie, and Saab CEO and Vice Chairman of the ASD Board, Micael Johansson, on the pressing challenges tied to the global surge in ammunition demand. Despite significant production increases, companies are grappling with supply chain constraints and the need for longer-term contracts to support investments in expanding capacity. 

The Financial Times reports that companies like Rheinmetall, Saab, and Thales have significantly increased their output of ammunition and defence systems. For instance, Rheinmetall aims to increase its production of 155mm ammunition from 100,000 rounds before the war to 1.1 million rounds per year by 2027. Saab has doubled its capacity for ground combat systems, including ammunition, and plans to double it again in the near future.

Despite these efforts, supply chain bottlenecks persist, particularly for raw materials like cotton linters, which are crucial for producing explosives. 

Jan Pie, Secretary General of ASD, is quoted in the article, warning that production levels were still short of what was required, especially following decades of under-investment in Europe’s industrial base: “If we want to help Ukraine win this war and if we want to build up sufficient military capacities to deter Russia from further aggression, we have to procure and to produce in Europe much more and much faster.”

To achieve this, defence companies are calling for longer-term contracts from governments to provide the certainty needed for substantial capital investments. Micael Johansson, CEO of Saab, stressed that the industry “needs more long-term commitment from nations as it is taking on risk ramping up capacity without guaranteed long-term contracts”

The article underscores the challenges faced by Western defence companies in meeting the increased demand for ammunition, highlighting the need for long-term investment and stable contracts to ensure a robust and reliable supply chain in the face of ongoing geopolitical tensions.

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