news

In Russia, the defense industry exists to serve national security. While one might believe this goes without saying, across the collective West, the defense industry, like all other industries in the West, exists solely to maximize profits.

To best serve national security, the defense industry is required to maintain substantial surge capacity – meaning additional, unused factory space, machines, and labor on standby if and when large surges in production are required in relatively short periods of time. Across the West, in order to maximize profits, surge capacity has been ruthlessly slashed, deemed economically inefficient. Only rare exceptions exist, such as US 155 mm artillery shell production.

While the West’s defense industry remains the most profitable on Earth, its ability to actually churn out arms and ammunition in the quantities and quality required for large-scale conflict is clearly compromised by its maximization of profits.

The result is evident today as the West struggles to expand production of arms and ammunition for its Ukrainian proxies.

The NDIS report would note:

Prior to the invasion, weapon procurements for some of the in-demand systems were driven by annual training requirements and ongoing combat operations. This modest demand, along with recent market dynamics, drove companies to divest excess capacity due to cost. This meant that any increased production requirements would require an increase in workforce hours in existing facilities—commonly referred to as “surge” capacity. These, in turn, were limited further by similar down-stream considerations of workforce, facility, and supply chain limitations.

Costs are most certainly a consideration across any defense industry, but costs cannot be the primary consideration.

A central element of Russia’s defense industry is Rostec, a massive state-owned enterprise under which hundreds of companies related to national industrial needs including defense are organized. Rostec is profitable. However, the industrial concerns organized under Rostec serve purposes related to Russia’s national interests first and foremost, be it national health, infrastructure or security.

Because Russia’s defense industry is purpose-driven, it produced military equipment because it was necessary, not because it was profitable. As a result, Russia possessed huge stockpiles of ammunition and equipment ahead of the Special Military Operation (SMO) in February 2022. In addition to this, Russia maintained large amounts of surge capacity enabling production rates of everything from artillery shells to armored vehicles to expand quickly over the past 2 years.

Only relatively recently have Western analysts acknowledged this.

The New York Times in its September 2023 article, “Russia Overcomes Sanctions to Expand Missile Production, Officials Say,” admits Russian arms production of not only missiles, but also armored vehicles and artillery shells have exceeded prewar levels. The article estimates that Russia is producing at least seven times more ammunition than the US and its Western allies combined.

Despite this, Western analysts now claim Russian production will “plateau” as the limits of surge capacity are reached and new facilities and sources of raw materials are required.

The Royal United Services Institute (RUSI) in a February 2024 article titled, “Russian Military Objectives and Capacity in Ukraine Through 2024,” regarding ammunition production would claim:

…the Russian MoD does not believe it can significantly raise production in subsequent years, unless new factories are set up and raw material extraction is invested in with a lead time beyond five years.

But because Russia’s industrial base is purpose-driven rather than profit-driven, additional facilities are already being built despite the longer-term economic inefficiency of doing so.

US government-funded Radio Free Europe/Radio Liberty in a November 2023 article titled, “Satellite Images Suggest Russia Is Ramping Up Production Capacity For Its War Against Ukraine,” reported that Russia was not only expanding production at existing facilities but was also developing new factories producing warplanes, combat helicopters, military drones, and guided munitions.