Last week, the Commander-in-Chief of the Armed Forces of Ukraine, General Oleksandr Syrskyi, reported that in January, 66% of Russian equipment was disabled as a result of strike UAVs, and almost half of the damage was caused by FPV drones.
At the same time, in 2024, Ukraine's largest private manufacturers did not produce 1.7 million drones and electronic warfare devices in the absence of government contracts, despite the available capacity. The key reasons are the lack of long-term planning and budget-guaranteed procurement.
These calculations were presented by our partners, the Technological Forces of Ukraine, an association of nearly 50 leading private manufacturers of all types of weapons. Today, they presented an online counter that shows the untapped potential of the private defense sector. You can follow the counter here: https://zbroya.online/.
Earlier, the We Build Ukraine team identified 5 strategic priorities for change, including planning.
A systemic solution is needed - long-term contracting based on the mechanisms of predictable financial cycles. Under such contracts, manufacturers will be able to respond as quickly as possible to changes in the needs of the front line. According to the Technological Forces of Ukraine, with uninterrupted contracting, enterprises could produce 4,700 units of equipment every day.
Since 2022, there have been repeated calls to increase production capacity for all types of weapons. Many manufacturers have invested and continue to invest in scaling up production, but the lack of uninterrupted and predictable procurement from the state effectively offsets their efforts. Thus, in 2024, 64% of the production capacities of large private producers were not utilized.
We are talking about more than 1.6 million FPV drones, more than 72,000 strike drones, 8.4,000 reconnaissance drones and 1.6,000 long-range drones, as well as a thousand ground robotic systems and more than 1.5,000 electronic warfare systems. This information was obtained from manufacturers of 30 codified weapons that the army needs.
Current defense planning is not linked to production cycles, which creates unpredictability for manufacturers and delays in funding. At the same time, communication between government customers and manufacturers is poor. However, there are examples of successful cooperation at the level of grassroots initiatives of individual brigades or within the Brave1 defense technology development support cluster.
In addition, competitiveness and innovation are hampered by an outdated pricing system in which the state restrains costs and profitability. The pricing mechanism should be in line with market realities, which will allow companies to increase production and invest in innovation.
Another limitation that restrains the industry's potential is the ban on exports of military products, which should be lifted. If manufacturers could use the capacities not utilized by the state to fulfill foreign contracts for allied countries, the amount of potential foreign exchange earnings to Ukraine in 2024 would be almost UAH 2 billion.
Unfortunately, a situation has arisen in which the industrial potential of Ukrainian producers cannot be fully utilized either for the needs of the frontline or for strengthening the country's economy and the defense capabilities of partner countries. These problems need to be addressed urgently, because it is not only about the growth of the industry, but most importantly about the lives of our defenders and the better position of the Armed Forces. Together with our partners in the Ministry of Defense, manufacturers' associations and the expert community, we must advocate for the development of the necessary solutions.