This year, the production capacities of the defense-industrial complex in Ukraine have tripled, with some specific directions experiencing growth by tens of times. As of December 27, the Minister of Strategic Industries of Ukraine, Oleksandr Kamyshin, reported these results during a briefing on "Results of the Ministry of Strategic Industries and Ukroboronprom for the year 2023."
Currently, Ukraine's defense-industrial complex encompasses 500 enterprises employing 300,000 workers. Despite the ongoing military actions, the country's economy is progressing, and the defense sector contributes significantly, with a 1.5% share of the 4.9% GDP growth in 2023.
Production at state-owned enterprises, in terms of monetary value, increased by 92% compared to 2022, reaching over 79 billion UAH. This translates to over 637,000 units of manufactured and repaired products, representing a 1117% increase from the previous year.
Private manufacturers experienced even more significant growth, and the overall share of private businesses in the defense-industrial complex has quadrupled. Currently, private companies constitute four-fifths of the market.
Oleksandr Kamyshin highlighted that the production of mortar ammunition increased by 42 times, artillery by 2.8 times, and Ukraine has started producing cartridges for small arms, projectiles of calibers 73mm, 125mm, VOG-17, VOG-25, and ammunition for UAVs.
The main challenge in ammunition production lies in the shortage of explosives and gunpowder, a global issue. The solution may involve the liberalization of the market, allowing private manufacturers to operate in this segment.
The production of six "Bohdan" self-propelled artillery units was showcased for the first time, and in November, five times more armored personnel carriers were produced compared to the spring. The production of armored vehicles increased by 3.4 times, and anti-tank missile systems doubled compared to the previous year.
Thanks to the ingenuity of Ukrainian engineers, the quantity of Ukrainian UAVs is increasing through the development of hybrid solutions. This involves combining missiles and launchers that are not originally intended for use together. An example of such a solution is the FrankenSAM program, implemented by Ukrainian manufacturers in collaboration with American companies.
One of the priorities for the Ministry of Strategic Industries is the development of technological solutions that help save the lives of Ukrainian Armed Forces soldiers. Ukrainian manufacturers supply a wide range of such products to the front lines, including FPV drones, UAVs for reconnaissance and fire correction, various-range strike drones, including long-range kamikaze drones with a range of over 1000 kilometers, maritime drones, and ground robotic systems for medical evacuation, logistics, and mine clearance.
As of the end of the year, the annual production capacities of state and private manufacturers are:
- 1 million FPV drones
- Tens of thousands of medium-range strike drones
- Thousands of long-range strike drones (1000+ km)
These quantities can be realistically produced in Ukraine with long-term contracting from the Ministry of Defense.
To accelerate production and increase its volume, Ukraine actively engages defense industry companies from partner countries in cooperation. The Defense Industry Alliance, established in September at the First International Defense Industry Forum, has become the center of the DFNC ecosystem. In addition to the alliance and the forum, the Ministry of Strategic Industries organized bilateral conferences with the United States, Britain, and France, providing defense equipment manufacturers with the opportunity to find new partners and exchange experiences.
The first partnership agreements between Ukrainian and foreign companies have already been signed, including agreements to establish joint ventures. To move from signed agreements to actual production and have the technology roll off the assembly lines, companies are awaiting long-term contracts from the Ministry of Defense.
The Ministry of Strategic Industries forecasts a sixfold increase in the production volumes of the defense industry in 2024 compared to 2023. Despite facing challenges such as insufficient funding, a shortage of gunpowder and explosives, and constant shelling of Ukrainian enterprises, the Ukrainian defense industry continues to work on developing production to manufacture more weapons and military equipment for the Armed Forces of Ukraine.
The construction of an anti-corruption infrastructure is ongoing. The State Concern "Ukroboronprom" has developed and implemented a strategy for preventing, detecting, and combating corruption.
Competitive selection for leadership positions within the Corporation has been reinstated. Thirteen leaders have already been selected, with an additional four planned for January. Procurements have returned to the Prozorro system, providing opportunities to save on behalf of production capacities.
Since June 2023, the Ministry of Strategic Industries has also been controlling and coordinating the process of restoring and equipping civil defense facilities. The ministry initiated the nationwide project "Iron Shelter," aiming to repair and equip civil defense shelters across the country, making them suitable and comfortable for occupants during air raids.
In total, in 2023, work was carried out on 6,828 objects at a cost of 9,189,188,620 UAH. This included bringing 765 anti-radiation shelters, 5,957 basic shelters, 10 dual-purpose structures, and 96 storage facilities to proper condition. The majority of the work was performed in the Dnipropetrovsk and Khmelnytsky regions and in Kyiv.
