In the competition to rearm in the face of rising great power competition, Europe and many other regions are opening new production lines, consolidating control of rare earth elements, re-learning industrial skills, and modernizing their armed forces. In 2024 alone, Russia is anticipated to produce 5 million artillery shells and around 700 cruise missiles. As a result, supply chains face sustained pressure as the world countries move to rearm, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Scaling Rearmament’, reveals the challenges facing countries in Europe and elsewhere in expanding production capacity for high-intensity warfare, as global defense spending is expected to rise to $2.45 trillion by 2028.

James Marques, Aerospace, Defense & Security Analyst at GlobalData, comments: “Vital items such as artillery shells, air defense missiles, and armored vehicles are seeing rates of attrition in the war in Ukraine at rates unheard of in recent times. Western nations are having to balance supporting Ukrainian troops with refilling their own stocks as defense budgets expand. The 800,00 shells found by Czechia on the international market in recent weeks are a stopgap measure – across Europe, the economy slowly turns to ‘wartime production’ mode.”

The UK alone has donated 300,000 artillery shells to Ukraine up to January 2024 and has signed deals with BAE systems worth £2.4 billion ($3.1 billion) for an eight-fold increase up to 2026, alongside other munitions. Across Europe, firms such as Rheinmetall and KNDS are breaking ground on new production lines. Some key supply chain chokepoints include machine tools and the labor force itself. Many roles in arms production cannot yet be replaced by industrial automation.

Marques continues: “Issues are not exclusive to Europe, however. In the US, the submarine-industrial base has announced it is halving the scheduled construction of Virginia­-class attack boats, a direct blow to the AUKUS military alliance announced in 2021. Defense ministries in the West are beginning to revise their procurement systems, seeking more responsive and agile solutions with the aid of commercial-off-the-shelf (COTS) technologies to deliver at both pace and scale. Assuming a maximum production rate, the EU could hit 2.6 155mm shells by the end of 2024.”

Marques concludes: “The so-called ‘peace dividend’ that came in the form of reduced defense spending at the end of the Cold War is over. If Europe wants the means to defend itself, especially if US isolationism grows, then the ‘just-in-time’ mentality of defense production must be changed.”