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With no end in sight, how can defense contractors apply lessons learned from the past two years in Ukraine to best support the Warfighter in 2024 and beyond?
February 24, 2024 marked the beginning of the third year of war stemming from Russia’s invasion of Ukraine. It also marked the 10th year since Russia’s earlier invasion of Ukraine in Crimea. While many initially believed this would be a quick operation, the last two years have proven this conflict is likely to continue for years to come. There may be no end in sight to the fighting, but what has been clear are the numerous ways the conflict has evolved over the past year.
Growing consensus among analysts is that the hard Russian pivot towards a war economy and reversion to Soviet-era mentalities around troop expendability signals that the conflict was never really about a swift victory in Ukraine, but rather a calculated waiting game where the target has been Western patience.
The Russian government—in the throes of a full-fledged war economy—faces three key priorities: 1. ensure steady funding for the war in Ukraine, 2. maintain non-combatant living standards, and 3. safeguard macroeconomic stability within the country. In the short term, using Cold War-era military reserves and lower-grade military assets from allies like Iran and North Korea, while propping up the economy via energy sales, has shown that there isn’t a need to make tradeoffs around these three priorities. However, in the medium to long term, ballooning spending on the first two priorities will likely stress macroeconomic stability. There is likely to be a future point when that tradeoff comes to bear. Russia’s bet, therefore, is that Western patience lapses before the military industrial complex can fully ramp and begin to fire on all cylinders.
There has been progress, however, from the introduction of new weapon systems like the PATRIOT Missile System, to the announcement of F-16s soon entering the fray, to the rapid rise of drone usage across Ukraine. The war will likely continue to introduce new weapon systems and opportunities for players in defense platforms and material production. For now, the funding environment—despite political budgetary disagreements—is trending towards assistance to Ukraine, as the U.S. Congress and the White House find a shared language around potentially structuring Ukraine aid as a loan, much as the United States did with allied aid in World War II.
To understand how defense contractors can improve operational performance to better support Western objectives in the coming year, it is necessary to review where the conflict in Ukraine currently stands, and which strategies employed by contractors to date have created the most value for the Warfighter.
Back to the future—where things currently stand:
Although many in the defense world cite the need to innovate and prepare for the modernization of the battlespace, a key lesson from Ukraine is that front lines still look much like they did during WWI. Both sides have created massive, numerous mile-long networks of trenches and are dug in. Much of the taking and ceding of ground is based on a few critical enablers:
- Funding: While European countries are starting to contribute more, the largest near-term source of aid (~$60B) is currently stalled in the bureaucracy of the U.S. Congress. While ~$300M was recently released, there is a growing unease about the prospect of long-term U.S. funding, especially with a looming presidential election year. More than any other factor, funding plays the most critical role in the conflict's potential outcome.
- Recruiting: Ukrainian soldiers have performed admirably and quite remarkably over the past two years. However, the army has begun to struggle with backfilling forces on the front lines; the average age of Ukrainian front-line troops is ~42 years old (vs. 30-35 in 2022), compared to only 28.5 years old across the American service branches today. Russian battlefield mortality rates in the past two years (estimated at 315,000+) have eclipsed total Russian losses from the decade-long 1979 Soviet-Afghan war. Following Putin’s “re-election” and facing an offensive impasse, the Russian armed forces are more likely to look again at the prospect of partial mobilization to further increase the size of their deployed in-country forces.
- Introduction of new weapon systems: The most public and anticipated weapon system to arrive on the battlefield is the F-16 fighter jet. Using this more modern jet and its capabilities will provide the Ukrainian Air Force some much-needed air power, as well as meaningfully reduce Russian capability to provide air cover during key offensive operations. Also noticeable is the rise of homegrown drones, such as those made by companies like DJI. With trenches spanning miles on the front lines, these drones offer a quicker, cheaper way to perform ISR missions on the battlefield and are a better fit for the profile of the conflict than exquisite ISR assets and HALE drones.
- Readiness for a spring/summer offensive: As spring approaches, a key question hanging over this year of the war will be how prepared Ukrainian forces are for their next offensive. Despite large-scale anticipation for last year’s offensive, delayed deliveries of armored systems and Russia’s ability to fortify its front lines led to almost no shift in controlled terrain. Assessing military readiness for a renewed 2024 offensive will be crucial to understanding the conflict's trajectory.
- New leadership: Ukrainian President Volodymyr Zelenskyy recently replaced a top general, who by most accounts was popular amongst the troops. The impact this may have on morale is still unclear. However, the leadership change may lead to a change in strategy and the implementation of new battlefield tactics and technologies. Only time will tell, but this move could prove to be either highly effective or risk damaging Ukrainian resolve.
To see where things stand geographically, we can look at how the composition of the front line has changed over the course of the war. In the figure below, you can see where territory lines were one year after the initial invasion, as well as where they were at the two-year anniversary. One significant movement in the past month has been the Avdiivka withdrawal, noted by some analysts as the first sign that battlefield momentum had shifted towards the Russian army. While the Russian victory in Avdiivka can only be described as Pyrrhic, it highlighted the Russian strategy of, as one Ukrainian soldier put it, “exhausting our lines with constant waves of attacks."
There have been many reports on the staggering expenditure of military resources throughout the conflict and utilization continues to eclipse projections that were used for production planning by almost all major suppliers. However, for defense contractors to effectively meet the needs of the Warfighter and to support Western allies, it is vital to understand which weapon systems have been most effective to better understand how battlefield lessons map to potential future program orders.
Artillery: With perhaps the exception of only rifle ammunition, no form of weapon has been more popular in Ukraine than artillery shells, particularly the 155-mm round. Consider the following data points:
- An estimated 4,000 to 7,000 artillery shells are used each day by Ukraine.
- At one point, Russia was launching more than 20,000 rounds daily during the summer.
- Artillery production costs were estimated at $2,100/round pre-war. Those now sit somewhere north of $8,000/round.
This rate of usage far outpaces both sides’ rates of production. While the U.S. and EU are on track to produce well over one million shells per year by the end of 2024, production still lags Russia’s and is well below the approximately 350,000 shells per month former Ukrainian Defense Secretary Oleksii Reznikov claimed were needed for the successful execution of battlefield tasks. The figure below shows production estimates and forecasts for artillery shells.
Drones: Drones have altered the nature of the Ukraine-Russia war, giving front-line soldiers the ability to conduct ISR and precision strikes at a fraction of the traditional cost. Similarly, the evolution of drone warfare in Ukraine has forced changes in battlefield tactics; without proper C-UAS investment, armies will find it more difficult to concentrate forces, achieve surprise, and conduct offensive operations. Initially, Ukraine prioritized MALE drone models like the Bayraktar TB-2 to target convoys and other high-value targets. As Russia improved its air defenses, Ukraine started using smaller, more maneuverable drones, including modified commercial DJI drones and kamikaze drones like the AeroVironment Switchblade to adapt to the evolving battlefield conditions.
Ukraine plans to significantly increase its use of drones. The Deputy Prime Minister announced that Ukraine intends to produce thousands of long-range drones in 2024 with the capability to strike deeper into Russian territory. In 2023, over 300,000 drones of different types were contracted and over 100,000 were supplied to front-line soldiers. Ukraine also announced the training of 20,000 specialized drone operators and aims to produce one million First Person View (FPV) drones over the next few years. Further, Ukraine and Bayraktar have signed agreements to stand up production facilities in-country to increase production capacity.
Russia has also incorporated drone warfare into its doctrine, using both small commercial drones like DJIs as well as large UAVs like the Geran-2, an adaptation of the Iranian Shahed-136 that is used as a kamikaze drone and which Russia hopes to produce 6,000 of by 2025.
The way ahead: What might the rest of 2024 look like for the conflict?
As the war enters its third year, we’re likely to see a balancing act come into focus between original equipment manufacturers (OEMs) prioritizing the production of high-tech, low-volume defense systems and the basic munitions necessary for large-scale engagements. The conflict highlights the critical need for a strategic approach that ensures a steady supply of both advanced weaponry and the fundamental ammunition required for sustained operations. While sophisticated systems such as the M1 Abrams tank and F-16 fighter jets provide significant capabilities, the war's outcome may ultimately hinge on the volume of basic munitions available, underscoring the need to adjust production priorities to meet the realities of modern warfare.
Despite steep advantages in manufacturing capabilities and technology, the U.S. and its European allies are falling behind in the production of munitions critical to the war in Ukraine. Russia is on track to produce three times more artillery munitions than its Western counterparts, resulting in significant advantages for Russian forces.
To best support the rapidly evolving needs of the Warfighter, what should defense contractors prioritize internally?
Program execution and delivery: The importance of the “speed of relevancy” has been on stark display during the first two years of the conflict, where prompt delivery of critical munitions and equipment has been critical to front-line operations. For example, deliveries of Javelin missile systems during January 2022 played a crucial role in repelling Russian advances in the first months of the war. While these initial deliveries were made from U.S. military stockpiles, future deliveries may be dependent on successfully meeting production schedules. OEMs that show the ability to deliver on or ahead of schedule will be more likely to continue supporting future Warfighter needs.
Accelerate ramp-up: As production of basic munitions lags well behind the usage rate, there will be growing demand to supply current needs as well as to replenish depleted stockpiles. In addition to U.S. stockpile replenishment and shipments for Ukraine, other NATO countries are also increasing their defense spending and there may be a growing demand for systems that prove effective.
Create better supply chain visibility: OEMs need to have clear line-of-sight into potential bottlenecks, shortages, or supplier issues that may affect their ability to deliver on schedule. With the recent recovery from COVID-19 supply chain issues, now is an ideal time to implement supply chain watchtowers and increase engagement with suppliers. For more details on recommendations and potential strategies, refer to our last A&D Minute, Why you should talk to your suppliers now.
Evaluate and form new partnerships: Joint ventures between U.S. and European contractors have the potential to reach broader markets and expand capacity while reducing the impact of CAPEX expenditures and sharing the risk of investing in new product lines. Examples include RTX and Rheinmetall’s joint venture to produce the OMFV, Lockheed Martin and Tata’s joint production of the F-21 in India, and RTX and Lockheed Martin's development of a Javelin production facility in Poland.
Use Ukraine as a planning scenario for future conflicts: The importance of sharing both advanced equipment and intelligence prior to potential conflicts greatly enhanced Ukraine’s ability to repel the initial invasion. Concerns in the years leading up to the invasion that advanced weapons shipments would accelerate a potential conflict rather than deter it were largely disproved. Early shipments would be especially important with any conflict in the Pacific, as NATO-aligned powers will not have access to a large land border with friendly countries that can be used for weapons shipments after a conflict begins.
Accelerate, plan, and prepare for 2024 and beyond
While few believed this conflict would last as long as it has, the prevailing belief now is that it will continue for the foreseeable future. While Ukraine stands brave against what can sometimes seem like unending waves of aggression and has done a commendable job thus far, it will need help to continue the fight. Defense contractors can position themselves to best support both Western replenishment efforts and allies in this conflict through speed. Taking a “faster rather than better” approach to producing and supplying aid is likely to yield positive results for Ukraine, the West, and defense contractors. Throughout 2024, defense contractors should be focused on accelerating everything within their power to produce the weapons and systems needed to support Ukraine, while simultaneously planning and preparing for future conflicts on the horizon.
Download the latest A&D Minute here.
For a deeper discussion about the challenges and solutions associated with this topic, contact:
Eric Bernardini
Executive Partner & Managing Director, Aerospace, Defense, and Airlines
Stefan Ohl
Global Co-Lead, Aerospace, Defense, and Airlines
[email protected]
David Wireman
Global Co-Lead, Aerospace, Defense, and Airlines
Contact the authors:
Ben Brooks
Partner
[email protected]
Rodion Kaplounov
Vice President
[email protected]
Joe Soules
Vice President
[email protected]
