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Herman Smetanin: "Domestic production capabilities are three times higher than the Defence Ministry's procurement capacity"

The needs of the frontline are now much greater than the production volumes of the entire defence industry, while the procurement capacity of the Ministry of Defence are three times lower than that because of a lack of funds. This is roughly how the situation in the Ukrainian defence industry looks like, says Herman Smetanin, CEO of Ukrainian Defence Industry (formerly Ukroboronprom).

At the discussion panel "How to win the war: prospects and challenges of the Ukrainian industry", held as part of New Country, a joint project by and EFI Group, Smetanin spoke about the achievements of domestic arms manufacturers, the problems of the industry, and how the state intends to solve two key tasks concerning increasing production and contracting.

Herman Smetanin, Director General of Ukrainian Defence Industry JSC
Photo: Max Trebukhov
Herman Smetanin, Director General of Ukrainian Defence Industry JSC

Over the past year, the enterprises of Ukrainian Defence Industry JSC have doubled production in terms of monetary value, says Herman Smetanin. In terms of units, they produced more than 600,000 items of different weapons and military equipment, which is a thousand times more than last year. However, he admits that the military needs much more.

"The needs of the frontline today are greater than the production volumes of the entire Ukrainian defence industry and most of the defence industries in Europe and the world. Today, we are at war with a country that spends enormous amounts of money from the state budget to purchase weapons and military equipment. Only a handful of countries in the world can compete with it, as they can afford such expenditures," he said.

He stressed that Ukraine's defence capabilities are growing every year. In particular, thanks to private companies joining MilTech.

"Private products and a state-owned enterprise are already cooperating in the market. We don't talk about it because it is a significant investment by people who invest their money in production, their money in R&D, in their own name, and we will never talk about it. Maybe after we win. We are just working, doing our job," he said.

According to him, the Ministry of Strategic Industries is also actively engaging private producers. It advises on needs, what to produce and even where to locate production. The head of the state-owned enterprise gave an example of such cooperation.

"We have good results when a private manufacturer comes to us and we cooperate. For example, we are currently producing a drone developed by a private company, and in the process of cooperation between our companies, this aircraft got a warhead and is now being supplied to the Armed Forces of Ukraine together with a warhead. Unfortunately, this is not the case with most private manufacturers, but thanks to the cooperation between private manufacturers and state-owned enterprises organised by the Ministry of Strategic Industries, these products have added value, quality is being improved and products are entering the market much faster," Smetanin said.


Thanks to the participation of private producers, a record amount has been allocated for modernisation and production this year, he said. And today, "the capabilities of domestic production, including private companies, are three times higher than the procurement capacity of the Ministry of Defence."

Herman Smetanin (right) and Andriy Lebedenko
Photo: Max Trebukhov
Herman Smetanin (right) and Andriy Lebedenko

"It is impossible to buy the same amount of ammunition and weapons and military equipment as is produced if you have a budget 10 times larger or 10 times smaller. Therefore, our priority today is to increase the production of weapons and military equipment. At the same time, the government is looking for opportunities to purchase equipment in Ukraine. Instead of investing in the production of our partners, we will buy Ukrainian products, which is much cheaper. And if not on a par with the quality, then better, as our products have already been tested on the front line.

So today we definitely need to increase production volumes. And the second priority is to contract everything we can produce, both from state and private manufacturers," said Smetanin.




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