Meeting the Demand Signal

accountants are bad at wartime math

One thing we touched on during last Sunday's Midrats was the growing unease that the Russo-Ukrainian War would not end before the stockpiles of preferred weapons and the ammunition they use runs out.

There has been discussions about both sides of the war burning through their stockpiles at unsustainable rates while the war seems to be expanding. The Russians are having issues even with their assumed relatively deep bunkers - but much of that is bottlenecked by an early 20th Century logistics train on a 21st Century battlefield. Their problems keeping their army equipped is not the more interesting story.

The Ukrainians would have run out of weapons and ammunition months ago if the former Warsaw Pact nations in NATO didn't empty what inventory they had left of Soviet Era weaponry and the rest of NATO led by the USA didn't wander the world trying to soak up as much available inventory money could buy. That and the rapid adoption of NATO compatible equipment by the Ukrainians is helping, but that has revealed other problems - who says the West has enough to give?

We've discussed the West's almost criminally neglected stockpiles - unready for anything but the most limited or short war - for the better part of two decades.

The Russo-Ukrainian War has once again brought it in to stark relief.

If you find the business and industrial part of the national security arena interesting, which you should, then you'll enjoy Marcus Weisgerber's latest over at DefenseOne. Read the whole thing, but this is the part part I found the most interesting as it points to this particular hobby horse of mine;

The U.S. has sent 13 years worth of Stinger production and five years worth of Javelin production to Ukraine, Hayes said during a panel discussion at the Reagan National Defense Forum here.

Seeing the demand for Stingers, Raytheon is “going to take a little bit of a gamble” because it seems NATO and other U.S. allies want to buy the easy-to-use weapons in the coming years as well. 

“We want to be prepared to meet the demand that's out there,” Hayes said in the interview. “I wish I could snap my fingers and then all of a sudden miraculously, throw a building up and train 500 people [to build them], but it just takes time.”

Kendall, who was the Pentagon’s top weapons buyer during the Obama administration, said that the Defense Department’s stockpiles are not a “significant risk” yet, but it could be down the road. 

“I think we need to give more attention to the potential for longer conflicts, and what the consequences [are] of that and how we prepare for that,” Kendall said. “So that's a combination of stockage and manufacturing capacity that needs to be factored into our planning, more than may have been in the past.”

One possible way the U.S. could accelerate the resupplying of NATO allies is by standing up factories in Europe, to produce weapons closer to the front lines. 

Oh, really? Europe? Really.

For you loyal Midrats listeners, that last bit would have you ... well ... 

German ammunition manufacturers recently warned about the waiting period for orders of cotton linters from China — a crucial component for propelling charges for small guns and artillery — has tripled to up to nine months. 

German ammunition makers flagged this information at a recent defense symposium near Munich. The German government hosted a roundtable discussion with ammunition manufacturers on November 28; however, no specific outcomes were made public.

Industry sources said that all European ammunition producers depend on China for cotton linters, even though it is a commodity produced and traded globally. 

Wolfgang Hellmich, the defense affairs speaker for the in-power Social Democratic Party (SPD) in parliament, told Asia Nikkei that the significant supply shortages of China-sourced materials for military equipment are particularly problematic for ammunition and specific steels.

This is a problem throughout the West. The Russo-Ukrainian War is sending a clear warning to everyone - you need to ramp up production, capacity, and have a more reliable - if not efficient - supply chain. 

This is hard, because unlike sexy things displacing water and making shadows on ramps, ammunition and expendables are hidden away in bunkers out of sight ... and if your peacetime military and diplomats do their job, will never be used. However, when you need them, the need is existential.

Study hard. Lobby harder. Spend wiser. Spend more.