PARIS — European policymakers should urgently provide more funding to increase production of the propellant and explosive materials required to manufacture 155mm artillery shells, ammunition makers Nammo and KNDS said at the Eurosatory defense show in Paris.
“The response from the industry: hurry up,” said Morten Brandtzaeg, the CEO of Nammo, in response to a round table question about the need for European Union financing beyond the €500 million (U.S. $536 million) ASAP program allocated in March. “We need to get this in place as soon as possible.”
The scaling up of artillery shell production to help Ukraine defend itself against Russia’s invasion equates to “an industrial war,” and the time lag to boost output is concerning, the Nammo CEO told Defense News on the sidelines of the round table discussion.
While the EU says annual European production capacity of 155mm shells reached one million in January, the bloc was only able to deliver slightly more than half of one million shells promised to Ukraine by March. The ASAP program will help Europe reach production capacity of 2 million shells a year by the end of 2025, according to the European Commission.
The requirements to further boost raw-materials production have already been identified as part of ASAP, and there is no new tender necessary should the European Commission for example decide to invest an additional €200 million, according to Dominique Guillet, vice president of ammunition at KNDS. “We know what is necessary. It’s just a decision to take.”
Beyond financing capacity, companies need to take into account research-and-development funding, with long range and precision important for future munitions, and loitering munition another new development that needs to be considered, said Guillet.
The industry also needs to consider “the end of the peak and the big volume,” and how to manage the new assets beyond that, according to Thierry Francou, the CEO of French artillery-propellant manufacturer Eurenco.
Brandtzaeg said he “fully supports” coordinating demand, for example with one European country holding a significant amount of explosives, while another has significant capacity to fill warheads. The Nammo CEO cautioned against industry consolidation, however, while Guillet and Francou also expressed doubts about further concentration in the European ammunition industry.
“It’s not the time for consolidating something you are in short supply of,” Brandtzaeg said. “There are a handful of players in Europe. They should not be fewer, but a few should be bigger.”
The price of a 155mm shell produced in Western Europe ranges from a low of $5,000 to more than $10,000 for the high-end ammunition, a senior industry executive attending the round table told Defense News.
Ammunition manufacturers face higher supply-chain costs due to more demand for machinery, as well as more expensive energy, which is “a big weight,” according to Francou.
“We have an increase in pricing of all the machinery, and this is the case of everyone in this room,” Francou said. “One example: In order to accelerate the investment, we accept to overpay in order to be first in line. If I have time, I can do it cheaper, but in three years. So in the end, what is the price of the acceleration right now?”
The price of small-caliber ammunition has also doubled. “This is the market during the last five years,” Francou said.
Brandtzaeg at Nammo said price hikes aren’t only due to the war in Ukraine, but started already because of the Covid-19 pandemic, and setting up a new ammunition factory takes two to three years.
