28 Mar 2024 -

Defense sector ramps up amid global rearmament

defence electronics

The world is witnessing a dramatic surge in defense spending as nations scramble to replenish stockpiles and bolster their military capabilities in the face of escalating geopolitical tensions. A new report Scaling rearmament – Thematic Intelligence from GlobalData highlights the immense pressure on global supply chains as countries race to produce the munitions and equipment essential for high-intensity warfare.

The conflict in Ukraine starkly illustrates the issue, with Russia expected to produce a staggering 5 million artillery shells and 700 cruise missiles in 2024 alone. The West’s focus on high-tech, limited-production solutions has left it vulnerable to supply chain challenges as militaries “balance supporting Ukrainian troops with refilling their own stocks.”

Europe is scrambling to shift its economy into “wartime production” mode. The UK alone has sent 300,000 artillery shells to Ukraine, and companies like BAE Systems and Rheinmetall are ramping up production lines. But key chokepoints remain, including shortages of machine tools and skilled labor – critical roles that cannot be easily automated.

The US is also facing bottlenecks, with its submarine-industrial base forced to cut production in half – a blow to the AUKUS alliance. This highlights the need for Western defense ministries to fundamentally rethink procurement strategies, prioritizing agile systems and commercial technologies to boost output.

GlobalData’s James Marques warns: “The so-called ‘peace dividend’ that came… at the end of the Cold War is over.” Countries are realizing the inadequacy of ‘just-in-time’ production models as the specter of major conflict looms, prompting an unprecedented arms race that will place immense and sustained pressure on global supply chains for years to come.

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