TITLE: Arms Manufacturers Catching Up with World's Insatiable Need for 155mm Rounds
https://www.nationaldefensemagazine.org/articles/2024/9/11/arms-manufacturers-catching-up-with-worlds-insatiable-need-for-155mm-rounds
EXCERPTS: Since the war began in Ukraine the demand for the relatively low-tech 155mm ammunition has skyrocketed, with the nation firing as many as 8,000 rounds per day, according to some published estimates.
From Asia to Europe to the United States, arms manufacturers are building new facilities to boost the capacity to produce the shell, not only to supply Ukraine but also to replenish domestic stocks.
In the United States, the Army is looking to significantly ramp up 155mm production, with a stated goal of producing 100,000 rounds per month by 2025. As of February, the Army was “manufacturing 30,000 155mm rounds per month, doubling its previous output of 14,000 rounds prior to the conflict,” according to a service release.
Doug Bush, assistant secretary of the Army for acquisition, logistics and technology, said the Army is now “on a path” to producing 70,000 to 80,000 rounds per month by the end of 2024 or early 2025.
In May, the Army’s Joint Program Executive Office for Armaments and Ammunition hosted an opening ceremony for the Universal Artillery Projectile Lines facility in Mesquite, Texas, which will produce metal parts for 155mm shells.
The $576 million facility will be operated by General Dynamics Ordnance and Tactical Systems. A company official who spoke on the condition of background said General Dynamics “worked closely with the Army to figure out what the [service’s] desires were and incorporate as much new technology as possible into a new facility.”
One example is the significant amount of automation throughout the facility.
“If you think about things like forklifts and hand trucks to move material from one operation cell to another, we don’t have that here,” the official said. “It’s a lot of conveyors, [and] anytime we do have to move batches of things it’s done by [automated guided vehicles], which are essentially little Roombas that go and pick up the pallets and move them to the next operation, and all that’s done through [light detection and ranging] programming and the sensors onboard those machines.”
In addition to the typical 155mm high explosive rounds, the facility also “offers the flexibility to manufacture a variety of projectile metal parts ranging in calibers from 60mm to 155mm,” a General Dynamics release stated.
The Army will assume ownership of the capital equipment, subsequently leasing it back to General Dynamics Ordnance and Tactical Systems through a government-furnished materiel agreement, the Army statement said.
Along with domestic industry partners such as General Dynamics, the Army is looking to international companies to help with 155mm production.
Norway-based aerospace and defense company Nammo is in talks with the Army to open a second U.S. plant to manufacture 155mm munitions, the company’s president and CEO Morten Brandtzaeg said at the Eurosatory trade show in Paris in June.
Nammo already operates a plant producing 155mm ammunition in Mesa, Arizona. Brandtzaeg said Nammo is prepared to open a new 155mm plant near its Mesa location or in Florida.
Another source of the ammunition is South Korea, which has large stockpiles of 155mm shells that adhere to NATO standards. Its laws prohibit it from supplying weapons to nations at war, but it can get around the law by replenishing stocks of countries not at war who are sending their own shells to Ukraine.
German defense giant Rheinmetall is “a little ahead of the curve, but I would say probably at about now, the United States is producing more than Europe,” Darling said.
Gaspard Schnitzler, head of the defense industry program at the French Institute for International and Strategic Affairs think tank, said before the beginning of the Ukraine war, Europe was able to manufacture about one million 155mm artillery shells, but by 2026, it should be able to produce 2 million.
The EU Commission has also come up with numerous initiatives, creating incentives on both the demand and the supply side to give the defense industry more visibility, he said while moderating a panel on the European ammunition industry at Eurosatory.
Another indication of the rising demand was Rheinmetall in June signing the largest order in the company’s history: an 8.5 billion euro deal with the German government to replenish its 155mm stocks and supply Ukraine with the shells with deliveries to start in 2025, a company statement said.
In February, it broke ground on a new 155mm-focused factory in Unterluess in the Lower Saxony region.
Armin Papperger, the company’s CEO and chairman of the executive board, said the order will ensure that the new factory will not overbuild production capacity.
Dominique Guillet, general manager for KNDS Ammo France, along with the other two European industry executives, questioned what happens when the world’s insatiable demand for 155mm rounds comes to an end.
His company has a goal to triple its 155mm artillery shell production.
“We are fully mobilized to ramp up but we need to think about the future after the next two years. It’s OK now, but what happens from 2027 to 2030?” he asked.
TITLE: Defense Companies Profit as War Expands, Expected to Double Cash Flow in 5 Years
http://www.koreatimes.com/article/20240920/1530850
EXCERPT: According to an analysis by Vertical Research Partners, the world's top 15 defense companies are projected to generate $52 billion in free cash flow by 2026, a figure that is double the amount at the end of 2021, reported the Financial Times (FT).
The top five U.S. defense companies alone are expected to generate $26 billion in cash by the end of 2026, more than double the amount in 2021.
This figure excludes Boeing, whose recent series of mishaps and significant involvement in commercial aviation have negatively impacted its performance.
In Europe, major defense companies such as the UK’s BAE Systems, Germany’s Rheinmetall, and Sweden’s Saab are also expected to see more than a 40% increase in cash flow, driven by orders for missiles and ammunition.
This trend is being accelerated by the Russian-Ukrainian war, the conflict in the Middle East, and rising tensions in Asia, leading governments to increase their defense budgets.
In the U.S., a recent support bill for Ukraine, Taiwan, and Israel allocated $13 billion in defense funding to the top five defense companies and their partners, including Lockheed Martin. Similarly, the UK Ministry of Defense has spent £7.6 billion (around $10.1 billion) on military aid to Ukraine over the past three years. With rising defense spending, weapon orders are approaching record highs globally.
Typically, it takes several years for new weapon contracts to translate into revenue, as defense companies record sales when the weapons are delivered. However, attention is already on how these companies will use the substantial cash they have begun accumulating.
Robert Stallard, an analyst at Vertical Research, noted, “Companies generally don't like to hold onto a lot of cash, and acquisitions aren't easy in the current environment, so how they choose to allocate this cash is a major point of interest. Stock buybacks or dividends seem likely." This trend has already begun. Defense companies have invested billions in stock buybacks even before the recent surge in orders.
According to data from Bank of America (BoA), U.S. and European defense companies saw their largest stock buyback volumes in five years last year.
TITLE: ‘Arms production has defeated diplomacy’ too often, Higgins says
https://www.laois-nationalist.ie/arms-production-has-defeated-diplomacy-too-often-higgins-says_arid-31958.html
EXCERPTS: Powerful world leaders are complicit in the avoidable loss of life of children, Michael D Higgins has said.
The president [of Ireland] also said record military expenditure worldwide reflected a “species failure”, adding: “Arms production has defeated diplomacy in too many areas.”
He made the remarks as he visited Ratheniska, Co Laois for the 2024 National Ploughing Championships.
Mr Higgins, who officially opened the event on Tuesday, told the crowd that the “rhetoric of war and the shocking escalation of armaments” must not sideline agreements on poverty, inequality, climate action and sustainability.
“This is not a world of which any species can be proud, that we have failed in these significant areas – and how shameful it is that this is taking place in a world where military expenditure has soared to unprecedented levels, reaching 2.44 trillion dollars in 2023, the highest ever recorded.”
Mr Higgins said people “were drawing dividends” by investing in the weapons of war, adding: “When one looks at this period of history, it is in fact a species failure.”
He added: “In particular, we think of all the people in Gaza as we approach the one year anniversary of the horrific events of October 7th.
“There is no room any more for anyone, I think, to avert their gaze from what are the most horrific of circumstances of war and displacement.
“This outrageous level of killing must end with an immediate ceasefire.”
The president further reflected on his interactions with other world leaders and added: “I cannot understand, and I cannot condone those heads of state from very powerful countries who cannot allow themselves and officials to look at young children dying of malnutrition or dehydration and still staying silent.
“Staying silent is complicity in the loss of life that is avoidable, and it must end.”