Ukraine can make more weapons than the country buys. Industry figures say there is a simple solution to unlock its potential.

• Due to Russian invasion, Ukraine’s industry is developing rapidly and Ukraine relies less on its dependence.

• But the industry said that since Ukraine cannot spend too much, it has much more capacity.

• Industry leaders say there is an easy way to realize Ukraine’s potential.

Ukraine’s defense industry says it is ready to produce more weapons than it currently manufactures. The problem is that the Ukrainian government cannot afford the production of billions of dollars.

But it says there is a simple solution.

Ukrainian defense industry has flourished since Russia’s full-scale invasion of Ukraine, with manufacturers ranging from huge clothing to small companies based on people’s garages. These companies are crucial, especially when Western support is uncertain.

The numerous defense companies that have grown rapidly in the wars of the past three years have allowed Ukraine to innovate quickly and create weapons that are well suited to the specific combat in the country, and their insights into the needs of modern warfare have made many Western companies keen to collaborate and learn.

Ukraine’s Minister of Strategic Industry Herman Smetanin shared earlier this year that “the capacity of Ukraine’s defense industry has increased 35 times in the three years of the invasion,” from $1 billion in 2022 to $35 billion now.

Industry agencies representing about 100 Ukrainian defense companies, told Business Insider that if someone can fund it, the country’s industry is ready to make more weapons a weapon, saying it will be a win-win for allies.

Ukraine can create more with more money

Serhiy Goncharov, CEO of the Ukrainian Defense Industry Association, which represents about 100 Ukrainian companies, told BI that Ukrainian producers have more than three times the capacity of their investments they buy from their current budget.

He said Ukrainian defense companies were awarded contracts worth about $11.5 billion, but they were able to earn as much as $45 billion in weapons.

“We are ready to increase production. We have the ability to increase productivity,” Goncharov said. But for the moment, “we are still at the limit of the Ukrainian budget.”

Government officials also shared similar observations. For example, then Ukrainian Minister of Strategic Industry, Oleksandr Kamyshin, said in April 2024 that Ukraine’s defense production capacity is three times that of its defense budget.

Ihor Fedirko, CEO of the Ukrainian Defense Industry Commission, which represents the agency of more than 100 companies, told BI “has huge backup manufacturing capabilities”.

Ukrainian defense companies usually rely on government funds from purchasing goods for the military. Units can also buy some weapons and items themselves, but this practice does not add up to the same scale or provide the same confidence for the company.

The Ukrainian government only has so much money, especially during the war.

A way to solve the problem

The Ukrainian industry figures outline a simple solution that has been carried out on a smaller scale. This is a new way to support Ukraine, which Denmark introduced last year.

Nicknamed the “Danish Model” to buy Ukrainian weapons directly from Ukrainian developers, rather than from European or American companies or from inventory in other countries.

Goncharov describes actions similar to the Danish model as the “easiest” way a partner country can help Ukraine’s industry and provides industries for “fastest results on the battlefield.” This approach, he said, allows Ukraine to increase its production by giving manufacturers financial assurance and confidence.

Several countries have joined the model, while others (such as Germany) say they are making their own versions.

Danish models ensure that weapons are faster and usually arrive at Ukrainian soldiers for less money. This also means that the weapons most needed by Ukrainian troops are given priority. Goncharov said this could help the Ukrainians “get their needs on the battlefield.”

By this approach, it can still “buy Ukrainian artillery from Ukraine” even if the partner countries have limited inventory or limited defense production capacity.

Last year, a weapon purchase worth about $550 million was finalized and the production of key weapons like the Bohdana self-propelled howitzer was added.

Gong Charov said the Ukrainian industry has a series of weapons lists, and if money is obtained through this model, production can be increased. The list includes artillery and armored vehicles.

Fedeko said the Danish model is “the greatest hope for the private sector.” Other options include the use of frozen Russian assets with foreign companies and joint manufacturing opportunities.

The Danish model is not the only option

Goncharov said he had discussed the Danish model and other options to produce more Ukrainian weapons with the European Commission members.

Another model he proposed was financing production in Ukraine, depending on a large number of European components. He said many Ukrainian companies imported some components from other parts of Europe, such as some metal and vehicle chassis.

He described it as “more complex” and more medium-term than the Danish model, but it is a solution that benefits European industry and is intensifying.

Europe is closely watching the war in Ukraine, with many countries greatly increasing their defense spending and warning Russia could attack elsewhere throughout the African continent.

The state hesitantly exhausts its stocks, and new defense orders create backlogs in industry, limiting its ability to produce weapons for others.

Many European countries are studying Ukraine’s defense industry and its speed, but this is an ongoing work.

Many of Ukraine’s international partners have not expanded defense production quickly enough, so Ukrainian industries “have no other option to grow that can meet our needs.”

He said that cooperation with Ukraine is beneficial for other countries trying to improve their defense capabilities. They can learn from Ukrainian companies, with the advantage of direct contact with soldiers and units, allowing them to stay up to date to meet Russian needs and test their products.

“Unfortunately, when we are warring on territory, we are facing this situation, which is not our choice, but its nature.”

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