Just in time is dead: How European manufacturers are gearing up for land warfare

For any industry, a supply chain must balance efficiency with cost. Holding stock can be expensive and inefficient, it requires an entity to maintain and retain warehousing and storage for components and to procure them in bulk. Ideally, a production line is operated at an optimal capacity without any redundancy. This reduces waste and ensures a flexible approach to delivery and changing circumstances. Many industries pursue just in time delivery to manage their supply chains. In essence, this is a process where a manufacturer will conduct extensive planning to predict the future production needs and maintain the minimum amount of components and materials in stock necessary to meet them. When the stock falls below a certain level this will trigger the demand for replenishment that leads to frequent small deliveries. At the same time, a manufacturer will generally retain enough staff and machinery to meet the expected production outputs. Staff and machine tools, as well as the space to house them and store critical components and materials represent costs to companies. As such, keeping them ‘lean’ or to the minimal level required to ensure successful delivery, has become a favoured model of operations for many manufacturing industries, from microchips to cars and even food.

However, just in time delivery has vulnerabilities that primarily arise when uncertainty or variability in demand are likely. It is perhaps surprising, therefore, to find that just in time delivery has been the favoured method of supply chain management for many defence companies. “Just in time is dead,” Tommy Gustaffson-Rask, President of BAE Systems Hägglunds told an audience at the Eurosatory 2024 event. He spoke in light of the aftermath of COVID and the shock of the Ukraine war. Both events have exposed fragile supply chains to some of the greatest challenges they could expect to face; from a sudden collapse of supply chains and spending, to a surge combined with changes to supplier landscapes coupled with a resurgent and very serious threat. As a result, defence manufacturers are pushing hard to increase production of essential systems as the prospect of a military confrontation with Russia hangs over the capitals of Europe.

“Just in time is dead”

For Europe’s manufacturers of armoured fighting vehicles (AFVs), and indeed those abroad, just in time delivery has made some sense for a long time. Many AFVs rely on commercial powerpacks that are produced at scale and orders can be increased or decreased as required. Vehicle armour can be challenging as Europe has very few steel mills capable of producing large stocks of steel qualified for use in armoured vehicles.^[1] However, vehicle orders have tended to be predictable in size and intermittent, which allows manufacturers to prepare their supply chains for contract awards and commence production and assembly. Similarly, Europe’s armed forces have limited the use of their vehicles and systems, which has allowed production capabilities of consumable components such as barrels to atrophy. With the possible exception of France, few European nations have used their howitzers enough in the past ten years to justify production of 155 mm and 120 mm barrels at scale.^[2] Orders for new vehicles have kept these production lines alive but in a minimal form. The war in Ukraine has laid these challenges bare, since February 2022, there have been hundreds of land platforms ordered in Europe alone, an overview of some known orders for 2024 is provided in Table 1.

Table 1: Select major European land platform orders
Country	Vehicle family	Prime contractor	Quantity	Delivery date
Austria	Skyranger 30 on Pandur	Rheinmetall	36	2026
Bulgaria[3]	IRIS-T SLM	Diehl Defence	Unknown
Croatia	Leopard 2A8	KNDS Germany	50	Letter of intent
Denmark	CV9035 Mk IIIC	BAE Hägglunds	115	2026 – 2029
Denmark[4]	Skyranger 30 turrets	Rheinmetall	16	2027 – 2028
Finland	Common Armoured Vehicle System (CAVS)	Patria	161	2025
France	Caesar Mk II	KNDS France	109	2026
Germany[5]	UTF 5t and UTF 15t trucks	Rheinmetall	610	2024 onwards
Germany	Boxer Heavy Weapons Carrier	Rheinmetall	Up to 123	2025 onwards
Germany	Skyranger 30 on Boxer	Rheinmetall	19	2024
Germany	Leopard 2A8	KNDS Germany	105	2027 – 2030
Germany	HX Body Swap System trucks	Rheinmetall	1,515	2024
Germany	PzH2000	KNDS Germany	22	2025 onwards
Italy	Leopard 2A8	Leonardo	132	2026 onwards
Lithuania[6]	Leopard 2	KNDS Germany	46 (est)	By 2030
Lithuania	CV90	BAE Hägglunds	>80 (est)	By 2030
Lithuania	Vilkas (Boxer)	KNDS Germany	27	2027 – 2030
Latvia[7]	Common Armoured Vehicle System (CAVS)	Patria	256	2025 onwards
Latvia	ASCOD	GDELS	Unknown	By 2028
Slovenia[8]	IRIS-T SLM	Diehl Defence
Sweden	Common Armoured Vehicle System (CAVS)	Patria	321	2025 onwards
Sweden[9]	CV9035 Mk IIIC	BAE Hägglunds	>50	2026 – 2029
Switzerland	Piranha AGM	GDELS	Unknown	Unknown
UK	HX Palletised Load System trucks	Rheinmetall	500	2024

 

Table 1 is far from comprehensive, and does not represent the totality of land platform orders that European manufacturers are facing. Hundreds more vehicles have been ordered since 2022 leading Tommy Gustaffson-Rask, to state, “just in time is dead, you need to plan differently, take more time, and work more proactively in the supply chain to manage it. COVID and the war in Ukraine have brought big changes to our supply chains,” in a press interview at Eurosatory 2024. At that point in June, Hägglunds had 450 CV90s on its order book as well as 700 of the BvS10 family, the company’s total order book exceeded EUR 6 billion, driving investment in its production plant with another EUR 300 million to be spent by 2027. “We need to realise that we are stretching the capacity to deliver all over Europe. There are three challenges: We have been supporting Ukraine, we have to replenish what we have sent to Ukraine, and for too long, we have had too little stock,” Gustaffson-Rask explained.

There are clues, provided in Table 1, as to how supply chain stresses can be minimised. One is a common procurement programme such as the Common Armoured Vehicle System (CAVS) 6×6 from Patria, for instance. The CAVS has been ordered by Latvia, Finland, and Sweden. Germany has also joined the consortium and may benefit from the developments put in place by the other members. Already, Patria has orders for more than 750 CAVS vehicles in different configurations and has opened a production facility in Latvia with capacity for production of around 30 vehicles per year.^[10] The CAVS vehicle is designed to be used as the base platform with user-specific additions such as a Kongsberg RS4 remote weapon station (RWS) in the case of Sweden. However, the idea is to leave the core design of the vehicle untouched. “From a supplier point of view, it’s important to stress the fact that if you come to us with joint requirements, we can do a lot of the same. For example, Sweden is the lead organisation in the procurement of Bvs [BvS10], and they are buying the same vehicles as the UK and Germany, they will add their own systems later,” Gustaffson-Rask said.

The Boxer Heavy Weapons Carriers ordered by Germany follow this principle – they are much the same as the Australian Combat Reconnaissance Vehicle, and 100 of them will be built in Australia and exported to Germany from 2026.^[11] The Swedish and Danish orders for the CV9035MkIIIC will come from the same production lot in the same standard, which uses the D-series turret design of the Dutch CV90 mid-life upgrade, with the same design selected for the Slovakian CV9035MkIV, 152 of which are to be delivered under a contract signed in 2022.^[12] In short, each country will receive vehicles built to a common standard that allows BAE Systems to seek out and exploit efficiencies within its supply chain – whether that is the bulk purchase of armoured steel or engines, or the expansion of warehousing facilities to store additional components and materials. The same is true of CAVS and Germany’s new Boxers, these orders mean a more simple supply chain that carries reduced risk, compared with one producing a range of different variants for different users. This is key for those European countries that would like their new vehicles to arrive in a short space of time, but it might mean compromising on requirements. “If you take 90% of your requirements, you can get your vehicles in time. But if you stick to 100% of your requirements, you might not get them until 2032,” Gustaffson-Rask added.

In a similar but connected vein, many users have settled on proven platforms in a modern format, the Leopard 2A8 is a prime example of this, with around 300 ordered in 2024 alone. They may not all be procured as Leopard 2A8s, but the base platform and turret have few differences between variants and with as many as 280 of them in the 2A8 standard, KNDS Germany will also be able to consolidate its supply chain around a single platform. However, the number of Leopard 2s that have been ordered will likely create some friction within the supply chain. Barrel production is one issue that is often raised against the backdrop of the war in Ukraine. The scale and extent of the fighting led to the rapid deterioration of barrels for both howitzers and tanks, which in turn prompted an inward look at the West’s ability to replace them.^[13] Europe did not have many barrel production lines in 2022, with many reliant upon Rheinmetall for the ubiquitous 120 mm L44 or L55 gun that arms the Leopard 2 family. Many others, such as Pzh2000 operators, and Poland with its Krabs, were also dependent on the German manufacturer to supply replacement barrels.

Rheinmetall has expanded its production to meet the increased demand, and is expected to produce at least 100 155 mm barrels for the PzH2000 between 2024 and 2029 for an unspecified European country.^[14] The company is thought to be capable of producing up to 200 barrels in both 120 mm and 155 mm calibre per year, plenty to meet the current demand for Leopard 2 and PzH2000s, but the expansion of production into Italy will add further barrel production capacity. This is necessary to sustain the European Leopard 2 fleet, and may become critical if they must ever be used in anger.

So, it’s clear that Europe is working to boost its land platform fleets with around 1,600 vehicles ordered in 2024 from the contracts found for this article, not to mention the 2,500 or so logistics vehicles for the UK and Germany. Many are expected to be delivered by 2030, according to the initial contract announcements, which indicates that a period of intense growth must lie ahead for BAE Systems Hägglunds, KNDS Germany, Rheinmetall and Patria. “I think generally we can deliver to the customers, but maybe not in the time frame that customers are expecting,” Gustaffson-Rask said. One route to meet this need is through local partnerships, which Rheinemtall has already established in Hungary, and is in the process of doing in Romania.^[15] Similarly, BAE Systems Hägglunds has signed an agreement with Slovakian company Koval Systems for the production of D-Series turrets for Slovakia’s CV9035MkIV order.^[16] Additionally, Hägglunds has also signed an agreement with Norwegian company Ritek to produce two CV90 variants for Sweden – a forward maintenance vehicle and a combat engineer variant.

While European vehicle production is beginning to move into higher gear, other challenges remain, such as the production of sufficient quantities of ammunition. At present, meeting Europe’s ammunition demands very much requires new production lines, how is Europe meeting that demand?

‘Artillery is heaven falling to earth’

In 2022 a social media account run by a US veteran started posting accounts of the war from Ukrainian soldiers. One post recalled words to the effect that ‘Russian artillery was like heaven falling to earth.’ The soldier explained how terrifying a Russian bombardment was, how paralysis would descend over the most experienced soldiers as Russian shells crashed into their trenches. The Ukrainians fought back with their own massed artillery, expending thousands of shells and rockets stockpiled from the Soviet era and purchased from their neighbours. This helped stem the Russian advance and counter the massed fires of Russian divisions as they shifted from a war of manoeuvre to one where attrition was the order of the day. However, Ukraine quickly depleted its stockpiles of Soviet ammunition which led the West to begin supplying its NATO calibre systems and ammunition. War stocks were quickly emptied across Europe and the attendant supply chains groaned into life in a bid to replenish them. International efforts were quickly initiated to find suitable ammunition of both Soviet and NATO calibres abroad.

The matter was critical for Ukraine, the figures vary but Russian artillery has caused, and continues to cause up to 80% of Ukraine’s combat casualties depending on where combat is focused. Ukraine in return has caused extensive damage to the Russian forces with its own artillery; it has destroyed thousands of Russian howitzers and prevented hundreds of advances. Suffice to say, artillery and the ammunition that enables it has been a critical tool in Ukraine, and resourcing that need has stressed the West’s supply chains as it was found that there was insufficient capacity to increase production to meet dramatically increased needs.

In response, Rheinmetall has opened or is working on at least three artillery ammunition factories as it works to meet the huge demand placed upon it for 155 mm ammunition. A new factory at the company’s site in Unterluess is scheduled to be complete by early 2025 and due to provide an initial annual output of 50,000 shells, rising to 100,000 the year after and 200,000 thereafter, as well as 1,900 tonnes of RDX explosive per year, along with rocket motors and warheads.^[17] In 2024, Rheinmetall conducted the official takeover of its 30 mm ammunition factory in Várpalota, Hungary and announced the start of construction of a new facility in Baisogala, Lithuania set to be operational by mid-2026, and planned to produce “tens of thousands” of 155 mm shells each year. The company is also working to establish an ammunition plant in Ukraine, and received a EUR 8.5 billion framework agreement from Germany in 2024 for artillery ammunition to replenish the country’s stocks of 155 mm shells. Spain added to the order book with a framework agreement valued at EUR 205 million for up to 500,000 artillery charges. These developments, and many others mean that Rheinmetall has assessed the operating result of its weapons and ammunition business from Q1 to Q3 of 2024 to be EUR 339 million; for comparison, it was just 175 million euros for the same time period in 2023.^[18]

The French company Eurenco, which produces modular charges, nitrocellulose, and explosives for large calibre ammunition is expanding its production facilities in France. It is expanding production at many of its facilities with plans to produce up to one million modular charges per year from its Bergerac site. The company restarted production of nitrocellulose after an accident in 2022 shut production down, which will reduce European reliance on foreign suppliers in a supply chain that also feeds Russia’s war machine.^[19] Eurenco has also stockpiled 18 months’ worth of cotton to support nitrocellulose production, alongside additional supplies of wood pulp from France.^[20]

Meanwhile, BAE Systems in the UK is expanding its industrial footprint with an additional explosives filling facility at Glascoed in Wales subject to planning approval.^[21] The new facility will expand artillery ammunition output by eight times, according to BAE, although the starting point is rumoured to be relatively low.^[22] A new 155 mm shell machining line is being built in Washington in the UK, and BAE is also reinstating production of 30 mm ammunition – all under a GBP 2.4 billion partnering agreement signed with the British government in 2020.^[23]

In the Nordics, Nammo is to increase production of 155 mm shells, 120 mm tank rounds and rocket motors for AIM-120 AMRAAM missiles, for a minimum of 15 years under a EUR 86 million contract signed with the Norwegian government in July 2024.^[24] Nammo’s Swedish factory has received funding from the EU’s ASAP initiative as well as the Swedish government to triple its production of 155 mm ammunition, and the Finnish entity has also received funding to increase its output of 155 mm shells, nitrocellulose, and explosives.^[25] Also in Norway, Kongsberg has announced EUR 55 million in funding to support increased missile production, a move validated later in 2024 by the company’s largest ever Naval Strike Missile (NSM) order, valued at EUR 850 million.^[26] Although the NSM order is for the US, increased production at Kongsberg will also benefit European states.

Missiles and complex weapons are of course a critical component of land warfare. Europe’s decision to establish local production of Patriot PAC-2 GEM-T surface-to-air missiles (SAMs) at COMLOG (a joint venture between Raytheon and MBDA) is therefore a welcome one, with MBDA’s Bayern-Chemie set to produce the first PAC-2 rocket motors by the end of 2026, returning a capability that was lost in 1996.^[27] Diehl is also working to expand its IRIS-T missile family footprint in Europe, and broke ground on a new facility at Nonnweiler at the end of October 2024, which is expected to be operational by the end of 2025.^[28] However, with all this expansion, companies must find raw materials and components, which will also come under pressure as the lower tiers of the defence supply chain adjust to new levels of demand. This is where synthetic environments may offer new benefits in supply chain management.

Synthetic environments and the future of supply chains

“There is an existential threat facing organisations from a lack of supply chain visibility. This threat is multifaceted, affecting operational efficiency, financial stability, ethical compliance, national security, and environmental sustainability,” Hadean, a defence AI company specialising in synthetic environments told ESD via email. The company believes that ‘supply chain situational awareness’ can be established, allowing manufacturers to plan ahead and anticipate supply chain shocks caused by events at lower tiers. They could, for example, stockpile certain components if a risk to supply is identified in time, or identify an alternative source. “Synthetic environments can handle the vast context of modern supply chains, allowing for comprehensive modelling and analysis without being limited by data volume or network complexity,” Hadean said. These environments can also be used to run parallel simulations and conduct predictive analysis of the potential impact of any given disruption.

Many companies will have the capacity to conduct supply chain analysis in some form or another, but this will typically depend on human resources, and thus be inherently limited by the speed at which those humans can reply to any given request. The scale of a supply chain matters here – some microchip companies can sell millions of chips every week, making any comprehensive analysis impossible in a useful timeframe. “Synthetic environments can resolve this by both rapidly shortening the process time of question to answer, sometimes by removing, replacing or augmenting the Request and Analysis steps with AI, and in most cases, reducing the need for further questions through visualisation and enhanced understanding of insights,” Hadean explained. The potential for synthetic environments is relatively clear; many industries failed to appreciate the impact that COVID 19 would have on their supply chains, because predicting ‘black swan’ events is essentially impossible. However, building the tools to conduct analysis as a disruption emerges would be beneficial.

However, there’s a catch, “sharing data (a proprietary asset) with your extended supply chain would ultimately be beneficial but companies are often reluctant to do so due to concerns about data security, confidentiality, and competitive advantage. Sharing proprietary information with external partners can expose sensitive business insights, intellectual property, and strategic plans to potential risks such as data breaches or misuse,” Hadean said. This means that companies in the synthetic environment space must build trust with their potential stakeholders and develop clear and secure frameworks for using company data. If, however, it is possible for Europe’s supply chains to be simulated, then it may prove a worthy investment. Recent analysis from Ukrainian think-tanks indicates that Russia is increasingly reliant on China for much of its defence needs, especially for machine tools and microchips. If Europe has similar dependencies, it would do well to identify them through data-sharing, and at least simulate the potential disruption should those dependencies come to be exploited or disrupted by an adversary.

Overall, there is plenty to inspire hope in Europe’s defence production. Billions of Euros have been invested into new vehicles, replenishing ammunition stocks, and standing up production lines that fell dormant in the 1990s. It seems likely that at this pace, Europe will be well-placed to meet most of its land warfare needs by 2030 – at least in a material sense. Much will depend on the political will to maintain cohesion between states, and to provide ongoing support for these new supply chains or face losing them once more.

Sam Cranny-Evans

 

^[1] Rearmament Plans: Piling Up Trouble? | Royal United Services Institute

^[2] Firebase Saham: A day in the life of joint-artillerymen securing the Iraq border | Article | The United States Army

^[3] Diehl Defence welcomes Bulgaria in the IRIS-T SLM user family

^[4] Rheinmetall supplies Skyranger 30 for Denmark’s mobile air defense system

^[5] Rheinmetall receives record order

^[6] Lithuania goes firm on Leopard 2 and CV90 combo for its armoured forces

^[7] Latvia expands CAVS fleet with 56 new command vehicles

^[8] Slovenia procures IRIS-T SLM within ESSI framework | Diehl Defence

^[9] BAE Systems signs contract with Sweden for new CV90 combat vehicles

^[10] Patria opens a new armoured vehicle production facility in Valmiera, Latvia

^[11] Production contract for Boxer Heavy Weapon Carrier Vehicles from Australia | Rheinmetall

^[12] BAE Systems signs contract with Slovakia’s KOVAL SYSTEMS for CV90 production; BAE Systems signs contract with Sweden for new CV90 combat vehicles

^[13] Artillery Is Breaking in Ukraine. It’s Becoming a Problem for the Pentagon. – The New York Times

^[14] Major order for L52 gun barrel systems | Rheinmetall

^[15] Welcome Day at Rheinmetall Automecanica SRL

^[16] BAE Systems signs contract with Slovakia’s KOVAL SYSTEMS for CV90 production

^[17] Rheinmetall builds new ammunition plant in Germany

^[18] Rheinmetall / Investor Relations / Publications / – Presentations & Reports

^[19] Restart of the Nitrocellulose production on the EURENCO Bergerac site

^[20] Industrie : que fait-on vraiment à la poudrerie Eurenco de Bergerac ?

^[21] BAE Systems Glascoed factory expansion set for approval | South Wales Argus

^[22] 155mm Artillery Ammunition | Munitions | BAE Systems

^[23] UK Ministry of Defence invests £280m in frontline battlefield munitions | BAE Systems

^[24] Agreement will significantly expand production of Norwegian artillery ammunition

^[25] Nammo Sweden to triple ammunition production capacity < INDUSTRY < 기사본문 – Global Defense & Aerospace Post (GDAP)

^[26] Kongsberg lands $896 million deal for Naval Strike Missile

^[27] Patriot returns: Bayern-Chemie breaks ground on new rocket engine facility

^[28] Ground-breaking ceremony for the expansion of the Diehl Defence Nonnweiler location