Russia is struggling to increase arms production against a tide of permanently growing costs and a shortage of human and financial resources. Without a ceasefire, the Kremlin will face deeper imbalances in its domestic political economy and become strategically weaker.
2025 will be the last year Russia can rely on its massive stockpiles of Soviet-era conventional arms, including artillery, main battle tanks and armored vehicles.
If the intensity of combat, and consequent Russian losses, follow the same pattern as 2022–2024, most stockpiles will be exhausted by the second half of the year, forcing Moscow to rely on newly manufactured arms rather than repaired and modernized ones.
Financial Results for Rostec and Tactical Missile Corp
The industrial and foreign trade statistics for 2024, and the annual financial results of the major Russian military-industrial corporations, won’t be available until later this year, but it is already clear the arms manufacturing sector in Russia cannot scale-up production in the way it did in 2022–2023.
The examples of Rostec and Tactical Missile Corp. show clearly that Russia’s military-industrial complex is suffering the effects of cost-push inflation and pressure from the weakness of the ruble. This is the inevitable result of the sector’s continuing dependence in imported supplies of components and machine tools, and despite the import substitution policy. And the cost-push inflation is much higher than the officially declared monetary inflation rate (7.42% in 2023.)
For example, Kurganmashzavod, a subsidiary of Rostec which manufactures BMP-3 infantry fighting vehicles and modernizes the BMP-1 and BMP-2 models, declared a 45.5% increase in production costs in 2023, outstripping its 41.8% revenue growth.
Another major obstacle to manufacturers is a shortage of qualified workers, although, as so often with the Russian state, the data is contradictory.
In June 2022, then deputy prime minister Yuri Borisov declared a shortfall of 400,000 workers and engineers, of whom 120,000 were engineers. Two years later, Borisov’s successor, Denis Manturov, said there was a shortage of 160,000 workers and engineers with a prospect of this increasing to 240,000 by 2026, of whom 80,000 would be engineers.
Five months after that, the head of the Duma’s control committee Oleg Morozov reprised the 400,000 deficit in workers and engineers. While the Kremlin’s number theater is designed to confuse and is hard to penetrate, it is clear that workforce shortages will remain a major obstacle for Russian arms manufacturers for the foreseeable future.
The age structure of the workforce is also a problem. The median age of employees of military manufacturers was 45 in 2021, with only 16% of them 29 or younger, and 41% 50 and older.
This year, the age structure is no more favorable as a result of the negative long-term demographic trend, and continuing attempts to recruit hundreds of thousands of men, most of whom are “blue collars” of middle age, for the military. In short, the military-industrial complex needs more qualified workers than Russia has today and will have in a foreseeable future. As a result, it will be hard for Russia’s authorities to increase arms production significantly without a decline in the quality and range of products.
Manpower shortages on the frontline and at home, the difficulty of manufacturing, and runaway budgets, makes Russia increasingly vulnerable to the continuing war of attrition with Ukraine.
The Kremlin’s strategic threat could be weakened, if not eliminated, if in the long-term Ukraine is able to maintain and the increase military pressure on its invaders.
Dr. Pavel Luzin is a non-resident senior fellow with the Democratic Resilience Program at the Center for European Policy Analysis (CEPA), a senior fellow at the Jamestown Foundation, and a visiting scholar at the Fletcher School of Law and Diplomacy (Tufts University.) In 2017–2018, he was a consultant on the issues of the armed forces, law enforcement agencies, and the defense industry for Alexey Navalny’s presidential campaign in Russia.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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