After years of dwindling production, ironmongers worldwide are gearing up for the new Cold War - re-energised by the fight in Ukraine.
Britain’s defence sector is no exception, with industry leader BAE Systems expecting a flood of new orders from countries preparing for the return of industrial war - and threatened by the potential for Vladimir Putin to extend his atrocities beyond Russia’s neighbour.
The company is in talks with customers over how to gear up missile and munitions production as the sector digests the new pattern of war being waged in Ukraine.
Chief executive Dr Charles Woodburn says demand from the UK’s Ministry of Defence (MoD), as well as other customers, “will ultimately require us to increase capacity across a whole suite of munitions”.
“People are learning lessons as we speak,” says Woodburn, who took the helm in 2017. “One of the takeaways is that ramping up a hot production line is a lot easier than trying to restart a cold production line, particularly one that in some cases may have been turned off for several years.”
BAE, Britain's largest defence firm, is in a comparatively lucky position as production lines for the shells and missiles it supplies to the MoD are already running, or can be set up quickly, meaning it does not have to dust off old designs and seek out forgotten parts to get models moving again.
As demand starts to ramp up, Woodburn says “conversations are happening as we speak with our customers around the world” about shifts being added to production lines, and new ones being set up.
For the past five months, Ukraine has been using thousands of artillery rounds per day, ranging from howitzers small enough to be towed by a Land Rover firing comparatively cheap shells which can be made quickly, to longer-range weapons like the M270 multiple-launch rocket system.
Foreign countries have supplied huge volumes of this weaponry, either donated or sold. Earlier this week, Germany approved the sale of 100 tank howitzers worth €1.7bn (£1.4bn) to Ukraine.
As of last week, Britain has sent 6,900 NLAW, Javelin, Brimstone and other anti-tank weapons, 16,000 artillery rounds, hundreds of missiles and six Stormer vehicles fitted with Starstreak anti-air missile launchers.
BAE makes bullets and shells for the MoD and complex missiles through MBDA, which it co-owns with Airbus and Italy’s Leonardo. MBDA’s Brimstone missiles, which have been sent to Ukraine, are designed to destroy tanks.
In the first half of the year, BAE enjoyed a £18bn boost in orders, up 70pc as underlying earnings before interest payments and tax rose 8.2pc to £1.11bn. It has upped its interim dividend by 5pc and will buy back £1.5bn shares.
Much of that order increase was for existing programmes such as its Dreadnought nuclear ballistic submarines and a recent order from Spain for more Typhoon fighter jets, which it builds in partnership with Germany, Spain and Italy. Yet the uptick looks set to continue with countries wanting to bolster supplies.
“I think there is more to come. Which, given the very unfortunate events in Ukraine, have put the elevated threat environment back on the minds of our political leaders,” Woodburn says.
Last week, the Czech Republic said it has authorised negotiations with BAE Systems Hägglunds - the company’s Swedish unit - for CV90 combat vehicles, while Slovakia is also in negotiations.
More sales opportunities are sure to present themselves as NATO irons out plans to put more troops at high readiness from 2023 along the alliance’s border with Russia, which could translate into armoured vehicles sales for BAE’s Hägglunds business.
With orders increasing, missile makers — including BAE — are understood to be exploring how to better manage production so weapons are made faster.
Typically, missiles fired at moving targets are made in batches. It takes 10 years to commission, design and deliver a new system, and two years to restart a programme, depending on its complexity. It makes managing stockpiles tricky, since ammunition can be burned far quicker than it is made.
Earlier this week, retired US Lieutenant General Mark Hertling estimated that the 16 Himars rocket systems America sent to Ukraine could fire 192 missiles a day — equivalent to a year’s worth of production in less than two months.
He said he expected prudence was being used in supplying the missiles and that the US has a stockpile, but that another conflict would put pressure on supplies.
It isn’t just BAE that is set to benefit. For Babcock, Britain's second-biggest defence contractor, the build-up of Nato capability in Eastern European nations offers potential work in training, maintenance and supplying parts, according to chief executive David Lockwood. Nations such as Poland, Hungary, Romania and the Baltic nations are switching from Soviet weaponry.
“There are East European governments, and I don't mean Ukraine, who are now buying western kit having grown up on Warsaw Pact kit, who need help in understanding how to support and operate that and that's the kind of thing we do in the UK,” he says. “There are those kinds of discussions running.”
The company unveiled a pre-tax profit of £182m for the first six months of 2021, compared to a loss of £1.18bn a year ago, and an orderbook up more than a fifth to £9.9bn.
“I think the world has changed beyond recognition, and I think defence departments and governments are now looking at the world quite differently. But that takes time to work through the system,” adds Lockwood. He says big, new orders for large naval projects are unlikely to arrive in a rush, since they are slow to design and make.
Sources close to Babcock say customers want existing projects to be completed more quickly, as the war in Ukraine heightens preparedness.
The Polish government, for instance, is asking for its first frigate of three new warships to be delivered ahead of time, according to people close to the negotiations. Babcock won the key contract to supply Poland in March, beating Germany’s Thyssenkrupp.
When it comes to the UK’s preparation for the return of industrial war, the Government plans to order a replacement to the Type-45 missile destroyer and a new fleet of frigates. This could offer opportunities to both Babcock and BAE.
“There will be some ships in the longer term,” says BAE’s Woodburn. “There's quite a range of opportunities to be pursued in the UK.”