As allies scramble to supply Ukraine, Canada still has no deal to ramp up munitions production

In the fall of 2022, a little more than six months into the full-scale Russian inva‐ sion of Ukraine, two of Canada's major ammuni‐ tion manufacturers sub‐ mitted proposals to the Liberal government to drastically increase produc‐ tion of artillery shells.

Almost a year and a half later - with Canadian stock‐ piles drained by donations to dangerously low levels, and with Ukraine running out of ammo - a major agreement to ramp up production in this country still hasn't been signed.

And there doesn't appear to be one on the immediate horizon, despite pressure from allies who already have moved to increase their own munitions capacity.

Canada and the United States have held exploratory talks aimed at finding ways to resupply Ukraine, discus‐ sions that quickly turned to the question of how to re‐ plenish dwindling domestic inventories.

The Liberal government's hesitation stems in part from the fact that boosting pro‐ duction of the NATO-stan‐ dard 155 millimetre shells that both Canada and Ukraine need requires a fed‐ eral investment of as much as $400 million in the facto‐ ries where they're made.

"There have been discus‐ sions. I've not yet signed a deal," Defence Minister Bill Blair said in a recent inter‐ view, adding that he spoke recently with the finance and innovation ministers about the issue.

"We're looking hard at making an investment in Canada to increase [muni‐ tions] production. The cur‐ rent ammunition situation is unacceptable in Ukraine. It's unacceptable for NATO. Un‐ fortunately, it's something that we got to fix."

There are "significant sup‐ ply chain issues," Blair said. Part of the problem is the de‐ fence industry's struggles to secure a supply of the miner‐ al antimony (a critical compo‐ nent in everything from ar‐ mour-piercing bullets and shells to night vision goggles) outside of China.

There are also research is‐ sues related to the develop‐ ment of a combustible car‐ tridge for the 155 millimetre shells.

But more than anything else, the federal government seems stuck on the invest‐ ment question. Sources say federal officials are skeptical and believe there won't be enough long-term demand to justify ramping up produc‐ tion of the M795 variant of the 155 millimetre shell known as the "operational round" - the NATO-standard ammunition needed by both Ukraine and the Canadian Ar‐ my in Europe.

No shortage of cus‐ tomers

During the bilateral talks with the U.S., the idea was floated that Washington could invest in the Canadian production lines itself. But the United States has privately assured Canada that if it can open other production lines - no‐ tably the one at General Dy‐ namics Ordnance and Tacti‐ cal Systems (GDOT) in Valley‐ field, Quebec - it will have no shortage of world-wide cus‐ tomers and will be able to re‐ coup its investment.

At the moment, Canada is unable to manufacture the operational round, which provides greater accuracy and range. Munitions-makers in this country can only pro‐ duce the M107 version of the 155 millimetre shell, known as the "training round."

Testifying before the House of Commons defence committee last fall, the se‐ nior defence official in charge of procurement said that the initial proposals from GDOT and IMT Defence in Ingersoll, Ont. called for an investment of only $200 million - an amount the federal cabinet seemed prepared to accept.

"We made a recommen‐ dation through the deputy minister and chief of the de‐ fence staff to the minister of national defence to proceed with that investment, and that was approved," said Troy Crosby.

"Since that time, industry estimates have doubled to $400 million."

If and when Ottawa de‐ cides to invest, it will be years before production kicks into high gear, Crosby added.

"Once the money is ap‐ proved, industry forecasts three years for the produc‐ tion line to be operational," Crosbie told the Commons defence committee on Oct. 5, 2023.

Christyn Cianfarani, presi‐ dent of the Canadian Associ‐ ation of Defence and Security Industries, said the proposals have languished for a while and she suspects it's because the issue of ammunition pro‐

duction doesn't suit the gov‐ ernment's agenda.

"I don't know what the motivation is at this point [for the delay], now that probably all the numbers are in," Cianfarani said. "The only thing I can think of is that we're in a period where we're heading towards an election, and it's very clear that do‐ mestic issues are the top pri‐ ority for this particular gov‐ ernment."

No one can pretend that $400 million "is not a big chunk of money," Cianfarani added, but "we made com‐ mitments to the rest of the world that we would ramp up our capacity, and we have Ukraine literally begging Canada to do something about ammunition produc‐ tion for them.

"I think, you know, we need to do the right thing."

WATCH: NATO allies are running low on shells

The Department of Na‐ tional Defence did award a contract worth $4.8 million to IMT Defence to increase pro‐ duction capacity for the M107 variant of the 155-mil‐ limetre artillery metal projec‐ tile bodies from 3,000 rounds a month to 5,000.

The department is also spending $2 million on GDOT to update automation for production of the M795 pro‐ jectiles.

But Canada's efforts have been overshadowed by the urgent actions of allies, all of whom have moved more swiftly to ramp up produc‐ tion.

Since February 2022, the

Pentagon has signed contrac‐ ts worth $2.26 billion US to produce 155 millimetre shel‐ ls.

Douglas Bush, the assis‐ tant secretary of the U.S. Ar‐ my for acquisition, logistics and technology, said the Pen‐ tagon is on track to produce 80,000 shells per month by the end of this year, and will hit the target of 100,000 per month by 2025.

He told a recent panel at the Washington-based Cen‐ ter for Strategic and Interna‐ tional Studies that the U.S. has managed to move so quickly in part because the military paid defence con‐ tractors to keep production equipment in mothballs. Un‐ like Canada, the U.S. doesn't have to create new produc‐ tion lines.

"We paid for that in the army's budget every year to maintain that kind of insur‐ ance policy," Bush said. "Well, that insurance policy has paid off, because if we hadn't had at least some capacity in those depots that we could spin up, we'd be even further behind."

In response to a written question put before the U.K. Parliament, the British Min‐ istry of Defence said it's plan‐ ning an eightfold increase in munitions production.

European allies are also scrambling to increase pro‐ duction. Germany recently broke ground on a new Rheinmetall manufacturing facility with the ultimate goal of producing 200,000 155millimetre shells every year by 2025.

France has tripled its pro‐ duction of 155 millimetre shells. In a recent interview with Radio-Canada, French Ambassador to Canada Michel Miraillet proudly stated that "3,000 shells are delivered, not just produced, but delivered to Ukraine" every month.

All of these allied efforts, however, stand in stark con‐ trast to Russia, which signifi‐ cantly ramped up munitions production capacity last year.

On Jan. 15, 2024, Ukrain‐ ian Maj.-Gen. Vadym Skibit‐ skyi, deputy head of Ukraine's military intelligence directorate, released an as‐ sessment that showed Russia produced roughly two million 152 millimetre and 122 mil‐ limetre artillery shells and re‐ cently acquired as many as one million rounds from North Korea.