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 invasion of Ukraine, two of Canada's major ammunition manufacturers submitted proposals to the Liberal government to drastically increase production of artillery shells.

Almost a year and a half later — with Canadian stockpiles 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, discussions that quickly turned to the question of how to replenish dwindling domestic inventories.

The Liberal government's hesitation stems in part from the fact that boosting production of the NATO-standard 155 millimetre shells that both Canada and Ukraine need requires a federal investment of as much as $400 million in the factories where they're made.

"There have been discussions. I've not yet signed a deal," Defence Minister Bill Blair said in a recent interview, 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 [munitions] production. The current ammunition situation is unacceptable in Ukraine. It's unacceptable for NATO. Unfortunately, it's something that we got to fix."

There are "significant supply chain issues," Blair said. Part of the problem is the defence industry's struggles to secure a supply of the mineral antimony (a critical component in everything from armour-piercing bullets and shells to night vision goggles) outside of China.

There are also research issues related to the development of a combustible cartridge for the 155 millimetre shells.

But more than anything else, the federal government seems stuck on the investment question. Sources say federal officials are skeptical and believe there won't be enough long-term demand to justify ramping up production 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 Army in Europe.

No shortage of customers

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 — notably the one at General Dynamics Ordnance and Tactical Systems (GDOT) in Valleyfield, Quebec — it will have no shortage of world-wide customers and will be able to recoup 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 produce the M107 version of the 155 millimetre shell, known as the "training round."

Testifying before the House of Commons defence committee last fall, the senior 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 recommendation through the deputy minister and chief of the defence 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 decides to invest, it will be years before production kicks into high gear, Crosby added.

"Once the money is approved, industry forecasts three years for the production line to be operational," Crosbie told the Commons defence committee on Oct. 5, 2023.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said the proposals have languished for a while and she suspects it's because the issue of ammunition production doesn't suit the government'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 domestic issues are the top priority for this particular government."

No one can pretend that $400 million "is not a big chunk of money," Cianfarani added, but "we made commitments 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 production for them.

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

WATCH: NATO allies are running low on shells     

Top generals warn that NATO allies running low on artillery shells

1 year ago

Duration 2:53

A leading NATO official and Canada's top military commander have both warned allies that their ammunition shortages have reached a crisis state. They're calling for urgent action to boost production of critical artillery rounds.

The Department of National Defence did award a contract worth $4.8 million to IMT Defence to increase production capacity for the M107 variant of the 155-millimetre artillery metal projectile 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 projectiles.

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

Since February 2022, the Pentagon has signed contracts worth $2.26 billion US to produce 155 millimetre shells.

Douglas Bush, the assistant secretary of the U.S. Army for acquisition, logistics and technology, said the Pentagon 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 Center for Strategic and International Studies that the U.S. has managed to move so quickly in part because the military paid defence contractors to keep production equipment in mothballs. Unlike Canada, the U.S. doesn't have to create new production lines.

"We paid for that in the army's budget every year to maintain that kind of insurance 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 Ministry of Defence said it's planning an eightfold increase in munitions production.

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

France has tripled its production 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 contrast to Russia, which significantly ramped up munitions production capacity last year.

On Jan. 15, 2024, Ukrainian Maj.-Gen. Vadym Skibitskyi, deputy head of Ukraine's military intelligence directorate, released an assessment that showed Russia produced roughly two million 152 millimetre and 122 millimetre artillery shells and recently acquired as many as one million rounds from North Korea.