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The writer is adviser to Gallos Technologies, and author of ‘Goodbye Globalization’
History shows that when the political class ignore the fortunes of manual workers, it often comes back to bite them. This is still true today. Since the ratcheting of military conflict both in Ukraine and the Middle East, governments are investing a lot more in defence — the problem is that there aren’t enough skilled workers to keep up with demand.
When Stefan Löfven was elected to Sweden’s top political post in October 2014, some observers found it amusing that the Social Democrat leader had begun his career as a welder. Those patronising Löfven’s manufacturing background seemed unaware that welding involves advanced skills. Indeed, good welders are indispensable in the manufacturing of defence equipment, and that’s where Löfven had earned his keep, as an employee of the Swedish company Hägglund & Söner (which is now part of BAE Systems). Then again, arms-making expertise was not at a premium in 2014.
How times have changed. Last year, defence equipment expenditures among Nato’s European member states and Canada soared by 24.9 per cent. Nato allies now spend a median of 27.8 per cent of their defence budgets on equipment. (Poland and Finland spend more than half). Other countries, too, are investing in weaponry: Australia is upgrading its submarine fleet to nuclear-powered vessels under the Aukus pact with Britain and the US.
But defence manufacturers are struggling to find the necessary welders, electricians and other skilled workers. “The biggest risk facing the nuclear-powered Aukus submarine build is whether enough skilled welders can be recruited and trained,” the Asia-Pacific Defence Reporter warned in March 2023, one and a half years after the pact was announced. The same problems are being felt in European defence firms. “Older workers are constantly retiring,” a top executive with a major European defence manufacturer told me. “But millennials are difficult to recruit. We’re experiencing a generational gap at the very time we’re expanding.”
It’s not just the so-called primes — the large defence companies that sell directly to governments — that are facing a worker deficit; it’s their suppliers too. “In the defence industry today everyone needs machines, everyone needs skilled workers,” David Chour, chief executive of the Czechoslovak Group (CSG), told me. “It’s very difficult to find the machinery, and the delivery time is longer and longer.”
CSG, which manufactures the Howitzer 155mm ammunition used by Nato countries and Ukraine, would like to accelerate production. The wait for new machines is almost four years. (CSG already runs three-shift days on its existing machinery). “If we had sufficient capacity, we’d be able to produce three times more ammunition than we are now,” Chour said.
Arms-making also involves an extraordinary degree of craftsmanship. “At the end of the process of making artillery shells, when you have to feel the explosive inside the shell, there’s nothing automatic about that,” the European executive told me. “There are parts of planes that are still handcrafted. There are many automated processes, but defence manufacturing relies on expert workers.”
Western countries are under pressure to increase deliveries to Ukraine at the same time as ramping up their own defence arsenals. Arms manufacturers live with a fundamental dilemma: in peacetime, when they need a steady stream of contracts, politicians have little incentive to spend on weapons. Yet during times of instability, defence spending steps up — which results in full order books but long delays because the companies lack enough skilled workers to fill the supply chain.
These delays are particularly painful for those on the frontline. One senior executive told me it will take two years for western defence manufacturers to make enough ammunition so Ukrainian soldiers are as well-supplied as the Russians. Taiwan is still waiting for much of the $19bn of weaponry it has ordered from US manufacturers. Wars could erupt, unfold and be lost because we lack skilled factory workers.
Weld Australia has proposed that Canberra launch a Shipbuilding Welding Academy. In the US, defence manufacturers are targeting high-school career fairs. Steering people to these jobs is a win-win at a time when there is pressure on countries to secure their supply chains.
It is true that the challenge of technology is forcing defence companies to diversify into new skills. But they’ll still need the existing ones — and they would lose the welders at their peril.
Source: Economy - ft.com
