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Romania to overhaul state defence firms to boost production

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Romania's economy minister announced on Wednesday (14 December) that the country aims to rebuild its state defense industry and invest in new technologies to increase output and exports. This was in response to a sector whose turnover has risen during the conflict in Ukraine.

15 weapons and ammunition companies are controlled by the state-owned ROMARM, which includes armoured transporters and gunpowder as well as infantry shells.

ROMARM's turnover has increased six times in the nine months following Russia's invasion of Ukraine. This is in addition to its 2021 revenue of 131.6 million lei, which was a record, according to minister Florin Spataru. The bulk of this increase was due to exports, he said.

However, the company's high energy costs and outdated technology make it difficult to keep up with private defense firms.

Spataru said in an interview that high energy prices and a weak technological base had led to a lower production level than we expected.

We need to invest in new technologies to solve this problem of competitiveness. While we aim to increase production to meet the needs of relevant ministries and other agencies, we also consider exports and meeting regional demand.

As governments from the region support Ukraine's fight against Russia, Eastern Europe's arms sector has increased production.

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Romania shares a border of 650km (400 miles) with Ukraine. However, it has not commented on the military assistance it is providing. NATO Secretary General Jens Stoltenberg said in November that it was "significant".

Romania, a NATO member since 2004, will increase its defence spending from 2% to 2.5% next year.

Spataru stated that state defense firms were currently acquiring new production lines and equipment for 600m lei, with 200m lei allocated for next year.

Electromecanica Ploiesti will launch a three-year investment program in 2023 to build SkyCeptor missile interceptors with U.S. Raytheon. The first missiles are expected in 2026, Spataru stated.

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