Russia's Collapsing Industrial Production Can't Support Putin's War
Putin has a logistical problem. Russia’s industrial base is shrinking at the very moment he needs it most.
Rosstat data for September indicate an acceleration in the decline in industrial production in annual terms - the fall is estimated at 3.1% after a 0.1% decline in August. The start of partial mobilization at the end of September would not have had time to affect the output, with a higher probability, the decline was caused by the high base of 2021 and the systemic problems of the Russian industry. Demand affects the dynamics of production: the decline in production continues due to the sanctions deterioration in foreign trade conditions, while processing is not able to cover the population's needs for familiar products after the departure of Western companies. The output structure is changing in a different direction: the industry has been able to increase the production of a number of simple goods, but is experiencing difficulties in technological industries - for example.
There are several telling admissions in the Rosstat data:
Sanctions are hurting Russia’s industrial base to a significant degree.
Russia cannot sustain output of high-tech goods without imports and foreign investment—the very things sanctions have targeted.
The deficiencies are systemic, which means they cannot be overcome merely by finding new sources of industrial inputs to replace lost imports.
There is an additional implication as well: Russian industry is struggling to produce necessary munitions, weapons systems, and other essential supplies vital to prosecuting the war in Ukraine. If military goods were taking the place of civilian goods, overall output would not be falling 3% in a single month.
Nor is this mere speculation. Both Prime Minister Mikhail Mishustin and Presidential spokesman Dimitry Peskov have recently acknowledged the supply problems that are hindering the Russian war effort in Ukraine.
For the production of military equipment, it is necessary to connect all the capacities of the light industry, including small enterprises, Prime Minister Mikhail Mishustin said on October 25. According to him, it is necessary to step up work "to increase the output of clothing for the full staffing of mobilized citizens", to organize uninterrupted supplies of raw materials, materials, fabrics. All funds for the purchase of uniforms have already been allocated, the prime minister stressed.
Presidential spokesman Dmitry Peskov acknowledged the problems with the supply of mobilized equipment, adding that the coordinating council for meeting the needs of the armed forces, created by order of Vladimir Putin on October 21, will participate in resolving the issue.
Despite Putin’s orders for domestic industry to increase production of needed supplies and munitions, some of Russia’s industry watchers have projected that converting Russian industries over to a wartime footing for producing military rather than civilian goods could take over a year.
For uniforms especially, a study by Russian news agency Kommersant found the disruptions of imports into Russia are making manufacture particularly problematic.
The main problem is the import component, the study says. Thus, in the production of workwear, the share of the local "contribution" is in the range from 20% to 60%, and the category is highly dependent on the import of cotton, synthetic fibers, yarn, dyes, mainly from China, South Korea, Turkey and the EU countries. According to the PPE Association, over the past year, prices for polyester have increased by more than 40%, cotton has risen in price by 60%, dyes and auxiliary components by 100%, which led to an increase in the cost of workwear by 30-80%.
In the meantime, inflation is making Putin’s war ever more expensive for Putin.
Volunteers involved in helping the military in Crimea told Kommersant that since the start of hostilities in Ukraine, prices for ammunition in the region have increased two to three times. Manufacturers and sellers, they say, blame each other for this. In the Stavropol network "Blockpost" they assure that prices have not changed much, just "the most inexpensive positions are sold out very quickly."
It doesn't matter how many troops Russia mobilizes if there are not the means to equip them for war. Without supplies, without bandaids and bullets, troops are merely future casualties.
If Putin cannot resurrect Russian industry victory in Ukraine becomes highly unlikely.
All Facts Matter is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. Alternatively, please consider leaving a tip through Ko-Fi. Thank you always for your support!