To help Ukraine win the war, many foreign defense companies are beginning to set up their production facilities in Ukraine, instead of sending military equipment from abroad. It makes business sense for them, too: Ukraine offers lower wages and cheaper production costs than the European Union or the Scandinavian countries. Plus, soon you will be allowed to re-export your local products to other volatile markets such as Africa or Asia.
For all those reasons, foreign defense companies are establishing their operations in Ukraine. For example, in March 2024, the German defense conglomerate Rheinmetall announced its plans to construct at least four plants in Ukraine for weapons manufacturing, producing Ukraine ammunition, military equipment, and air defense systems. Last year, the Ukrainian Defense Industry JSC and Rheinmetall entered into a joint venture, Rheinmetall Ukrainian Defense Industry LLC.
More recently, on Oct. 1, 2024, the French-German defense company KNDS announced that it registered its 100% foreign-owned company in Kyiv (KNDS Ukraine LLC) to carry out the domestic maintenance and repair of Ukrainian land systems and produce artillery ammunition.
In our article, “Setting Up Production Facilities in Ukraine: Options for Foreign Defense Companies,” we discuss various alternatives for setting up defense production facilities in Ukraine. You can find it here.
