Transcription
Peter Zin here, coming to you from Birmingham, Alabama. Uh, today we're going to do another in our drone tech series, specifically looking at the pros and cons, the ups and downs of Russia versus Ukraine when it comes to drone manufacturing.
Now, it may be obvious through this series that the Ukrainians have proven to be the superior player when it comes to day-to-day, week-to-week, month-to-month aviation. We've had a dozen major new models be introduced at scale in just the last 3 months. Whether it's the hybrid drones with the detachable wings, or new turbo drones that have better speed and range and payload, or the memory drones that have the ability to select their own targets. All of these are changing the face of the battlefield, and they've hit in such rapid order that the Russian positions on the front really is breaking down. I won't say collapsing yet, but it's something we might see later this year, especially over the summer.
Uh, part of this is because when the Soviet Union broke up, the legacy of Soviet military manufacturing broke up with it, based on where the facilities were. So groups like Motors, or um, Kark Aerospace, or uh, Avian and Antinov, the these are all Ukrainian names. Uh, they've certainly decayed in the time since 1992. That's obvious. But a lot of the hardware remained, and a lot of the personnel remained. And when Ukraine came under threat, these people all got back to work and started taking on dozens of apprentices of their own. You combine that with the pressure of the war, and in this last year and a half, more capital coming in from the European states, and they've been able to fill their orders and can expand their design bureaus in a way that uh, they didn't think was going to be possible.
Uh, and this is going to continue because a new flush of funds is coming in from the Arab states of the Persian Gulf, who are desperate to expand their interceptor inventories because the United States has basically alerted them that that's not going to happen in the foreseeable future. They need alternatives, and the Ukrainians are the only ones in the game. With that money, we're taking a lot of industrial plant that has been built out but hasn't been fully funded for mass production, and we're finally marrying the legacy skill sets with the legacy infrastructure, with the talent, with the money and the resources and the inputs coming in from Europe. And it's a completely different game, and things are really clicking together quite nicely.
Which doesn't mean that the Russians don't have some cards to play here. Russia is still the superior state. Russia doesn't have to rely on anyone for foreign funding. And most importantly, the real strength of the Russian military-industrial complex isn't innovation. A lot of that really did happen in Ukraine back in Soviet days, but it's taking a proven innovation and applying it to a pre-existing industrial plant and then building that product at scale. So, one of the things that we've seen over and over in this conflict is the Ukrainians may be better at designing something fresh and getting it out the door and applying it to the battlefield, but once the Russians figure out how to do it, they can produce two, three, four, five times as many of them once they get the production system up and running, so long as they can get the parts from China.
So the two issues here that are now racing are financial and material support from Europe, because the US has basically checked out, and the speed and iteration in which the Ukrainians can bring new tactics and new hardware to the front to disrupt what other Russians are doing and get ahead of the Russian capacity to then produce more. At the moment, the Ukrainians are clearly winning this game. They're producing about 13 drones for every 10 that the Russians are. And they've turned a lot of those drones to attacking the income stream that allows Russia to purchase parts from China. If that income goes away, then the Chinese have to decide whether or not they want to fight this war financially for the Russians or not. And that is a decision that they haven't begun to make.
So, we're probably going to see something decisive happening over this summer. Either the Chinese backing the Russians will allow the Russians to catch up technologically, the front will widen, but it'll remain relatively stable in terms of territory going back and forth. Or the Ukrainians will maintain this huge lead in innovation and grind down enough of the Russian industrial base that it starts to affect the Russians' ability to produce the drones in the first place. One way or another, this is the year we're probably going to find out how this is going to end.