Proactive Investors - BAE Systems (LON:BAES) has agreed to boost the production of artillery shells eightfold in a deal poised to create jobs and see the contractor paid hundreds of millions of pounds.
BAE will increase production of 155mm shells, which are used as standard in most NATO artillery pieces, and other types of ammunition under the £280mln deal.
This could be increased to £400mln, following vows from the UK government to increase defence spending and help reduce munitions shortages hitting Ukrainian military forces.
According to the FTSE 100-listed defence firm, the agreement will see 200 jobs created at sites in northern England and Wales, with investment having been poured into artillery production in Tyne & Wear alongside an explosives filling facility at Glascoed.
“[This] will lead to the production of vastly more artillery shells for use by the UK and other allied forces,” a government statement said.
BAE boss Charles Woodburn commented that the new agreement allows the company to “sustain vital sovereign capability to deliver cutting-edge munitions”.
Britain laid out plans to boost defence spending by £11bn over the next five years in March, to around 2.25% of 2025’s GDP, with the new BAE deal being signed under this pledge.
Pushing BAE to increase production comes as part of a bid to alleviate ammunition shortages affecting Ukraine’s defence against Russia, with prime minister Rishi Sunak expected to call on NATO allies to follow suit at a summit on Tuesday.