Estonian military equipment prices up by third, producers under pressure

Member of the Estonian Defense Forces (EDF) in military gear.
Member of the Estonian Defense Forces (EDF) in military gear. Source: Joakim Klementi/EDF, Sõdur

The COVID-19 pandemic and Russia's full-scale invasion of Ukraine have put companies producing military equipment for the Estonian Defense Forces (EDF) under severe pressure, with delivery times and product prices increasing, the Estonian Center for Defense Investment (ECDI) said.

The individual equipment procured for members of the EDF includes various uniforms, boots, helmets, flak jackets and bulletproof vests, carrying systems and harnesses, gas masks and protective suits, backpacks, sleeping gear, tents and more, Robert Käsper, soldier category manager at the ECDI's Procurement Department, said according to a press release.

Although European companies typically participate in ECDI procurements in this field, their production has sometimes been relocated elsewhere, primarily to Asia. This fact had a very strong impact on procurement a few years ago, as China locked itself in in almost all sectors during the COVID-19 outbreak, and transport from major Asian ports was also difficult to arrange. Fabric deliveries did not arrive as quickly as planned, which spilled over into delays in finished products.

"Hats worn under helmets and neck gaiters, for example, were two products we were rather worried about for some time," Käsper said. "The Estonian manufacturer was supposed to receive fabrics from China to make them, but they were delayed for a very long time. Another example — we ordered berets from the Czech Republic for a very specific deadline, but due to COVID, the factory that makes berets was simply shut down for three weeks."

War in Ukraine affecting availability

Russia's ongoing war in Ukraine has affected the availability of personal equipment in Europe for three main reasons, according to the ECDI.

First, raw materials are sourced primarily from the Far East, and there are signs indicating that delivery times have already increased compared to business as usual. Second, many volunteer organizations and companies are working hard to provide Ukrainian troops with essential protective equipment. As a result, producers are facing intense pressure, stocks are largely sold out and new production has to wait longer for delivery.

Third, Western European countries have started giving more consideration to better equipping their own defense forces, replenishing their stocks and renewing the personal equipment they have been using until now.

The Estonian center noted, however, that it has a very good network of contacts and a trusting relationship with both its suppliers and its manufacturers, which has helped aid in the on-time delivery of important supplies to the EDF.

Elements of an Estonian Defense Forces (EDF) soldier's uniform. Source: Joakim Klementi/EDF, Sõdur

EDF gear constantly changing

In addition to the global instability of recent years, procurements must also always take into account the fact that the equipment being sought is constantly changing as well, as is the clothing, for example.

"Materials, patterns, compatible products, comfort and much more are changing, and we're trying to keep up with the latest developments," the category manager explained.

Natural materials are decreasingly used in clothing as they are not durable and light enough, while midlayers may be non-breathable. In its clothing procurement, the ECDI is also moving toward the requirement that as many recycled materials as possible be used.

"When clothes last longer, it creates less waste," Käsper said. "It's increasingly important to us that procurements are also environmentally friendly — for example, in terms of the dyes and chemicals used to produce the clothes."

In cooperation with the EDF, the ECDI is currently in the process of updating EDF uniforms to make them more modern as well as to better comply with the latest needs of the EDF.

According to Käsper, there are a lot of little details to consider, from the durability of the materials — as new materials are coming onto the market are several times more durable than current ones —  to whether the cut of uniform pants are good enough to prevent them from bursting at the seams when long strides are taken in any direction.

There have also been developments in the footwear market. While the EDF's classic uniform footwear is still made from real leather, they are often combined with socks and textiles to make the footwear more breathable and to prevent friction when new.

Russian, Belarusian subcontractors ruled out

Supply chains today are also affected by a wide range of macroeconomic trends. On the one hand, increasing raw material prices and labor costs have put manufacturers under strong price pressure, forcing some suppliers to seek further ways to cut costs — including by increasing the share of components produced in countries with lower labor costs.

On the other hand, geopolitical currents, as well as high transport costs, are forcing many producers to take a deeper look at the overall costs of their supply chain and to take certain risks to increase security of supply.

"We've currently ruled out the use of Russian and Belarusian companies as subcontractors in our procurement, but it's neither justified nor feasible to rule out, for example, certain components and raw materials coming from China," Käsper said.

New procurement system

The ECDI uses four dynamic procurement systems, with 10-17 tenderers typically involved in each procurement. "These tenderers, or partners, can be present at each procurement, submit tenders for different lots and withdraw from tendering if they prefer," the category manager explained.

A dynamic purchasing system also allows the contracting authority to purchase products and services according to defined product groups through a procedure similar to the reopening of a competition — in legal terms, a related procurement — as the need arises. A dynamic tendering system makes it possible to add tenderers during the life of a contract, which helps ensure continuous competition.

As a result, many more tenderers and much more work is involved in each procurement, but according to the ECDI, the new process will also lead to better delivery times and lower prices. This is especially important in today's context, where the war in Ukraine has driven up prices in almost all product groups by a third in a short time period. This price increase has put all of the ECDI's military equipment suppliers under intense pressure.

The ECDI organizes procurements for the Ministry of Defense, the EDF as well as other institutions under the Ministry of Defense's administration as well as manages and develops its real estate.


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Editor: Aili Vahtla

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