The KNDS Gap: Why France’s Biggest Defence Manufacturer Still Has No Factory in Ukraine

The Promise

On 8 March 2024, French Defence Minister Sébastien Lecornu stood before cameras and delivered a statement that sounded like a turning point. French arms companies, he announced, would “manufacture directly on Ukrainian soil.” The first production units would be running by summer 2024. KNDS — the Franco-German defence conglomerate that produces the CAESAR self-propelled howitzer (SPH) and is one of Europe’s leading manufacturers of 155mm artillery ammunition — was named explicitly as one of the companies that would establish operations in Ukraine.

President Emmanuel Macron reinforced the message, framing the initiative as part of France’s broader commitment to Ukraine’s defence industrial self-sufficiency. The narrative was clear: France was not merely financing supplies. It was building in-country capacity. The promise carried weight because KNDS is not a private enterprise operating at arm’s length from the state. The French government, through the Agence des Participations de l’État (APE) and the legacy holding structure of GIAT Industries, owns 50% minus one share of the KNDS group. When Lecornu spoke, he was speaking not only as Defence Minister but effectively as the representative of KNDS’s controlling shareholder.

KNDS itself joined the messaging. In June 2024, the company announced it would “set up shop in Ukraine to repair heavy weapons, make ammo.” In October 2024, it registered a legal entity — KNDS Ukraine LLC — in Kyiv. Press releases described plans for maintenance, repair, and overhaul (MRO) of KNDS systems already deployed in Ukraine, 3D printing of spare parts, and the joint manufacture of 155mm artillery rounds with local Ukrainian partners. CEO statements referenced approximately 800 KNDS systems either in front-line deployment or under contract with Ukraine, making the group “among the most important industrial partners of the Ukrainian land forces.”

The messaging was sophisticated, well-timed, and widely reported. It positioned France as a model of Western industrial commitment to Ukraine.

The Reality

Eighteen months after Lecornu’s announcement, La Lettre — the French investigative publication — has now documented what WOME (Weapons, Ordnance, Munitions, and Explosives) analysts had increasingly suspected. KNDS has no factory in Ukraine. It has no concrete construction project for a factory. It has no credible production timeline. The Kyiv subsidiary exists as a legal registration, not as an operational manufacturing facility. The joint 155mm ammunition production that was announced has not materialised. The 3D-printed spare parts capability remains aspirational. And the maintenance partnerships for CAESAR systems “leave something to be desired,” according to La Lettre’s reporting.

That admission is remarkable given the context. KNDS recorded €3.8 billion in revenue in 2024, a 17% increase year on year. New orders reached €11.2 billion, with the order backlog swelling to €23.5 billion. KNDS France alone held an order book of €8.6 billion by end-2024, up from €5 billion just two years earlier. A significant portion of that growth is directly attributable to Ukraine-related demand — CAESAR SPH orders, 155mm ammunition contracts, and European Defence Industrial Programme (EDIP) funding channelled through EU institutions. The group is preparing for a potential initial public offering (IPO) in 2026, which would further capitalise on Europe’s defence spending surge.

KNDS, in other words, has been one of the largest commercial beneficiaries of the war in Ukraine. What it has not done is translate those profits into production on Ukrainian territory.

What the Competitors Have Done

The gap between KNDS and its competitors is not a matter of nuance. It is stark, measurable, and growing wider each quarter. To understand the scale of the divergence, consider what Rheinmetall, Nammo, and the Czechoslovak Group (CSG) have each committed to Ukraine.

Rheinmetall (Germany)

Rheinmetall secured a formal contract from the Ukrainian government in July 2024 to build a 155mm artillery shell production facility on Ukrainian soil. The company was granted a 51% majority stake in the joint venture — a significant concession that reflected Kyiv’s willingness to offer favourable terms to attract genuine industrial commitment. The original production target was 150,000 rounds per year, with a start date projected for mid-2026. In August 2025, CEO Armin Papperger announced that planned capacity had been doubled to 300,000 rounds per year. Construction timelines have slipped — in November 2024, Rheinmetall disclosed that Ukraine had changed the planned site location — but the company expressed confidence that the facility could become operational within 12 months of site resolution. The project represents one of the largest single foreign defence industrial investments in Ukrainian territory since the start of the full-scale invasion.

Nammo (Norway/Finland)

The Norwegian government issued a formal export licence authorising Nammo to establish 155mm ammunition production in Ukraine. Nammo and its Ukrainian partner signed an agreement to create a joint venture that would “develop, produce and sell ammunition in Ukraine,” with the long-term objective of making Ukraine self-sufficient across the complete 155mm ammunition supply chain — including propellants and chemical components. Oslo set a deadline of end-2026 for the new production line, with government statements emphasising that the goal was to launch earlier. Nammo’s CEO publicly apologised to a visiting Ukrainian delegation for the slow pace of production scale-up at Nammo’s own facilities in Scandinavia — a level of accountability that stands in pointed contrast to KNDS’s posture.

Czechoslovak Group — CSG (Czech Republic)

CSG has moved furthest and fastest. The Czech defence holding completed the transfer of 155mm artillery ammunition production technology to its Ukrainian partner, Ukrainian Armor, during 2025. Licensed production of large-calibre ammunition is now operational on Ukrainian soil. CSG supplies critical components — propellants, fuzes, and initiators — while Ukrainian Armor handles local manufacture of shell casings and final assembly. The stated target was 100,000 rounds in 2025, scaling to 300,000 rounds per year in 2026. Forbes reported that the technology handover phase had been fully finalised. This is not a press release about intent. It is operational production.

The CAESAR Problem

The production gap is compounded by maintenance deficiencies that directly affect Ukrainian artillery operations. The CAESAR SPH — a 155mm/52-calibre truck-mounted howitzer — is the most significant French weapons system deployed in Ukraine. Approximately 120 CAESAR Mk1 systems (in both 6×6 and 8×8 configurations) were in Ukrainian service as of October 2025, making Ukraine the second-largest CAESAR operator in the world after France itself.

The systems are being pushed to their operational limits. Ukrainian crews routinely fire 70 to 90 rounds per day from individual guns, with peak firing rates reaching 150 rounds daily during sustained operations — rates that dramatically exceed the peacetime duty cycles for which the barrels were designed. Barrel wear is the critical maintenance constraint. A 155mm/52-calibre barrel firing standard NATO-compliant charges has a typical service life measured in thousands of rounds, but the combination of high firing rates, variable ammunition quality, and extended-range charges accelerates erosion of the chromium lining and bore surface far beyond nominal parameters.

KNDS has responded by diverting 90% of its CAESAR barrel production to Ukraine — a figure confirmed by Le Monde. French parliamentarians have noted that the supply of replacement barrels “would benefit from improvement.” KNDS France has ramped CAESAR production from two units per month before the invasion to a target of twelve per month by late 2025, and has tripled its output of 155mm complete rounds. These are substantial industrial achievements. But they are achievements located in France, Belgium, and Italy — not in Ukraine.

The maintenance question matters because barrel replacement and artillery MRO performed close to the front line shortens the logistics tail and increases system availability. The further a damaged barrel must travel for replacement, the longer the gun is out of service. KNDS’s competitors understand this, which is why Rheinmetall’s Ukrainian subsidiary explicitly prioritises MRO as a first step before ammunition production. KNDS announced the same intention when it registered KNDS Ukraine LLC in October 2024, but La Lettre’s reporting indicates that the maintenance partnerships with Ukrainian operators “leave something to be desired.”

Operational data provides some context. Fewer than 10% of CAESAR systems are reported out of service at any given time — a figure KNDS cites as favourable compared to 20–30% downtime rates for comparable Western-supplied systems. Seven CAESAR units have been confirmed destroyed (six 6×6 and one 8×8), with a further three damaged. These are credible loss rates for an actively employed artillery system in a high-intensity conflict. The question is whether availability could be higher if MRO were conducted on Ukrainian soil rather than through extended logistics chains back to France or through ad hoc local arrangements.

Why the Reluctance?

La Lettre characterises the situation as “a behind-the-scenes battle, where political discourse has been shattered against the calculations of economic risks.” Four factors account for KNDS’s reluctance. None excuses the promise-delivery gap.

Risk aversion in a conflict zone. Any production facility in Ukraine is a target. Russian long-range strike capability — cruise missiles, ballistic missiles, Shahed-series one-way attack unmanned aerial vehicles (OWA-UAVs) — poses a genuine threat to fixed industrial infrastructure. This is a real concern, but it is shared equally by Rheinmetall, Nammo, and CSG, all of whom have accepted the risk and proceeded. Rheinmetall’s site relocation in late 2024 was reportedly driven in part by security considerations, demonstrating that the risk can be managed through site selection rather than avoidance.

Intellectual property protection. KNDS may be reluctant to transfer production technology — particularly for complete 155mm rounds and CAESAR components — to Ukrainian partners who could, in a post-conflict scenario, become competitors in export markets. This is a legitimate commercial concern that any defence manufacturer would weigh. However, CSG has demonstrated that technology transfer can be structured through licensing arrangements that protect core intellectual property (IP) while enabling local production. Nammo’s joint venture model offers similar protections. IP concerns justify caution, not inaction.

Franco-German governance complexity. KNDS is a 50/50 Franco-German entity. The French state holds its stake through GIAT Industries; the German side is controlled by the privately owned Wegmann family holding. Any major strategic decision — such as committing to a factory in a conflict zone — requires alignment between both shareholders. German export control restrictions, Berlin’s own political sensitivities regarding Ukraine, and the mechanics of dual-national governance could all create friction. But this is a structural feature of KNDS that has existed since the 2015 Nexter-KMW merger. It cannot be invoked as a new excuse for inaction in 2026.

IPO preparation. KNDS is reportedly planning a stock market listing in 2026. In IPO preparation, companies typically seek to minimise risk exposure and maximise the clarity of their financial profile. A production facility in an active conflict zone would introduce operational risk, insurance complexity, and potential asset impairment that could complicate the investment narrative. This explanation is perhaps the most uncomfortable for Paris, because it implies that KNDS’s commercial interests in capital markets have taken precedence over the French state’s political commitments to Ukraine.

The Wider French Paradox

La Lettre is careful to note that the broader French Defence Technological and Industrial Base (DTIB) has not been uniformly absent from Ukraine. French drone manufacturers, logistics firms, and other land, naval, and air equipment producers have demonstrated what the investigation calls “a recognized voluntarism on the Ukrainian ground, not hesitating to travel close to the front.” In 2025 and early 2026, France and Ukraine signed agreements on joint production of interceptor drones, with French automotive firms including Renault establishing drone production lines on Ukrainian soil. Thales International and the Ukrainian Defence Industry announced a joint venture covering air defence, tactical communications, and electronic warfare.

The contrast with KNDS is precisely what makes La Lettre’s investigation significant. Other French companies — many of them smaller, privately held, and without the financial cushion of €23.5 billion in backlog — have accepted the risks and moved into Ukraine. KNDS, the company with the deepest pockets, the largest state backing, the most relevant product portfolio for Ukraine’s most pressing ammunition needs, and the most explicit political endorsement from the Élysée, has not.

France committed its entire 2025 CAESAR production run to Ukraine. Paris has announced €2 billion in military aid. Macron has positioned himself as the leader of a European “coalition of the willing” that includes the possibility of Western troop deployments. The political rhetoric is ambitious, sometimes provocatively so. But KNDS’s 155mm production capacity — the specific commitment Ukraine most needs — remains in France, Belgium, and Italy. The gap between Macron’s rhetoric and KNDS’s actions cannot be attributed to logistics, bureaucracy, or complexity.

This analysis is AI-assisted and based on open-source material. All sources are cited. ISC Defence Intelligence is an independent analytical publication and has no commercial relationship with any manufacturer discussed in this article. All acronyms are expanded on first use.