Despite—or, paradoxically, because of—the high demands imposed by the Ukraine conflict, a range of Russian arms manufacturers have laid off workers and curbed production output.

It is axiomatic that war is good for business—and this is doubly true if one’s business is defense. During major wars, military contractors almost inevitably see their respective stock values go up as governments place large orders and profits soar. Active combat also creates an urgent need to replace the spent weapons and equipment as stockpiles are replenished. Whether the United States has entered President Donald Trump’s promised “golden age” is far from clear, but it has been a “golden age” indeed for American aerospace and defense contractors energized at the prospect of a $1.5 trillion defense budget for fiscal year 2027 (FY27). Even if Congress vetoes that idea, the American firms will still see huge paydays ahead as the United States rearms and weapon caches are built up again.

The situation couldn’t be more different in Russia—even as the country has been at war for more than four and a half years, and the conflict in Ukraine shows no signs of resolution. Instead of driving profits for the state-owned military-industrial conglomerate Rostec, the firm has seen a sharp decline in its bottom line.

Rostec CEO Sergey Chemezov acknowledged in a meeting last month with Russian Prime Minister Mikhail Mishustin that the business of war has resulted in its net profits dropping by 42 percent for 2025, which in turn has limited the company’s ability to take on new programs. At the same time, Rostec’s revenue increased by 25 percent, but that was due to orders from the Kremlin for state defense.

“Unfortunately, we do not have much of our own money left to launch investment projects,” Chemezov said following the meeting.

Rostec is an enormous Russian defense contractor responsible for more than 800 subcontractors spread out across 60 Russian regions. It is hard to track exactly how much money Rotec makes, as Russian President Vladimir Putin signed a March decree that banned the disclosure of financial data related to Russia’s defense sector. Moscow had previously suspended official customs and trade statistics following its 2022 invasion of Ukraine, and Putin has since expanded Russia’s state secret laws to cover international trade, economic policy, and state finances.

The Ukraine War Has Decimated Russia’s Arms Exports

Since the start of Russia’s “special military operation” in Ukraine, the country saw its exports drop significantly. Russia, long the world’s second-largest arms exporter, fell to third, overtaken by France. This was driven in part by demand for high-tech French platforms, notably the Dassault Rafale fighter jet, but it was also a function of Russia devoting the lion’s share of its defense production to the war in Ukraine rather than international customers. International sanctions have also played a role, according to the Stockholm International Peace Research Institute’s (SIPRI’s) tracking of top arms exporting nations.

Between 2020 and 2024, Russia’s arms exports decreased by 64 percent compared to the previous five-year period, according to SIPRI data. Moscow has sought to regain its place, with Putin calling for an increase in arms exports; last fall, Rostec even introduced a new development strategy.

However, these measures have so far yielded no significant results. Instead, several Rostec subsidiaries have reported heavy losses, and have even reduced their respective workforces.

That has included truck maker Kamaz, which posted a net loss of 43 billion rubles ($555 million) after truck sales fell by more than 20 percent, The Moscow Times reported. The situation was even worse with Uralvagonzavod, the largest Russian tank builder, which reduced its civilian division’s production lines to a four-day work week—while also cutting 10 percent of its workforce, hardly an encouraging development during an active war!

That move comes even as the Kremlin has struggled to replace combat losses, a sign that Moscow could be nearing a breaking point in funding its ongoing war.

“The weaker performance reflects broader pressure on Russian corporate profitability as high interest rates, rising borrowing costs and wartime economic distortions weigh on businesses,” The Moscow Times added.

This situation is one that needs to be watched closely by Washington. It is good news for NATO, which is increasing defense spending and bolstering its defense sector. Russia will almost certainly grow weaker in the short term, and a lack of exports today will mean it can’t develop new programs for exports tomorrow.

Yet, the other portent is that unwinnable wars may bring short-term profits for the arms makers, but that can’t be sustained indefinitely. The United States could risk going down the same rabbit hole as Russia, leaving it less able to confront China, which so far only builds up its military and its arms stockpiles—and is now doing so without looking to Russia.

About the Author: Peter Suciu

Peter Suciu has contributed to dozens of newspapers, magazines and websites over a 30-year career in journalism. He regularly writes about military hardware, firearms history, cybersecurity, politics, and international affairs. Peter is also a contributing writer for Forbes and Clearance Jobs. He is based in Michigan. You can follow him on Twitter: @PeterSuciu. You can email the author: Editor@nationalinterest.org.

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