Russia’s Defence Industry is facing a collapse as it in production amidst its worst crisis in some 30 years, as it struggles to cope with acute labour shortages, severe cash flow problems and lack of critical components for weapons. Vladimir Putin has put the economy on a war footing, as he pours billions of pounds into the defence sector.

Factories are working 24/7 as they strive to fulfil a stream of orders from the Kremlin to equip the Russian army with the lastest deadly weapons. Yet despite the surge in commissions, the sector is reportedly teetering on the brink of a disaster. Leaked internal documents show the military-industrial complex facing its deepest criss since the collapse of the Soviet Union in 1991, according to the Vanguard Intel Group.

Companies are said to be suffering from acute labour shortages and severe cash flow issues, caused by delays in payment.

At the same time, firms are struggling to cope with sanctions, which have made it far more difficult to acquire foreign components vital for weapons production.

Some of the worst affected companies include the tank manufacturer Uralvagonzavod and the aerospace firm United Aircraft Corporation (UAC).

Uralvagonzavod is reported to be unable to secure imported thermal imagers or transmissions.

Meanwhile UAC – a company that makes Su-57 and Il-76 jets – is still heavily reliant on foreign avionics and engine parts.

Sanctions are also impacting drone production, particularly the Orion and Sirius models produced by Kronstadt. The drone manufacturer has ben cut off from Western microelectronics and optics.

Some firms have been waiting several months to be paid, with one document showing that even tanks delivered in January remain unpaid for.

Uralvagonzavod is preparing to make major cuts to its workforce as it struggle to remain afloat.

The iconic defence company plans to lay off 10% of its workforce by February 2026 and will also stop hiring new employees.

For some divisions, the scale of layoffs will amount to “up to 50% of their full-time staff.”