Why Russia's Largest Tank-Building Plant Has Just Announced Layoffs

In a surprising decision for a government still committed to war, Russian media are reporting that the Kremlin's largest manufacturer of tanks and other weaponry will be laying off 10% of its staff. 

The reason appears to be that the country's economy is in serious trouble and so cannot maintain the pace of military investment of the past three years. It is also probable that the scale of Russian armored losses is causing the government to rethink its defense investment strategy, implying more emphasis on drones. JL

Vladislav V reports in Militarnyi:

Uralvagonzavod the flagship of the Russian tank industry, has announced plans to lay off 10% of its employees by February 2026 and completely stop recruiting new staff. This is a large-scale reduction in staff: in some units, the number of employees may be reduced by 50%. Such decisions indicate a lack of state funding and orders, which makes it impossible to maintain the current staff even at a strategically important defense enterprise. After trillions of rubles in injections into the sector, Russia is finding it increasingly difficult to sustain the pace of defense production. Among the main reasons are a shortage of skilled labor, sanctions restricting the import of technology and components, and the forced simplification of products to achieve higher output volumes.

Uralvagonzavod, the flagship of the Russian tank industry, has announced a large-scale reduction in staff – in some units, the number of employees may be reduced by up to 50%.

This is reported by the Russian publication E1.

According to the publication, the company plans to lay off about 10% of its employees by February 2026 and completely stop recruiting new staff. 

 

After trillions of rubles in injections into the sector, Russia is finding it increasingly difficult to sustain the pace of defense production. Among the main reasons are a shortage of skilled labor, sanctions restricting the import of technology and components, and the forced simplification of products to achieve higher output volumes.

Overall, Russia’s manufacturing sector is also showing signs of decline: 18 out of 24 industries – accounting for about 80% of total industrial production – are currently in recession.

Russia’s industrial sector, which accounts for about 30% of the country’s GDP, has effectively come to a halt: in September, growth was recorded at just +0.3% year-on-year, compared with +5.6% a year earlier.

According to internal documents, proposals for candidates for dismissal will be considered by a special commission. Those who will be laid off are promised payments of up to three average monthly salaries.

However, the plant’s employees fear that the actual scale of the optimization will be much larger.

 

“According to our data, the reduction for most units is up to 50% of their staffing. As a result, able-bodied, highly qualified specialists are losing their jobs,” Uralvagonzavod employees told E1.RU.

It is not yet known which structural units will be cut.

It could be the civilian sector, which manufactures railroad cars. At the same time, it is possible that the changes will also affect the military sector.

If the optimization does indeed concern civilian production, it remains unclear why the management does not transfer employees to the military sector, which is currently experiencing a growing need for personnel.

Probably, such decisions indicate a lack of state funding and orders, which makes it impossible to maintain the current staff even at a strategically important defense enterprise.

On October 26, it became known that the Ashinsky Metallurgical Plant (AMP) in the Chelyabinsk region announced a reduction in production and staff.

The company specializes in the production of special alloys, rolled plates and electrical steel used in Russia’s defense, aviation, nuclear and oil and gas industries.

Earlier it was reported that the Russian military-industrial complex is gradually entering a phase of depletion, despite a short-term increase in production after the start of the full-scale invasion of Ukraine.