The IDF is facing a budget crisis that has led to a decision to take several tank battalions out of service due to a shortage of spare parts and concerns over the closure of production lines, Kan Reshet Bet reported Thursday morning.
According to the report, officials in the IDF Intelligence Directorate have also warned of potential damage to operational readiness.
Defense officials warn that Elbit Systems could halt production of shells for Merkava tanks within days. The artillery shell production line is expected to close in October, followed by the mortar shell production line in November.
According to the report, halting production could result in the loss of workers, machinery, and professional expertise, making it difficult to restart production in the future.
In March, as part of its ongoing effort to bolster IDF operational endurance and readiness for the evolving campaign, the Israel Ministry of Defense (IMOD) announced a deal worth approximately $48 million (over NIS 150 million) to procure tens of thousands of 155mm artillery shells from Elbit Systems.
The munitions are manufactured at Elbit facilities nationwide, where thousands of employees are already working around the clock in three shifts at the Ministry’s direction.
The deal forms part of a broader IMOD strategy, driven by Defense Minister Israel Katz and Director General Maj.-Gen. (Res.) Amir Baram, to reduce reliance on external munitions sources and grow Israel’s domestic defense production base.
In May 2024, then-CEO of the Defense Ministry Major General (Res.) Eyal Zamir, who is now the IDF's Chief of Staff, signed multi-year procurement orders from Elbit Systems totaling approximately 2.8 billion NIS for land forces ammunition.
Since the outbreak of the war, as per the requirements of the Defense Ministry, Elbit Systems has intensified its production lines in order to meet the production targets set between the Ministry and the company. The production of the ammunition will be carried out at Elbit's factories across the country, which employ thousands of workers who, since the beginning of the war, have transitioned to more intense production schedules.
At the time the deal was signed, the Defense Ministry reported that since the outbreak of the war, the Security Procurement Administration has expanded its domestic procurement activities, aimed at supporting the building of force and IDF’s resilience for continued combat, to ensure production independence in vital areas and to strengthen the economy.
The extent of procurement carried out by the Defense Ministry since the outbreak of the war is estimated at tens of billions of NIS. Over half of the procurement was made from Israeli suppliers.