Mobilization challenges worry miltech staff

BLUF: To produce weaponry, Ukrainian companies can get ‘critical’ status, which will allow exemptions from mobilization for employees. Without it, engineers may be mobilized, and a manufacturer may be left without a valuable, hard-to-replace employee. Meanwhile, Ukraine’s MoD presented a plan to reform IP regulations, and Tencore land drone makers are planning to radically reduce foreign components in their manufacturing.

THE BIG STORY: Ukrainian defense companies struggling to save personnel from mobilization

Being liable for military service, Ukrainian defense workers also face mobilization and sometimes are drafted. Some teams have encountered situations where their most skilled engineers or key personnel were mobilized, leaving key positions unfilled.

This problem affects not only small startups but even large enterprises. To replace mobilized men, government-run defense company Ukroboronprom is hiring women on the production lines. As of October 2024, they made up 38 percent of the workforce.

The issue with mobilizing defense industry workers is that while the army gains a soldier, it loses a skilled specialist who is very scarce in Ukraine. 

1. A recent example is the attempted mobilization of the CEO of Oko Camera, a thermal imaging camera producer. In January, he arrived at Kyiv's Pechersk Territorial Recruitment Center (TRC) to update his data and register himself for future exemption from mobilization. However, the TRC decided to mobilize him during the process, stating that the company had not confirmed its ‘critical’ status.The story ended with the CEO's release, according to Tech Force in UA, an association of 40 private defense enterprises (including Oko Camera). However, this isn't always the case.
   

2. In October 2024, a chief engineer of Ptashka Drones producer was mobilized. He was in charge of anti-UAV systems development. He became a rifleman a few weeks before the company received the ‘critical’ status.

3. A similar situation occurred with young FPV drone manufacturer SokilSky last Summer. This startup was also left without its chief engineer. It took several months for them to replace the rare specialist — the company and its volunteers had to train a different team member. This time lag jeopardized the company's contract with the Ministry of Digital Transformation to supply drones to the military, said Anna Chudnivets, CEO of SokilSky.

The TerMIT ground drone producer Tencore also faced engineer mobilization. However, they're helping team members join the Third Assault Brigade, which operates TerMIT drones. So the company's engineers continue to maintain the TerMIT drones in service even when they are in AFU, Oleksii Dudkin, head of sales at Tencore, told Counteroffensive.Pro. 

Still, returning mobilized personnel from the army to private defense enterprises is next to impossible. So defense companies are doing everything to keep them from being mobilized. 

Often, the problem is a time lag. It takes a few days for a person's data to appear in a government register, so that an exemption request can be considered. Then another three days pass before the decision on the exemption is made, explains Oleh Boldyrev (also known by his blogging pseudonym Martin Brest), who works in a drone company. 

The long process to obtain critical status 

Companies need to receive an official status, that of an essential enterprise, to ask for personnel exemptions. By the end of February 2025, all companies critical to the economy must undergo a re-evaluation process for critical status under updated criteria. 

The designation under updated rules allows provides two options. 

The first option is exempting up to 50 percent military service employees from mobilization: to do this, a company should fulfill three out of seven criteria: 

• the total amount of taxes and fees paid during the previous year exceeds the equivalent of $1.75 million;

• the amount of foreign currency earnings, excluding loans and borrowings, exceeds $33 million for the previous year;

• the company is on the list of state-owned companies of strategic importance;

• the company is essential for the economy or meeting the needs of the territorial community;

• no owed payments for the unified social tax;

• the average salary at the company exceeds the average wage in the region for the fourth quarter of 2021; 

• the company is a participant in Diia.City, a special platform for IT companies.

For the second option, which exempts more than 50 percent of employees from mobilization, the enterprise must have:

• A valid government contract for weapons production, repair, modernization, or disposal;

• The production volume of military goods must exceed 50 percent of the total production

• Receipt of state grants.

The most challenging requirement for smaller teams is having an active government contract with a military unit, local authority, or ministry. Many companies instead supply products such as drones and EW systems to charitable foundations and specific soldiers. 

Also, the limited government budget can't provide orders to the hundreds of Ukrainian drone makers. The change in leadership at the Defense Procurement Agency, which supplied the Ukrainian army with lethal weaponry and equipment (read our previous coverage here), also affected the acquisition of government contracts, said Serhii Honcharov, executive director of NAUDI, a lobbying association of Ukrainian manufacturers. 

Changes in the DPA caused delays in signing contracts. And without a valid contract, a company can't confirm its critical status and exempt staff.

How the exemption process changed through 'Diia'

Since mid-2024, the government changed the mobilization exemption application process. Now everything works through ‘Diia,’ the Ukrainian government’s service's portal. To get an exception from mobilization via Diia, the company should prepare a list of documents like the full legal name, the name of the CEO, and information about the subject of military service. Document review takes three days.

However, difficulties may arise if employees don't update their military registration documents on time. They might be mobilized during the update, as with Oko Camera, even with company documents requesting their exemption. 

But sometimes, companies can't understand how the system works.

“We received the [exemption]. However, 3 out of 17 people who applied… received rejections. No one knows why – all the documents, updated data, everything. We applied again and still got a rejection,” explained Oleh Boldyrev.

Tech Force in UA believes this should be regulated separately. Employees should receive mobilization deferment during military registration document updates.

For now, everything depends on the specific TRC unit and the human factor. Some TRC units may still mobilize defense workers from the street, as with Boldyrev’s employees. On the other hand, some TRC units did not mobilize personnel upon learning they worked at the defense company even without having an exemption, said Dmytro Babenko, co-founder of FPV drone manufacturer Vyriy drone.

In the summer 2024, more than 40 defense companies called the government to solve the the mobilization problem. Recently, private companies held meetings with MoD and TRC about the mobilization of engineers, which improved the situation, said Andrii Demchenko, deputy head of Practika, an armored vehicle producer. However, isolated cases still happen. 

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1. Ukraine MoD roadmap on reforming intellectual property law:

The MoD announced its plans at an event hosted by We Build Ukraine analytical center, and indicated that they have three future work directions:

• A draft law on military personnel's 'service works' has been developed at the legislative level. It will provide rewards for individual inventors (40 percent of readiness, a draft law is ready, but has not yet been voted on in the Verkhovna Rada)

• At the MoD level, an instruction project for IP rights protection has been developed (75 percent), and ‘Single Window’ is being created to identify and scale production of practical inventions (30 percent). 

  • Single Window is a website for military personnel to report about new technical and other type of products with the aim of their legalization, rapid implementation, and scaling;

• The development of international defense technology transfers in two stages (25 percent).

Due to problems with IP law and enforcement, private manufacturers often register their intellectual property (IP) abroad, while the Ministry of Defense holds no patents. Most Ukrainian startups register abroad in Estonia, the USA, Great Britain, and other countries. Thus, there is a need for comprehensive solution that keeps Ukrainian IP in-country.

The Intellectual Property Department of Ukraine's Ministry of Defense is expected to be fully established by October 2025 to manage the IP portfolio.

2. Tencore plans to reduce imported parts to 10 percent by year-end:

The manufacturer of the land drones TerMIT, Tencore, is working on radically reducing the number of imported components in its products, Oleksiy Dudkin, Tencore's Head of Sales, told Counteroffensive.Pro. 

Currently, 50 percent of Tencore's spare parts are imported from abroad, and China is the primary source. However, the startup plans to reach 10 percent of imported parts by the end of the year, as the logistics chain now takes one to two months. 

The company already manufactures batteries for ground drones by itself.

The ground drone TerMIT was already integrated with the grenade launcher turret Burya' and has the following specifications:

• Speed: 8 km/h;

• Weight: 280 kg;

• Payload capacity: 300 kg;

3. Europe is waking up – main results of Eurodefense Hackathon: 

This past weekend in Munich, the European Defense Tech Hackathon was held. The main conclusion is Europe is finally waking up, Benjamin Wolba, co-founder of Eurodefense Hackathon, told Counteroffensive.Pro.

“There’s been a series of wake-up calls, but now it’s happening. We’ve organized the largest defense hackathon in Europe,” said Wolba. 

About 250 participants attended the event, 25-30 of whom were teams from Ukraine, including, for instance, a combat medic from the Third Assault Brigade. They concentrated on different topics, including swarming technology, developing anti-drone products, and communication. Wolba emphasized that all of them must be cheap and effective. 

Winners of the hackathon: 

1. Tiresias – multi-sensor fusion for infantry identification and threat assessment

2. hamilTUMian – efficient search algorithms for drone swarms and Odile.Vision (shared) – AI decision support systems for the battlefield

3. Real-time multi-drone scene understanding for close field combat support.

4. Special Helsing award – Radar emission data analysis 

5. Special Quantum Systems award – SQUID (System for Quantum UAV Identification & Deterrence) and hamilTUMian.

Counteroffensive.Pro is a media partner for this event. The next one will be held in Amsterdam at the end of March.

4. Double Tab Investments investing in Ukrainian drone developer:

Ukrainian drone developer Black Forest Systems secured its first investments from the Finnish-Ukrainian Double Tap investing company. The investment amount is not disclosed, but Double Tap's average check ranges from $100,000 to $300,000. Black Forest Systems is developing the hunter-killer drone Vyrok, which is designed to destroy enemy troops. This drone is intended for use by an infantryman with basic technical skills.

“I can't elaborate, but the basis is R&D for the existing drone and the subsequent products,” said Oles Khudoba, co-founder of Double Tap Investments on how the developer will use the funds. Investments also will allow the development of a minimum of four new products. 

Double Tap is planning to increase funding in Ukraine, emphasized Khudoba. He also hopes to create joint ventures and investment alternatives in such projects.

“We are also waiting for the borders to open for the sale of defense products from Ukraine, which will add investment attractiveness to our startups – as it will be easier to calculate traction and other metrics that investors understand,” said Khudoba.

5. Ukraine and French Thales will establish a joint venture: 

A state defense group, Ukroboronprom will develop a joint venture with French defense company Thales. The company will develop innovative technologies in air defense, radar, EW, optoelectronic, and tactical communications. Still, specific projects and estimated dates of establishment of the enterprise remain unknown.

“We have just signed a memorandum of understanding for establishing a joint venture,” said Tetiana Kryzheva, a spokeperson for the Ministry of Strategic Industries.

ON THE MOVE:

• Natalia Renska started a new job as Director of Delivery at Swarmer, a drone-swarming startup. She also owns the Think Tank ‘Culture & Processes.’

• NATO in Ukraine seeks a Project Officer to develop, coordinate, and realize aid projects.

• Martin Karkour was appointed as the Chief Sales Officer at Quantum Systems, a UAV developer. He previously served as Vice President at Capgemini, a company specializing in technology transformation.

Interested in sponsoring Counteroffensive.Pro? In just three months, we’ve accumulated more than 1,000 subscribers focused on Ukrainian battlefield innovation. This includes Western primes, defense companies, allied governments and Ukrainian startups. Want your messaging to target this highly-sought-after demographic? Email me here. 

30 SECOND ELEVATOR PITCH:

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Now, the company is looking for $675,000 in investments for this development. 

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• Ukraine and Belgium discussed the localization of F-16 fighter jet maintenance in Ukraine, according to Rustem Umerov, the Minister of Defense. The parties also discussed strengthening the Ukrainian Air Force, including the supply of air defense systems to Ukraine and their production in Ukraine.

• The German company Helsing will produce 6,000 HX-2 attack drones for the Ukrainian Defense Forces. The HX-2 has four electric motors in the tail section, a top speed of 220 kilometers per hour, and a range of up to 100 kilometers. It is designed to destroy armored vehicles, artillery, and other military targets, including buildings.Share the newsletter

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Correction:

Tencore originally provided inaccurate specifications for the TerMIT drone. The correct speed is 8 km/h, and the correct weight is 200 kg. The operational range of Starlink is limited only by the satellite signal.