(Bloomberg) -- France and Germany agreed to join forces to produce ammunition in Ukraine through a new subsidiary of manufacturer KNDS, as Kyiv’s allies seek to step up military help in the face of Russian advances.

The Franco-German battle tank maker will create a unit in Ukraine to produce ammunition and spare parts for equipment sent by the two European neighbors, under an agreement reached Friday by German Defense Minister Boris Pistorius in talks with French counterpart Sebastien Lecornu in Berlin.

“We, France and Germany, both want to help Ukraine to make the ammunition production there more self-sufficient,” Pistorius told reporters after the meeting. 

Lecornu said KNDS, which makes products including Caesar self-propelled howitzers, artillery systems and armored vehicles, “will take a foothold in Ukraine with a local unit.” He added: “The production of ammunition must move close to the front line, that will be very important for supplies.”

French President Emmanuel Macron and German Chancellor Olaf Scholz pledged last week that they would start producing weapons inside Ukraine as they tried to move past concerns that their differences would hinder the bloc from mobilizing sufficient support. But Kyiv needs enough ammunition in the short term, with average daily shell use by Russian troops anywhere from three to five times what Ukrainian forces can fire.

The Ukrainian KNDS unit may later produce weapons systems from scratch, according to a French official who spoke on condition of anonymity. German arms manufacturer Rheinmetall AG announced last month that it will open a new plant in Ukraine to produce artillery ammunition with a local joint venture partner.

Lecornu and Pistorius also said they had reached an agreement on how to divide the workload between the companies from both countries working on the next generation of tanks, known as MGCS, for Main Ground Combat System. 

The MGCS is supposed to replace fleets of France’s Leclerc tanks and Germany’s Leopards, although officials say it will be used for a wider range of missions. KNDS, a joint venture of Kraus-Maffei Wegmann and Nexter, is the prime contractor for the Leclerc. 

Pistorius said that the two countries will sign a memorandum of understanding for the MGCS in Paris on April 26, with a contract readied by the end of the year.

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