As leaders from Europe meet Donald Trump’s team in Munich this week, discussions on boosting the continent’s defences are poised to take centre stage. While America’s peace plans for Ukraine will top the agenda, the focus on how Europe can scale up its military capabilities remains crucial. Three years after Russia’s invasion of Ukraine, European nations have ramped up defence spending, but industry leaders warn that the region’s military capacity still lags behind the growing demands of modern warfare. According to Financial Times, European defence companies have made strides, but much more needs to be done to build a competitive, scalable industry capable of matching the US’s industrial scale.
Roberto Cingolani, CEO of Italy’s Leonardo, emphasized that NATO’s security balance must be more even. “There can no longer be this disparity at a NATO level where one leg is much stronger than the other, and this was true even before Trump’s return,” he said. While the US has been the dominant force within the alliance, Cingolani suggests that Europe can no longer rely solely on American support, and must work towards stronger industrial capabilities within its own borders.
Though European companies, such as Sweden’s Saab and Germany’s Rheinmetall, have seen an uptick in sales and orders over the past three years, their turnovers are still small compared to their US counterparts. As noted by Financial Times, the scale of the challenge remains stark, with only the UK’s BAE Systems among Europe’s top-10 defence contractors by turnover in 2023. European leaders are increasingly calling for greater collaboration and long-term government orders to help companies expand their production capacity and innovate.
Several executives have outlined key strategies for scaling the industry. One essential factor is the need for long-term government commitments to provide manufacturers with the stability necessary for large-scale production. Morten Brandtzæg, CEO of Nammo, a major ammunition producer, highlighted the need for such orders to ensure not only adequate supplies for Ukraine but also the refilling of national stockpiles. Meanwhile, Guillaume Faury, CEO of Airbus, advocates for more pan-European programmes and closer collaborations between companies to strengthen the sector.
Despite these calls for unity, Europe’s fragmented defence sector remains a challenge. Joint initiatives, such as pan-European space collaborations, have proven difficult due to political divisions. A potential merger of Airbus, Leonardo, and Thales to challenge large space rivals like Elon Musk’s Starlink exemplifies the kind of collaboration Europe needs to compete at a global level, but such efforts face substantial hurdles.
As European leaders wrestle with how to pool resources, Financial Times notes that there are also proposals for joint purchases of defence equipment, which could streamline procurement processes and enhance cost-efficiency. This strategy, advocated by experts like Guntram Wolff, senior fellow at Brussels’ Bruegel think tank, could lead to a more market-driven approach to defence acquisition.
Ultimately, industry leaders agree that Europe must take greater responsibility for its security. Micael Johansson, CEO of Saab, emphasized the importance of investing in domestic production and supporting European capabilities to increase resilience and ensure freedom of action. With Trump’s return to the White House, the urgency of Europe’s defence challenges has never been clearer. As Cingolani noted, “We owe this to NATO, but we also owe it to ourselves, considering we have taken peace for granted for 70 years and we can no longer take it for granted.”
