Europe's Defense Industrial Awakening: From Strategy to Battlefield Innovation

Estimated reading time: 5 minutes

Editor’s note: This article is based on Episode #3 of MADE IN EUROPE, an IPC Podcast, produced by SCOOP. Guests for this podcast were Peter Nielsen, president and CEO of Kitron Group, and Hans-Peter Thomassen, CEO of Defense and Aerospace at Kitron AS. He oversees operations in the Nordics and North America region.

Europe stands at a critical juncture in its defense industrial evolution. With geopolitical tensions escalating and lessons learned from ongoing conflicts, the European Union is racing to build a resilient defense industrial base that can respond to 21st-century security challenges. Recent participation in high-level EU Commission dialogues has revealed both the urgency of this mission and the complex realities of achieving it.

The Three-to-five-year Window

The sobering truth confronting European defense planners is stark: We have between three and five years to build the industrial capacity we need before facing potential major security challenges. This timeline shapes every strategic decision we make, from supply chain management to technology innovation.

The mathematics of modern warfare have fundamentally changed our understanding of stockpiling. What one nation considered a year's worth of artillery stockpile represents merely three days of consumption in the Ukrainian conflict. This reality has forced a complete recalibration of how we think about defense preparedness and industrial capacity.

Supply Chain Realities: Electronics vs. Chemicals

The defense manufacturing ecosystem operates at two very different speeds, creating both opportunities and bottlenecks that require distinct strategies.

For electronics manufacturing, the path forward is relatively straightforward. An electronics facility can be operational within 10–12 months, and strategic component stockpiling for three to five years is not only feasible but already being implemented by forward-thinking customers. The challenge lies in the fact that most electronic components originate outside Europe, making supply chain security a matter of inventory management and strategic partnerships.

Chemical manufacturing for munitions presents a dramatically different challenge. Building a new chemical facility requires at least five years, with up to four years consumed by permitting and environmental studies alone. The regulatory burden includes environmental impact assessments spanning 20,000 pages or more. When a new electronics facility costs approximately €15 million, a chemical manufacturing plant requires around €5 billion in investment.

This disparity explains why electronics stockpiling makes economic sense while chemical capacity requires coordinated, long-term government commitments to justify the massive capital investments required.

Regional Leadership and the Geography of Urgency

Geography matters in European defense planning. Countries bordering the Baltic Sea—including the Nordics, Baltics, Poland, and Germany—demonstrate the greatest urgency in defense procurement and budget allocation. Poland's defense spending is approaching 5% of GDP, while Sweden has moved from 2.8% to targeting 3.5% and eventually 5%.

This geographic pattern reflects not just proximity to potential threats, but also cultural and historical factors that shape national security perspectives. The further west and south from Russia, the less immediate the sense of urgency—a disparity that creates both challenges and opportunities for pan-European defense coordination.

The Startup Revolution in Defense Technology

Perhaps the most exciting development in European defense is the emergence of innovative startups across Eastern Europe. Companies from Lithuania, Estonia, Latvia, Slovakia, and Croatia are developing cutting-edge technologies that complement traditional defense contractors.

These startups focus on areas where agility and innovation provide competitive advantages: drone technologies, laser targeting systems, and battlefield applications that can be rapidly tested and deployed. Significantly, many of these technologies are being field-tested through support programs for Ukrainian forces, providing invaluable real-world feedback loops that accelerate development cycles.

The startup approach differs fundamentally from traditional defense contracting. These companies concentrate on technology development and market positioning while partnering with established manufacturers for the entire supply chain, from early-stage procurement through final delivery. This model creates tremendous opportunities for electronics manufacturing services companies willing to engage during the crucial transition from startup to scale-up phases.

Administrative Agility: The Missing Link

One of the most frustrating obstacles to European defense industrial coordination remains administrative inflexibility, particularly around security clearances. A security clearance granted in Norway for NATO operations provides no value in Poland, forcing companies to navigate separate bureaucratic processes in each country where they operate.

This creates particular challenges for manufacturing networks that depend on expertise mobility. When specialists from different European facilities need to collaborate on time-sensitive projects, current administrative frameworks can impose delays that undermine operational effectiveness.

The solution lies in developing trusted digital processes and mutual recognition frameworks that maintain security standards while enabling the workforce mobility essential for modern manufacturing agility.

The Path Forward: Coordination, Volume, and Investment

Success in building Europe's defense industrial base requires coordinated action across multiple dimensions:

• Procurement coordination: Individual nations must move beyond customized specifications toward standardized systems that enable bulk purchasing and justify major industrial investments.
• Strategic stockpiling: For electronics and components, systematic stockpiling of strategic materials over a three-to-five-year horizon provides insurance against supply chain disruptions.
• Long-term commitments: Chemical manufacturing and other capital-intensive sectors require government procurement commitments substantial enough to justify billion-euro facility investments.
• Regulatory reform: Environmental and permitting processes must be streamlined to reduce the timeline for establishing new manufacturing capacity from five years to something approaching the 12-month timeline achievable in electronics.

Innovation Meets Urgency

The Ukrainian conflict has accelerated defense innovation in ways that peacetime development never could. The feedback loop between battlefield requirements and technology development has compressed innovation cycles from years to weeks. Technologies that work receive immediate scaling opportunities; those that fail are quickly abandoned.

This real-world testing environment has proven invaluable for European defense startups, providing validation and refinement opportunities that traditional defense development processes cannot match. The challenge now is systematizing these lessons and incorporating them into broader European defense industrial planning.

Conclusion: Building Tomorrow's Defense Today

Europe's defense industrial awakening represents both an enormous challenge and a historic opportunity. We have the technological capability, the innovative spirit, and increasingly, the political will to build a resilient defense industrial base. What we need now is the administrative agility and coordinated procurement strategies to match the urgency of our security environment.

The next few years will determine whether Europe can successfully transform from a collection of individual national defense markets into a coordinated industrial ecosystem capable of meeting 21st-century security challenges. The stakes could not be higher, but neither could the potential rewards for getting this transformation right.

The conversation has begun at the highest levels of European policy making. Now comes the harder work of implementation, coordination, and execution. The clock is ticking, but European industry stands ready to answer the call.

Philip Stoten is a journalist, speaker and podcast host. Peter Nielsen serves as president and CEO of Kitron Group. Hans-Peter Thomassen is CEO of Defense and Aerospace at Kitron AS and oversees operations in the Nordics and North America region.