The European defense industry lacks less money than factories

Europe has never spent so much on its defense. The ReArm Europe plan, presented by the European Commission in March 2025, provides for a global effort exceeding 800 billion euros. In 2023, only three European countries reached the threshold of 2% of GDP devoted to defense set by NATO. They should be twelve in 2025, while the Alliance is now pushing its members towards an effort close to 3%. The numbers are dizzying. However, on the factory floor, the reality is more nuanced.

Money is not enough

The problem is simple to formulate: you don’t build a missile production line in a few months. Industrial deadlines extend over years. Companies face logistical bottlenecks, shortages of critical components and recruitment difficulties. The French defense industry illustrates this tension. The labor shortage is one of the main obstacles to the war economy, with some 10,000 positions to be filled in France. Companies are primarily looking for workers and technicians for two thirds of these positions.

“MBDA, the European missile manufacturer, is targeting 1,000 permanent recruitments each year. Naval Group plans the same effort. These skills are not formed in a few months.â€

The difficulties also concern less visible, but equally critical, industrial segments. After the end of the Cold War, Europe reduced certain capabilities deemed excess. The production of propellant powders, explosives or specialized electronic components has been concentrated among a limited number of players; sometimes only one per country. Consequently, an order placed today may come up against a supply chain that no longer exists in sufficient volume. Relaunching these sectors requires heavy investments, regulatory authorizations and ramp-up deadlines that are incompatible with the political urgency.

The situation goes beyond the French perimeter alone. Indeed, between 2020 and 2024, 64% of arms imports from European NATO states came from the United States. This structural dependence cannot be resolved with a budgetary vote. It reflects the capacity of American manufacturers to quickly produce standardized equipment, already integrated into the doctrines of the Alliance. On the other hand, Europe must still rebuild entire capacities in powders, electronic components or special steels; so many segments where dependencies have accumulated over decades of underinvestment.

Get up to speed

Some manufacturers are nevertheless moving forward. Thales recorded 25.3 billion euros in new orders in 2024, including 58% in defense, and has doubled its production rates for radars and missiles over the period 2022-2026. Rheinmetall in Germany, Leonardo in Italy and Saab in Sweden are investing in new manufacturing sites. Eastern Europe is also gaining momentum: Poland, the Czech Republic and the Baltic countries are increasing orders while strengthening regional subcontracting chains.

“On the institutional level, the EDIP; Program for the European Defense Industry, provides 1.5 billion euros in subsidies for the period 2025-2027, targeting joint acquisitions and the strengthening of production capacities.â€

In France, the government announced an additional envelope of 1.7 billion euros via Bpifrance and the Innovation Defense fund.
However, these efforts remain on the scale of catching up rather than breaking. The Commission’s objective was to increase the annual ammunition production capacity to two million shells by the end of 2025; a threshold that proved out of reach. But manufacturers are still struggling to meet the announced schedules. Ramping up takes time. It requires long contracts to secure investments and coordination between member states which remains fragmented.

Thus, the gap between political time and industrial time remains the real crux of the problem. A budget announcement produces an immediate effect. The construction of a factory, the certification of a production line or the training of a qualified workforce requires several years. Between the decision to invest and the delivery of the first capacities, the deadlines remain incompressible.

Committing billions is the simplest political gesture. Building factories, training welders, securing supplies of raw materials and rebuilding industrial sectors: this is where European defense capacity will really be at stake in the years to come. If these capabilities do not grow at the same rate as budgets, Europe risks increasing its spending while continuing to depend largely on external suppliers for its rearmament.