European nations are increasingly focusing on defense investments and boosting their industrial capabilities in light of geopolitical shifts and security concerns. The European Defence Fund (EDF) is a critical part of the European Defence Action Plan, which aims to promote cooperation and innovation within the defense sector and foster a robust and competitive European Defence Technological and Industrial Base.
Recent developments show the growing momentum behind European defense initiatives. Military spending has increased from $250 billion in 2022 to $290 billion in 2023, and it is projected to reach $370 billion in 2024.
The EDF's investment strategy focuses on high-end defense capabilities in critical areas such as naval, ground, air combat, space-based early warning systems, and cyber defense. The fund has taken significant steps forward in growing defense industrial and manufacturing capacities and is investing in critical areas. In the next few weeks, award decisions will be announced by the EDF under the Act in Support of Ammunition Production (ASAP) program. This funding will go toward doubling European ammunition production to over 2 million shells a year by the end of 2025.
Strategic partnerships and collaborations play a crucial role in enhancing defense capabilities. Recent contracts between U.K.-based missile maker MBDA and Polish defense company Polska Grupa Zbrojeniowa (PGZ) exemplify this trend, underscoring the importance of international cooperation in addressing shared security challenges.
Similarly, offset agreements signed by the Polish Ministry of National Defence with U.S.-based defense contractors Lockheed Martin and Raytheon will enhance Poland's defense capabilities and contribute to the development of its domestic defense industry.
A few recently announced projects and investment news items are listed below for your reference.
U.K.-based missile-maker MBDA and Polish defense company PGZ have signed a $5-billion contract to work on Poland's anti-air missile program. The deal will include the delivery of 1,000 missiles and more than 100 launchers for Poland's NAREW weapon system. The program is based on MBDA's extended-range variant of the Common Anti-Air Modular Missile, which was developed jointly by the U.K. and Italy.
The Polish Ministry of National Defence signed offset agreements for medium-range anti-aircraft and anti-missile systems with U.S.-based defense contractors Lockheed Martin and Raytheon under the WISLA Phase II program. The agreement is valued at approximately $241 million. As part of this agreement, the two U.S. companies will support Poland's defense industrial base by ensuring that the Polish industry can provide service, repair, and production facilities related to the WISLA system domestically.
STV Group is investing in large-caliber ammunition production, including 155-mm ammunition for NATO guns at its plant in Policka in the Czech Republic. The company commissioned a new line for filling artillery shells with explosives in 2024. Rheinmetall AG's subsidiaries will receive over $138 million in funding from the European Union to expand the production of 155-mm artillery ammunition and powder in six projects in Germany, Hungary, Romania, and Spain.
Finland has decided to join NATO and pledged $130 million to double its production capacity of artillery and mortar ammunition. The investment aims to strengthen Ukraine's defense against Russia, specifically by providing heavy ammunition such as 155-mm and 81-mm shells, as well as 120-mm mortar rounds. The funds will be directed toward Nammo, a Finnish-Norwegian aerospace and defense group and key player in the European ammunition industry, to increase its production capabilities to an output of 200,000 artillery shells annually by 2028.
Mercedes is investing over $1.06 billion to expand its Vitoria-Gasteiz, Spain, plant and make it a hub for fully electric van production by 2026. The project, named The Factory of the Future, will double the plant's size to 800,000 square meters and exclusively produce electric models while maintaining flexibility for combustion vehicles.
ITP Aero has launched its technology and industrial growth plan, which includes a $20 million investment to construct ADMIRE (Advance Manufacturing Aerospace Center), a new, advanced-manufacturing R&D center that will be fully operational by the end of 2024. The plan also includes investments in ITP Aero's castings facilities in Mexico and Barakaldo, Spain.
For more information, please contact Conchi Aranguren at caranguren@AMTonline.org.
