Geopolitical changes across Europe have prompted some member states to redirect domestic wealth to boost their defence capabilities. In addition to increased spending, the war in Ukraine has provided an opportunity for nations with relatively unproven military tech to test and prove their assets. Whether it\u2019s countries with established defence manufacturers such as Germany, with Europe\u2019s biggest ammunition maker Rheinmetall overtaking top carmaker Volkswagen in terms of market value<\/a>, or new players such as T\u00fcrkiye accelerating its manufacturing advancements<\/a> across product categories, including drones, armored vehicles, and naval vessels\u2014domestic spending is up and there are many opportunities to employ these capabilities in combat.<\/p>\n\n\n\n The EU multiannual financial framework (MFF) 2012-2027<\/a> includes separate funding for cooperation on defence-related activities. But the EU Commission has now upped its game with the recent unveiling of its plans for European Defence and \u2018Readiness 2030\u2019<\/a>, an ambitious financial lever for EU Member States to help drive an investment surge in defence capabilities. The EU also released its new financial instrument SAFE (Security Action for Europe)<\/a> to support member investment in defence capabilities, including domestic supply chains to increase market efficiency.<\/p>\n\n\n\n With Europe planning to increase its defence investment, what does this mean for the European Defence Industrial Base (DIB)?<\/p>\n\n\n\n European defence manufacturers have a unique window of opportunity<\/strong><\/p>\n\n\n\n Domestic European defence manufacturers must be prepared for a surge in demand as the need for enhanced capabilities and assets grows. This increase is not only crucial for defending their homeland but also for supporting ongoing conflicts.<\/p>\n\n\n\n This means the defence manufacturing market will no doubt experience a period of market consolidation to meet demand and focus on the need to increase their production efficiency. During this period, organisations could merge or seek help from other European and non-European manufacturers. This is already happening with examples such as General Dynamics European Land Systems partnering with Rheinmetall<\/a> to provide the German Army with 256 Piranha 5 vehicles equipped with a 15m telescopic mast system.<\/p>\n\n\n\n There is also potential for reindustrialisation as manufacturers shift their production capacity from commercial production to defence-related products to meet demand. This could be driven by economic forces or increased funding, but also by governments, as they reprioritise supply chains to ensure defence manufacturers receive necessary components first or influence civilian companies to prioritise the production of essential assets. This reprioritisation of production happened most recently in the U.S. during the COVID-19 pandemic when The Defence Production Act was enacted to deal with the lack of respirators. While European nations have not yet employed this sort of action at scale, it is certainly a lever if the industrial base proves itself to not be as responsive as it should be.<\/p>\n\n\n\n Regardless of the form of consolidation, partnerships, or reprioritisation, European defence manufacturers have a window of opportunity to leverage increased funding and national priorities. These will undoubtedly not last forever, as public support may not be enduring.<\/p>\n\n\n\n Funding, talent, and technology are at the ready, it\u2019s up to manufacturers to leverage them<\/strong><\/p>\n\n\n\n In their current state, many defence manufacturers cannot match this increased demand. However, with some strategic shifts, they can be helped.<\/p>\n\n\n\n First, get funded. To meet procurement goals, manufacturers need to leverage funding incentives such as SAFE and the European Defence Industry Programme (EDIP)<\/a>. Not only are there monetary benefits for manufacturers that leverage these incentives, but they also encourage cross-border and company collaboration, perfect for smaller EU nations that cannot justify having homegrown manufacturers of assets they don\u2019t need.<\/p>\n\n\n\n![\"\"](\"https:\/\/track.com.tr\/wp-content\/uploads\/2025\/06\/image.jpeg\")
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