{"id":34541,"date":"2025-08-22T12:15:19","date_gmt":"2025-08-22T11:15:19","guid":{"rendered":"https:\/\/www.argonandco.com\/?post_type=article&p=34541"},"modified":"2025-08-22T12:21:44","modified_gmt":"2025-08-22T11:21:44","slug":"europes-defence-dilemma-ramping-up-in-a-fragmented-market","status":"publish","type":"article","link":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/","title":{"rendered":"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market"},"content":{"rendered":"

In July 2025, Saab\u2019s CEO Micael Johansson warned that Europe\u2019s defence industry, despite its innovation, risks falling behind global competitors due to its fragmentation and a lack of scale. His warning echoes the 2024 Draghi report on EU competitiveness, which raised similar concerns. The message is clear: while defence budgets are rising, production capacity is not keeping pace.<\/p>\n

The Scaling Challenge in Europe<\/strong><\/h2>\n

Countries like the Netherlands, France, Germany and the Nordic nations are dramatically increasing their defence spending in response to growing geopolitical instability and NATO commitments. However, the region\u2019s defence industry is still highly fragmented, with national priorities often outweighing collective efficiency.<\/p>\n

The European defence ecosystem is composed of a patchwork of thousands of small and medium-sized enterprises (SMEs), alongside a handful of national champions. This stands in sharp contrast to the United States, where the industry is dominated by a few large, consolidated defence giants.<\/p>\n

The appointment of the EU\u2019s first Defence Commissioner, Andrius Kubilius, marks a turning point. His mandate includes consolidating the defence industry, boosting investment in advanced technologies, and strengthening Europe\u2019s strategic autonomy. But policy alone will not solve the operational bottlenecks \u2013 ramping up requires fundamental change in how the industrial base operates.<\/p>\n

Key Pain Points in Scaling Up<\/strong><\/h3>\n
    \n
  1. Procurement Complexity Across Borders<\/strong>
    \nThe billions pledged in increased defence spending have yet to translate into streamlined, scalable orders and financial commitments for the European industry. Procurement in Europe remains fragmented, with countries often favouring domestic suppliers and developing systems to meet national specifications. This often leads to a proliferation of design variants<\/strong> \u2013 each tailored to slightly different operational doctrines \u2013 which adds complexity and drives up costs and lead time. While political alignment is improving, operational coordination on specifications, timelines, and contracting is still lacking.<\/li>\n<\/ol>\n
      \n
    1. Fragmented Supply Chains<\/strong>
      \nEurope\u2019s defence sector faces significant ramp up challenges due to its fragmented supply chains and only few strong industrial anchors to coordinate efforts<\/strong>. The sector\u2019s resilience and operational capacity rely heavily on thousands of dual-use SMEs, especially in countries like the Netherlands. These companies \u2013 including startups and family-owned businesses \u2013 form the backbone of the industry, despite often lacking the scale, digital infrastructure, and capital intensity of large original equipment manufacturers (OEMs). This fragmentation poses a serious risk: pushing high demand into an already strained and poorly coordinated supply chain can trigger uncontrolled price increases and a decline in delivery reliability.<\/li>\n<\/ol>\n
        \n
      1. Scaling from Prototype to Series Production<\/strong>
        \nModern warfare is evolving at an incredible pace, with battlefield requirements changing almost as quickly as new technologies emerge. Radar systems, for example, must not only detect long-range threats but also distinguish birds from cheap consumer drones. These systems must be fast and mobile \u2013 survivability is non-negotiable.This pace of change creates a paradox: defence organizations must industrialize cutting-edge innovations and move into series production, even as requirements continue to evolve \u2013 sometimes forcing a near restart mid-development. Navigating this challenge calls for robust processes around rapid prototyping, baselining, configuration change management, and design for manufacturing.<\/li>\n<\/ol>\n
          \n
        1. Shortage of Technical Personnel<\/strong>
          \nCompanies must find new ways to\u00a0win the war on talent<\/strong>: attracting, training, and deploying people faster and smarter than ever before. In many defence companies, production has tripled or even quadrupled within just a few years \u2013 resulting in a surge of open vacancies. Yet the region faces a growing shortage of skilled workers, from electromechanical specialists and assembly technicians to software developers, quality inspectors, and factory planners. Onboarding and training take time, something the industry cannot afford to waste.<\/li>\n<\/ol>\n

          From Fragmentation to Orchestration<\/strong><\/h3>\n

          Europe\u2019s defence industry will not scale through policy alone. To realise the growth, a fundamental transformation in how the industrial base operates is essential. Sales representatives, engineers, production workers, quality engineers, inventory planners, procurement teams and suppliers must operate as one \u2013 because even a single material shortage or quality issue can derail an entire production schedule.<\/p>\n

          This transformation hinges on the ability to orchestrate the supply chain<\/strong>. OEMs must take the lead in aligning Tier-1, -2, and -3 suppliers, enabling early visibility into demand, shared forecasting, long term commitments and coordinated planning. Without this alignment, suppliers remain reactive, and scalable production remains out of reach.<\/p>\n

          A critical enabler is the integration of end-to-end planning processes. Sales and Operations Planning (S&OP) should drive cross-functional alignment across sales, engineering, procurement, and production. Master Production Scheduling (MPS) and Rough-Cut Capacity Planning (RCCP) must be tightly connected. Material Requirements Planning (MRP) should be embedded in program execution to ensure timely procurement of the right materials. With these foundations in place, procurement must evolve from a transactional function to a strategic one \u2013 securing access to capacity and critical materials (microchips, rare earth, etc.), while implementing mechanisms to enhance redundancy and share risk across the supply chain.<\/p>\n

          A major challenge in Europe\u2019s defence industry is the tendency to prioritize short-term wins by tailoring products to individual client specifications. While this may help secure contracts, it keeps in place the engineer-to-order mindset that undermines long-term efficiency and scalability. Companies must resist the urge to over-customize and instead advocate for a shift toward standardized product platforms to enable make-to-forecast production strategies.<\/p>\n

          The momentum is here<\/strong><\/h3>\n

          The opportunity is clear: Europe has the innovation, the talent, and the political will. What is needed now is operational alignment and industrial leadership. Ramping up defence is not just about policy or producing more \u2013 it is about producing smarter, faster, and together<\/strong>. The time to act is now, before complexity and fragmentation become strategic liabilities.<\/p>\n","protected":false},"featured_media":34544,"template":"","categories":[],"region":[256],"class_list":["post-34541","article","type-article","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\nEurope\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co\" \/>\n<meta property=\"og:description\" content=\"In July 2025, Saab\u2019s CEO Micael Johansson warned that Europe\u2019s defence industry, despite its innovation, risks falling behind global competitors due to its fragmentation and a lack of scale. His warning echoes the 2024 Draghi report on EU competitiveness, which raised similar concerns. The message is clear: while defence budgets are rising, production capacity is […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/\" \/>\n<meta property=\"og:site_name\" content=\"Argon & Co\" \/>\n<meta property=\"article:modified_time\" content=\"2025-08-22T11:21:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.argonandco.com\/wp-content\/uploads\/2025\/08\/Defense-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1393\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/\",\"url\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/\",\"name\":\"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.argonandco.com\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/Defense-scaled.jpg\",\"datePublished\":\"2025-08-22T11:15:19+00:00\",\"dateModified\":\"2025-08-22T11:21:44+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.argonandco.com\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/Defense-scaled.jpg\",\"contentUrl\":\"https:\\\/\\\/www.argonandco.com\\\/wp-content\\\/uploads\\\/2025\\\/08\\\/Defense-scaled.jpg\",\"width\":2560,\"height\":1393,\"caption\":\"2R70W47 06 June 2023, Lower Saxony, UnterluB: Lynx infantry fighting vehicles stand in a Rheinmetall production hall. Photo: Philipp Schulze\\\/dpa\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Articles\",\"item\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/news-insights\\\/articles\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/#website\",\"url\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/\",\"name\":\"Argon & Co\",\"description\":\"We help clients achieve their strategic and operational objectives, working together to transform their businesses and generate real change.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.argonandco.com\\\/en\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-GB\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/","og_locale":"en_GB","og_type":"article","og_title":"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co","og_description":"In July 2025, Saab\u2019s CEO Micael Johansson warned that Europe\u2019s defence industry, despite its innovation, risks falling behind global competitors due to its fragmentation and a lack of scale. His warning echoes the 2024 Draghi report on EU competitiveness, which raised similar concerns. The message is clear: while defence budgets are rising, production capacity is […]","og_url":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/","og_site_name":"Argon & Co","article_modified_time":"2025-08-22T11:21:44+00:00","og_image":[{"width":2560,"height":1393,"url":"https:\/\/www.argonandco.com\/wp-content\/uploads\/2025\/08\/Defense-scaled.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Estimated reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/","url":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/","name":"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market - Argon & Co","isPartOf":{"@id":"https:\/\/www.argonandco.com\/en\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/#primaryimage"},"image":{"@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/#primaryimage"},"thumbnailUrl":"https:\/\/www.argonandco.com\/wp-content\/uploads\/2025\/08\/Defense-scaled.jpg","datePublished":"2025-08-22T11:15:19+00:00","dateModified":"2025-08-22T11:21:44+00:00","breadcrumb":{"@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/"]}]},{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/#primaryimage","url":"https:\/\/www.argonandco.com\/wp-content\/uploads\/2025\/08\/Defense-scaled.jpg","contentUrl":"https:\/\/www.argonandco.com\/wp-content\/uploads\/2025\/08\/Defense-scaled.jpg","width":2560,"height":1393,"caption":"2R70W47 06 June 2023, Lower Saxony, UnterluB: Lynx infantry fighting vehicles stand in a Rheinmetall production hall. Photo: Philipp Schulze\/dpa"},{"@type":"BreadcrumbList","@id":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/europes-defence-dilemma-ramping-up-in-a-fragmented-market\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.argonandco.com\/en\/"},{"@type":"ListItem","position":2,"name":"Articles","item":"https:\/\/www.argonandco.com\/en\/news-insights\/articles\/"},{"@type":"ListItem","position":3,"name":"Europe\u2019s Defence Dilemma: Ramping up in a fragmented market"}]},{"@type":"WebSite","@id":"https:\/\/www.argonandco.com\/en\/#website","url":"https:\/\/www.argonandco.com\/en\/","name":"Argon & Co","description":"We help clients achieve their strategic and operational objectives, working together to transform their businesses and generate real change.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.argonandco.com\/en\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"}]}},"_links":{"self":[{"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/article\/34541","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/article"}],"about":[{"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/types\/article"}],"version-history":[{"count":0,"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/article\/34541\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/media\/34544"}],"wp:attachment":[{"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/media?parent=34541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/categories?post=34541"},{"taxonomy":"region","embeddable":true,"href":"https:\/\/www.argonandco.com\/en\/wp-json\/wp\/v2\/region?post=34541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}