FT: Europe's arms industry triples peacetime growth

A new analysis of satellite data indicates that Europe's weapons manufacturing capacity is undergoing a historic expansion, with new industrial development stretching across more than 7 million square meters. This surge in construction, which is three times the typical peacetime rate, reflects a significant rearmament push in response to Russia's full-scale invasion of Ukraine in 2022.

The analysis, conducted by the Financial Times using radar satellite data from 150 facilities across 37 defence companies, reveals that Europe's long-promised defence revival is materialising in tangible infrastructure. The data, gathered from the European Space Agency's Sentinel-1 satellites, shows that construction activity has gone into overdrive since the start of the conflict. Approximately one-third of the sites examined showed clear signs of expansion or new construction work.

A generational shift in defence

The scale of this building activity suggests a fundamental shift in Europe's defence strategy. According to William Alberque, a former director of NATO arms control, these are "deep and structural changes" that will transform the defence industry. The transition from a "just-in-time" peacetime model to a more sustained war footing is intended to create a robust industrial base capable of mass-producing critical munitions.

The analysis highlights that areas marked by construction jumped from 790,000 square meters in 2020-21 to 2.8 million square meters in 2024-25. This expansion is confirmed by photographic evidence showing new buildings, roads, and extensive excavation work at the sites.

One of the most significant expansions is a joint venture between Germany's Rheinmetall and Hungary's N7 Holding. The companies have built a vast new factory in Várpalota, Hungary, to produce ammunition and explosives. The first phase of the factory, completed in July 2024, is already producing 30mm ammunition for infantry fighting vehicles, with plans to expand production to include 155mm artillery shells and 120mm tank ammunition.

EU funding fuels growth

A key driver of this expansion is the EU's Act in Support of Ammunition Production (ASAP) program, which has invested €500 million to address production bottlenecks. The analysis found that companies receiving ASAP funds expanded more rapidly than those without the funding. Significant physical expansion was visible at 20 ASAP-funded sites, with smaller expansions at 14 others.

This investment is directly impacting ammunition production. EU defense commissioner Andrius Kubilius stated that Europe's annual ammunition capacity has increased from 300,000 to an estimated 2 million rounds by the end of this year. Rheinmetall alone plans to boost its annual production of 155mm rounds from 70,000 in 2022 to 1.1 million by 2027.

While ammunition production is a priority, experts like Fabian Hoffmann from the University of Oslo emphasise the need for similar investment in long-range strike capabilities. He argues that missiles are critical for a credible deterrence against Russia, and European production of these is currently limited.

Broader investment and future plans

Beyond ASAP, other public and private investments are contributing to the defence build-up. At the German headquarters of missile-maker MBDA, new roads and building works covering 94,000 square meters have been detected. This expansion is supported by both ASAP funding and a significant $5.6 billion NATO commission to produce Patriot surface-to-air missiles.

Similarly, Norway's Kongsberg opened a new missile factory in June 2024 with government and ASAP funding, leading to an "exponential increase" in its missile production capacity. In the UK, BAE Systems has invested over £150 million in its munitions factories since 2022, with a new facility in Wales expected to increase 155mm shell production sixteen-fold.

Looking ahead, the EU is negotiating a new €1.5 billion defence program that would extend the logic of ASAP to other critical areas, including missiles, air defence, artillery, and drones. This continued investment, according to Latvia's foreign minister Baiba Braže, is "a very positive and much needed development" to ensure the defence industry can deliver on NATO's growing spending commitments.

By Tamilla Hasanova