Opinion | Europe’s defence industry has entered the industrial production phase

This article was written by Ignas Marcinkevičius, Defence industry expert at Invest Lithuania

Key takeaways

• Europe’s defence industry is shifting from strategy to large-scale production
• Industrial capacity – not budgets – is now the primary constraint
• Supply chain resilience and ammunition production are critical gaps
• Agile countries like Lithuania are emerging as defence execution hubs

At Enforce Tac 2026, one message was unmistakable: Europe’s defence industry has moved beyond the strategic debate about defence production. The question is no longer whether the continent should scale its defence industrial base, but how quickly and how structurally it can do so.

Europe’s defence industry is shifting from strategy to execution

Over the past three years, European policymakers have focused on building the policy architecture needed to support defence manufacturing. At the EU level, much of that framework is now in place, with instruments such as the Security Action for Europe (SAFE) and the European Defence Industry Programme (EDIP) designed to mobilise investment. The real challenge, however, lies at the national level, where implementation capacity, permitting systems, and industrial coordination still vary significantly across Member States. Political alignment across Europe is stronger than it has been in decades, but turning that alignment into industrial output remains the next step.

What is changing now is the centre of gravity of the conversation. Defence is no longer primarily a policy discussion. It has become an implementation challenge.

The tone at Enforce Tac reflected this shift. Industry leaders, government representatives, and investors were no longer debating strategic intent. Instead, conversations focused on timelines, production lines, and delivery capacity. The defence sector is entering a phase where execution matters more than declarations.

Industrial capacity is becoming a core driver of European security

One of the most striking evolutions in European security thinking is the growing recognition that deterrence is not only about budgets or troop numbers. Increasingly, it is about endurance.

Why ammunition production capacity is critical in Europe

High-intensity conflicts require sustained ammunition output at a scale that most European systems were not designed to support. The war in Ukraine has exposed this gap, making ammunition production a central component of defence planning rather than a secondary industrial function.

Production capacity, supply chain resilience, and the ability to sustain output over time are becoming critical components of national and collective security.

The role of defence supply chains in long-term resilience

Beyond production itself, supply chain coordination is becoming a defining factor. Dependencies on specialised components, raw materials, and cross-border logistics introduce vulnerabilities that directly impact delivery timelines and operational readiness.

In this context, industrial output is emerging as a strategic indicator alongside GDP and defence spending.

For investors and industrial partners, this represents a structural shift. Defence manufacturing is no longer viewed purely as a procurement sector, but as a strategic infrastructure capability.

The real constraint in Europe’s defence manufacturing is structural, not financial

While defence budgets across Europe have increased significantly, discussions at Enforce Tac repeatedly pointed to a different constraint: production bottlenecks and national regulatory systems that are not always designed to enable the rapid implementation of defence manufacturing projects and national regulations that lacks flexibility when it comes to implementing the defence manufacturing projects fast.

Key bottlenecks in European defence manufacturing

Across multiple segments of the defence ecosystem, companies highlighted the same constraints. Explosives and raw material shortages remain a persistent challenge. Highly specialised components often involve long lead times. Skilled workforce shortages are becoming more visible as production ramps up. And perhaps most importantly, Europe’s defence manufacturing landscape remains fragmented across national systems.

These constraints point to a fundamental reality: Europe’s challenge is no longer financial. Funding is rising and capital is available. What is needed now is an industrial organisation – more flexible national procedures to scale facilities quickly, better synchronisation of supply chains, and a workforce capable of sustaining higher production volumes. In other words, Europe must move from funding defence production to structurally enabling it.

Execution capacity will define Europe’s strategic defence partners

This transition places a new emphasis on trusted partnerships and national execution capabilities.

Scaling defence manufacturing requires far more than capital investment. It demands close cooperation between governments and industry, coordinated cross-border supply chains, and national frameworks capable of accelerating industrial projects without compromising regulatory certainty.

Financial instruments are only the starting point

Europe now possesses the financial architecture to support this transition – including instruments such as the SAFE and the European Defence Industry Programme (EDIP). Yet financial instruments alone do not produce ammunition. Industrial capacity is ultimately built through factories, production lines, permitting systems, land availability, and above all the speed at which projects can be executed.

National execution capacity is becoming decisive

This is where national systems become decisive. Over the past year, Lithuania has focused on translating European strategic ambition into measurable industrial execution – through regulatory adjustments, stronger institutional coordination, and the development of a more integrated.

The gap in European ammunition production is not yet closed but closing it will depend on countries capable of delivering capacity quickly, predictably, and at scale.

Agile economies can play an outsized role

In practice, this means that smaller but agile economies can play an outsized role. States that have prioritised defence resilience, built strong technology sectors, and developed effective public-private cooperation models are often able to move faster than larger but more complex systems.

Across Northern and Eastern Europe in particular, several countries are positioning themselves within this emerging industrial architecture – not simply as buyers of defence equipment, but as contributors to the continent’s production capacity.

The future of Europe’s defence sector: from strategy to production

The broader takeaway is that Europe’s defence transformation is entering a new phase.

The strategic consensus now exists. The political momentum is real. Capital is increasingly available. What remains is the most difficult part: building industrial capacity at scale.

For investors and technology companies, this moment represents a significant opportunity, but also a responsibility. Defence is becoming one of the defining industrial transformations of the European economy. The countries and companies that succeed will be those capable of turning strategy into production, and policy commitments into operational capacity.

In the coming years, Europe’s security credibility will depend not only on what it plans – but foremost on what it can manufacture.