Reconfiguring defence supply chains: procurement dynamics, inter-organizational dependence, and resilience under geopolitical uncertainty

In an era of expensive equipment, rising weapons costs, and increasingly constrained defence budgets, the nations of Western Europe cannot avoid questioning the efficiency and competitiveness of their defence industries. Critics point to monopoly and the absence of competition for contracts, the gold-plating of equipment, cost overruns, delays in delivery, cancellations, excessive profits, poor labour productivity, labour hoarding, and a failure to export. In addition, the European defence industries are criticised for excessive and wasteful duplication of costly research and development (R&D) and for relatively short production runs. It is generally believed that these defence industries are inefficient and uncompetitive, especially in relation to the USA and that the situation can be improved through collaboration. Some of these issues were reflected in debates about the European Fighter Aircraft, the UK Westland helicopter company,and European involvement in the Star Wars Programme.The policy debate about efficiency, competitiveness and collaboration has generated an extensive list of questions for which there are few reliable answers.KeywordsDefence IndustryCost OverrunNational Defence IndustryPerfect CompetitionProcurement PolicyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Progress made in European defence-industrial integration has been subjected to the hardest test with the 2022 Russian invasion of Ukraine. The conflict has had profound implications for European defence industries across the board and spurred on massive investment into the sector. Based on extensive analysis of procurements, adopted policies, and shifts in discourse, we argue that the practical steps undertaken by Central and Eastern European (CEE) defence industries in the wake of the conflict are disintegrational. This is contrary to many discernible indicators which align with European integrational initiatives in defence. Moreover, the paper argues that the pattern of decisions taken by Central and Eastern European countries reinforces structural barriers to potential future European defence-industrial integration. The findings are significant to EU-wide, regional, and bilateral defence-industrial co-operation as well as national defence industrial strategies in reaction to the ongoing war in Ukraine.

This article analyses the European Defence Industry Programme (EDIP), a landmark EU regulation proposed in early 2024 and currently under discussion by the European Parliament and Council, that marks a fundamental shift in European defence industrialpolicy. Moving beyond emergency responses to Russia’s invasion of Ukraine, EDIP introduces comprehensive mechanisms for strengthening the European Defence Technological and Industrial Base. Through analysis of the draft Regulation’s primary sources, the study examines how EDIP establishes permanent structures for defence industrial cooperation, including the innovative Structure for the European Armament Programme framework, sophisticated supply chain security measures, and mechanisms for Ukrainian defence industrial integration. The article argues that EDIP represents a strategic transformation from voluntary coordination to the active management of defence industrial capabilities, creating flexible yet robust frameworks for long-term European defence industrial development. While implementation challenges remain, particularly regarding security requirements and institutional coordination, EDIP establishes foundations for a more integrated European defence industrial base that will likely shape policy evolution beyond its initial 2025–2027 timeframe.

ABSTRACTThe war in Ukraine, coupled with a more turbulent international system characterized by geopolitical competition between the United States and China, is leading to a simultaneous change in the demand and supply side of the European defence market. On the demand side, European countries are adapting their procurement plans to move from a crisis management phase dominated by asymmetric warfare against small states or non-state actors to an era of strategic competition and potential conflict against peer adversaries. On the supply side, European defence industries are preparing to meet the increased demand for major equipment from national governments in the short term, while at the same time trying to be ready to invest in long-term innovation, in order to anticipate future government requirements for the new era. This paper investigates the interactions between demand and supply in the European defence market and provides a first illustration of the trade-off between prioritizing short-term readiness over long-term innovation and vice versa

In the current conditions of a full-scale war in Ukraine, the European defense industry has become the focus not only of security, but also of economic, political and information discourse. For the first time in a decade, defense companies have become visible subjects of the public space: their activities are discussed in the media, political circles and the public sphere at a level comparable to transnational energy or pharmaceutical corporations. In this regard, the communication marketing strategies of arms manufacturers have acquired a fundamentally new meaning: now they are not only a sales tool, but also a way to build a reputation, legitimize their presence in the market, influence public policy and public opinion. The aim of the article is to conduct an analysis of modern communication marketing strategies of European arms manufacturers in the context of the war in Ukraine. The article is devoted to an in-depth analysis of the communication marketing strategies of leading European arms manufacturers in 2022–2024 in connection with the full-scale war in Ukraine. The study combines quantitative indicators and qualitative aspects. Based on the generalized EU data and case studies of four companies, two fundamentally different models of behavior in the information market were identified. The first is an active strategy focused on proactive PR, extensive use of digital channels and the formation of the image of a “partner of democracies”; it is demonstrated by Rheinmetall and Leonardo. The second is a passive strategy, typical of Saab and Thales, based on restrained positioning, an emphasis on B2G communications and a high technical reputation without excessive media coverage. The result of the work is a proposal for communication strategies with four key parameters each, which can be used by companies to adapt to new geopolitical challenges. An active communication marketing strategy is recommended for companies that seek to quickly increase international sales and capitalize on the reputational “renaissance” of the defense industry; passive – for manufacturers with an already stable order portfolio and the need to minimize reputational risks.

The European Union has often been described as an economic giant but a political dwarf. It has a security and defence policy, but it is not a military alliance. Despite this, the defence industry has been on the EU’s agenda for years. This development reached a new phase in 2021 when the EU budget included almost 8 billion Euro in a European Defence Fund, strengthened when the EU in 2022 acted decisively to supply Ukraine with arms and ammunition, and strengthened yet again in March 2024 when it presented a comprehensive European Defence Industrial Strategy and European Defence Industry Programme. At first glance the developments may seem counterintuitive. What makes a mainly civilian organisation develop into an actor in defence industry policy? Departing from four dilemmas arising from the specific challenges with ownership of the defence industry and efforts to create a European defence market, this article identifies the challenges that different EU initiatives try to solve, analyses economic, political and strategic rationales of the development, analyses the four dilemmas in light of the development, and discusses how it relates to the EU’s raison d’être with regard to European defence.

With the European security environment deteriorating and destabilising in the 2010s, European defence – particularly the European defence industry – has gained heightened attention since 2022, as evidenced by Russia’s renewed aggression towards Ukraine. European countries have since attempted to efficiently address the dilemma of short-term production and stock replenishment versus long-term research, development, and innovation to offset the unpreparedness of European armed forces to fight protracted high-intensity wars. Accordingly, this chapter aims to outline the demand–supply equation of the European defence industry leading up to the Hungarian EU Presidency in 2024, and the adoption of the first-ever European Defence Industrial Strategy. This strategy aims to identify the drivers for developing the European Defence Industrial and Technological Base (EDTIB) as a defence ecosystem by the 2030s, enabling the sustainable provision of arms that European countries may need to defend themselves on European soil and uphold their interests. The following analysis provides an overview of the trends leading up to 2024 for enhancing European defence industrial production, research and development. The chapter is structured as follows: first, it outlines the dynamics of the changing European security environment and threat perception, followed by an assessment of European capability gaps and policy responses aimed at closing these gaps, including an improved record of defence investments. The main argument is that despite the constraints of EDTIB in the early 2020s, such as the effects of three decades of underinvestment, fragmentation of production capacities, shortcomings in providing raw materials and access to cutting-edge technology, as well as shortages of manufacturing capabilities and skilled manpower, there are nevertheless opportunities to remedy this situation. Drivers for comprehensive and efficient European defence industrial cooperation are being developed, including better-aligned strategic planning and defence capability development, currently underpinned by increasing defence spending, extensive joint defence procurements, and research and development (through the European Defence Industry Reinforcement through Common Procurement Act and the European Defence Industry Programme, supported by Permanent Structured Cooperation, the European Defence Fund, and the European Peace Facility).

The war in Ukraine has triggered a profound transformation in European defense policies, compelling European Union member states to reassess their defense industrial strategies. In this context, Spain faces a critical challenge: balancing strategic national autonomy with international defense cooperation. This article examines how the Ukraine conflict has influenced this balance in Spain's defense industrial policy, assessing whether the country has prioritized strengthening its national defense industry while deepening its integration into European and transatlantic defense frameworks. Through a systematic analysis of government policies, defense budgets, procurement strategies, and multinational defense initiatives, this study identifies key trends in Spain's evolving defense industrial approach. While Spain has significantly increased national defense spending and reinforced industrial capabilities, its deep engagement in European cooperation initiatives suggests a concurrent push for enhanced international collaboration. The findings indicate that Spain has not fully committed to either strategic national autonomy or cooperation but has pursued a hybrid approach, leveraging European mechanisms while maintaining key national industrial capabilities. By exploring the tensions and synergies between these two strategic orientations, this article contributes to the broader debate on the future of European defense integration and the role of national industries in a rapidly shifting geopolitical landscape.

The Ukraine war, the aftermath of COVID-19, Brexit and shifting US geostrategic interests are putting pressure on the European defence situation, strategy and budgets. The current crises expose warfare capability gaps in the European armed forces and capacity constraints of the European defence industry after decades of the peace dividend. More nations are calling for stronger engagement of the EU in the defence sector to overcome these challenges and complete the European defence sector integration that started in the late 1990s. It is estimated that more cooperation in defence procurement and research could save up to 30% of the current €290 bn total EU27 defence budgets. Can this combination of recent factors provide new impulses towards a unified European defence market, more cooperation on defence procurement and industry consolidation? We conducted a literature review (‘meta-synthesis’) of 172 journal articles, studies and think-tank papers since 1995 to build a holistic picture. The analysis aims to describe the progress and challenges of European defence market integration from an economic viewpoint. It provides future researchers with a basic understanding of defence industrial challenges, motivations and economic drivers of European defence integration as well as of reasons for resistance and potential scenarios.

Energy security, economics and environmental factors are key drivers toward greater energy efficiency, decarbonisation and circularisation of the building sector. Bio-based construction provides a potential low carbon and circular strategy toward these aims, as these materials can sequester carbon, are derived from renewable and nontoxic sources and can be re circulated in either technical or bio cycles. This innovative research undertakes a state of play into select agri-crop biobased construction materials, products and systems across Europe focusing on their supply chain types and dynamics. The research is based on a multi case study applying a range of mainly qualitative research methods, including desk-based review, semi structured interviews and supplemental field work facilitating a high-level analysis of this sector and its supply chain dynamics. This novel research presents an overview of the sector and examination of supply chain dynamics in relation to key agricultural, process, manufacture and construction stages. The findings show an emerging biobased construction sector utilising a range of agri-crops to produce various materials, products and modular systems within diverse and innovative supply chains, with common and distinct features and aspects identified including; crop types and utilisation, processing requirements and methods, transport, handling and storage, construction application, the centrality of certification and testing to access markets and growing interest in carbon profiling and benefits.

This paper explores the evolution and current state of the defence industry over the past decade, with a particular focus on supply chain dynamics and delivery capabilities. Over the past two years, procurement priorities within the Armed Forces have undergone a marked shift, from a primary emphasis on cost efficiency to a heightened concern for supply chain sustainability. Drawing on case studies of four defence industry firms in Sweden, conducted over a research period exceeding two years, the study offers valuable insights into this evolving landscape. A literature framework is developed to contextualize and analyse defence industry supply chains. The research identifies key constraints that limit the industry’s ability to enhance delivery performance and robustness. It provides a detailed assessment of current supply chain structures, underscoring critical challenges and highlighting potential opportunities to strengthen supply security. This study contributes to the existing body of knowledge by addressing the intersection of NPM reforms, public procurement practices, and the resilience and scalability of defence supply chains. While previous research has examined collaboration, disruption, and logistics in the defence sector, this study offers a novel perspective by analysing the impact of cost-efficiency-driven procurement strategies on supply chains during times of crisis.

In the White Paper for European Defence – Readiness 2030, the European Defence Technological and Industrial Base (EDTIB) has a central role in the renewed impetus towards a European defence pillar triggered by the changes in the European geopolitical landscape. The EDTIB is a crucial pillar since it is required to produce and supply the weapons systems needed to augment EU states' military capabilities. Recognising its strategic importance, the Commission published the first-ever European Defence Industrial Strategy that seeks to increase intra-EU defence industrial cooperation and promote collaborative defence equipment development and procurement. The paper sets out to examine the degree of connectedness among major European defence industries applying a quantile connectedness approach to examine the degree and direction of connectedness among 15 major European defence companies. The estimations span the period from January 2018 to February 2024, which allows for a total of 1453 daily stock price observations per company. Results reported herein suggest the presence of a strong total connectedness among these major European defence industries. The findings reveal three broad groupings with respect to net total directional connectedness: a net-transmitting group, a net-receiving group of defence industries and finally a group that exhibits mixed connectedness.

This study delves into the intricate dynamics of supply chain resilience amidst the backdrop of ongoing geopolitical disruptions, offering a comprehensive analysis of how modern supply chains can adapt and thrive in an environment characterized by uncertainty and volatility. This review aims to thoroughly examine the impact of geopolitical disruptions on supply chain dynamics, define the essence of supply chain resilience, and explore the strategies that can fortify supply chains against such disruptions. Employing a meticulous literature review methodology, the study synthesizes findings from a range of recent, peer-reviewed sources. This approach facilitates a multi-dimensional understanding of supply chain volatility, drawing on historical perspectives, current trends, and forward-looking insights. The review methodically addresses the role of geopolitical disruptions, the components of resilient supply chains, and the effectiveness of various resilience strategies. The main findings reveal that supply chain resilience is a dynamic capability, heavily influenced by factors such as diversification of supply sources, technological innovation, and adaptive policy frameworks. The study highlights the necessity of a proactive, anticipatory approach to supply chain management, emphasizing agility and strategic foresight. Conclusively, the study underscores the imperative for supply chains to evolve continuously, integrating resilience into their core strategies. Recommendations include adopting a holistic approach to resilience, focusing on sustainability, and embracing technological advancements. This review contributes significantly to the discourse on supply chain management, offering valuable insights and practical guidance for navigating the complexities of global supply chains in an era marked by geopolitical uncertainty. Keywords: Supply Chain Resilience, Geopolitical Disruptions, Supply Chain Management, Resilience Strategies, Technological Innovation, Global Supply Chains.

Since the end of the Cold War, the defence industry has emerged as a leader in innovative technologies, and the Russo-Ukrainian war has provided a unique opportunity to test these technologies in a real combat scenario. As a result of the geopolitical events of February 2022, the European defence industry has faced unprecedented political, economic, and technological changes. This study examines these transformations through semi-structured, open-ended, in-depth interviews with twenty-five experts across ten European countries, analysed using qualitative content analysis, with a focus on small and medium-sized enterprises (SMEs). While perspectives on the necessity of defence innovations vary, there is considerable market demand for both disruptive innovations and the advancement of conventional technologies. However, despite the theoretical benefits, the current uncertain environment leads policymakers to view international defence collaborations as insecure. Consequently, SMEs develop military technological innovations either independently or with domestic partners. This study's novelty lies in its foundation on real empirical data, contributing practically applicable insights to the existing literature on the subject.

NATO’s Washington Summit Communique continues the tradition of all EU, WEU, and NATO summit communiques of recent years in that it states a strong support for strengthening the European Security and Defence Identity (ESDI) within NATO. It is generally accepted that ESDI requires strengthening European decision-making structures, collective political will, and improvements in European military capabilities. But as such an identity should be based on, at least, some European capabilities to act independently from the US. Strengthening ESDI also rests, to an increasing degree, on Europe’s ability to maintain a competitive defence industrial base that is able to support its political, economic and military objectives. If Europe wants to be a serious partner for the United States in world politics or even pursue an autonomous foreign and military policy, a comprehensive, technologically competent and economically efficient European defence industry is necessary. The main challenges for the development of such a European defence industrial base arise from the downward trend in European defence budgets, the restructuring and rationalisation of the US defence industry and the accompanying competitive pressures in the global market place as well as Europe’s inability to imitate the US approach, that is, to rationalise its own defence industrial base in a European-wide manner.