Europe should follow the U.S. lead and focus more on local procurement of defense goods to strengthen the region's defense infrastructure, said Oliver Dörre, CEO of German radar and sensor manufacturer Hensoldt, in an interview with the Financial Times.
Since the election of Donald Trump, the pressure on foreign defense companies in the USA to produce more locally has increased. This has led German defense companies to form close partnerships with US competitors, says Dörre, who has been at the helm of the Bavarian company since last year.
Less than a quarter of the approximately 100 billion euros in arms contracts announced by European governments in the 15 months following the start of the Russian offensive against Ukraine in February 2022 have been concluded with local companies, according to the French Institute for International and Strategic Affairs. 80 percent of non-European procurements went to the USA.
Dörre emphasized that European governments should use EU laws to strengthen European suppliers. The regulations already allowed member states to circumvent EU free trade rules in specific cases of defense and security.
Hensoldt has greatly benefited as a producer of air defense radars from the "Zeitenwende" proclaimed by Chancellor Olaf Scholz in 2022. With the special fund of 100 billion euros, Germany wants to modernize its armed forces. The shares of the Berlin company have almost tripled since the beginning of 2022, while the order backlog has risen to a record level of 6.5 billion euros by the end of September 2024.
Other European defense companies could also benefit, as NATO members are increasingly under pressure to raise the defense budget from 2 to 3 percent of GDP – especially in light of the possible return of Trump as U.S. President.
Dörre expressed optimism that the defense sector will continue to grow in the coming years. Regardless of a possible peace in Ukraine, Europe would still need to expand its military capabilities. "I see at least a decade of increased defense spending ahead of us," said Dörre.
