Cranking Up the Defense Investment: NATO Honchos Propelling Predictability for Industry Bigwigs at The Hague Summit
Military industry calls for increased security measures in strategic planning from NATO alliance - NATO Urged to Boost Planning Predictability to Favor the Arms Industry
Here's the lowdown on the upcoming NATO summit in the gorgeous city of The Hague. The major talking point? Holistically bolstering defense capabilities and spending, and implementing predictability for those masterminds in the defense industry.
The Hague's elites are pressing for solid commitments from member states, emphasizing that actions need to align with the words uttered. "For the industry, this means planning certainty and long-term commitments through orders," says Michael Schöllhorn, the boss man of Airbus' defense division, spilling the beans to the "Augsburger Allgemeine" (Tuesdays).
Schöllhorn isn't mincing his words, stressing the need for a crystal-clear order scenario, adequate quantities, and steer clear of piecemeal approaches. With the US stepping back in terms of capabilities, Europe needs to step up to the plate, and sooner rather than later.
Alexander Sagel, CEO of Renk, a tank transmission manufacturer based in Augsburg, echoes the same sentiments: "Predictability is what we crave." Despite moving forward with advance investments, Renk has already amped up its capacities, transitioning from artisanal production to small-series manufacturing. The production of tank transmissions will see a leap from the previous 150 to 200 generated annually to four-digit transmission outputs in the future.
Oliver Dörr, CEO of defense electronics conglomerate Hensoldt, terms the expected NATO decisions as monumental, describing them as "a historic turning point for European security." This will pave the way for quick expansion of capacities and innovation.
René Obermann, Airbus S.A.S.'s supervisory board chairman, calls for more streamlined procurement procedures, underscoring the current ones as occasionally too time-consuming and complicated, not sufficiently focusing on European suppliers. Obermann also advocates for the standardization of European weapons systems.
So, what’s the big deal about this NATO summit? Well, it's aiming to elevate defense spending, raising the target to 3.5% of GDP from the previous 2%, with a stretch goal of 5% of GDP for security. This move is primed to beef up defense sector investment, fostering stability and predictability in defense orders. The summit is scheduled for June 24 and 25 in The Hague, focusing on the military buildup of the alliance and further support for Ukraine.
The HagueDefense IndustryPredictabilityNATONATO summitCEOAugsburgEuropeMilitaryAirbus S.A.S.Augsburger Allgemeine
Enrichment Insights:
- The substantial hike in defense spending targets is intended to boost investment and production in the defense sector, creating more stable and predictable defense industry orders [1][2].
- Efforts are underway to ensure equitable burden sharing, making certain that all allies shoulder their fair share of the financial load, leading to more consistent and predictable defense orders [1].
- Improving military mobility, resilient logistics chains, and pre-positioning of supplies necessitate longer-term procurement and industrial planning needs, fortifying the predictability of demand for defense manufacturers [4].
- The US administration is making it easier for its defense industry to collaborate and sell products across NATO allies, further promoting cooperation and stabilizing defense orders [4].
- The UK’s Strategic Defence Review 2025 prioritizes readiness and innovation in defense capabilities, signaling a structured approach to defense procurement and industrial investment that supports predictability for the defense sector [3].
- The upcoming NATO summit in The Hague aims to foster stability and predictability in defense orders by raising defense spending targets and advocating for more streamlined procurement procedures, emphasizing the need for European suppliers and the standardization of weapons systems.
- In preparation for the increased demand in the defense sector due to the NATO summit,ceos like Michael Schöllhorn, Alexander Sagel, and Oliver Dörr are amplifying their industries' capacities, transitioning from artisanal production to small-series manufacturing and aiming for four-digit transmission outputs in the future. These actions illustrate the craving for predictability in the defense industry's financial and business affairs.
