Europe needs to rearm fast, but obstacles from red tape to nimbyism are impeding defense contractors’ expansion.
Faced with Russia’s growing war machine and its aggression in Ukraine, European countries have raised defense budgets to their highest levels since the end of the Cold War.
The need to arm Ukraine, and Europe itself, has become more pressing in recent months, as European leaders fret over how a potential second Donald Trump presidency could affect U.S. commitment to Ukraine’s war effort. Trump’s running mate, Sen. JD Vance of Ohio, has said that he doesn’t believe the West has the capacity to arm Ukraine and that Kyiv should cede territory to Russia.
“We are stuck in a mindset of peace, thinking that we have plenty of time,” Danish Prime Minister Mette Frederiksen said in an interview. “We must make the logic of war part of our own foundation and ask ourselves, ‘What do we need?’ and then produce it.”
Europe’s biggest weapons makers have promised to churn out more weapons rapidly to counter Russia’s threat and restock the region’s empty inventories. Some have made progress. Britain’s BAE Systems tripled its production of 155mm artillery shells after Russia’s large-scale invasion of Ukraine, and Germany’s Rheinmetall has broken ground on several new factories.
Yet overall efforts remain mired in bureaucracy, bottlenecks, public wariness of weapons production and banks’ refusal to lend money.
Since the end of the Cold War, European defense industries have atrophied, factories have been dismantled and the supply of materials for artillery such as chemicals and casing has dwindled. Although European defense budgets have grown 43% since 2013, they pale in comparison with U.S. spending, which has remained high since the Cold War.
“Your forces are only as strong as the industry itself,” British Defense Secretary John Healey told journalists. “We’ve had the luxury in recent decades in the West and U.K. of essentially failing to recognize that. But no longer.”
Even European countries that have spearheaded support for Ukraine face significant hurdles.
In a highly trumpeted move, Denmark—a nation of around six million that has donated all of its artillery to the Ukrainian war effort—late last year bought back a decommissioned ammunition plant to resurrect its production of artillery shells.
Nearly a year later, the factory in a remote village in northern Denmark remains empty. Political wrangling has delayed the process of finding a company to produce the ammunition, and the formal tendering process has yet to start.
The factory is housed in red brick buildings on a quiet road shaded by trees outside Elling, a village of about 1,000 people close to Denmark’s northern tip. The premises are fenced off. Yellow signs warn of the danger of explosives, a remnant of the low-caliber ammunition production that took place there until 2020, when the Spanish arms maker Expal closed the plant 12 years after acquiring it.
Once back at capacity, the plant is slated to produce 120,000 artillery shells annually, mainly 155mm and 120mm caliber.
The Danish factory won’t reach full capacity until late 2026 at the earliest, three years after the state bought it. The Defense Ministry expects by April to select a producer to operate it, almost a year later than announced after the acquisition, after which rebuilding the plant will take about 18 months.
“It is not satisfying,” Frederiksen said. “We didn’t want it to take this long, and I don’t think it’s wise that it’s taking so long.”
The delay, which comes despite top-level government support for the project, illuminates why European countries can’t pivot to war economies as Russia can.
Some of the reasons are baked into European nations as democratic free-market economies. Months after the acquisition of the factory, a majority in the Danish parliament demanded that the government open the process to bidders, rather than settling for the presumed favorite for the job, the Norwegian defense company Nammo. Several Danish consortia have formed to bid for the job, arguing that the production should be kept in Danish hands to strengthen the nation’s defense industry.
Danish politicians, while aware that any holdup directly affects the Ukrainian war effort, have said they want the bid for a potential decadeslong defense partnership to be open for tenders.
Elsewhere on the continent, nearby residents are creating obstacles for projects. A leading European tank maker, KNDS, was planning to expand a Munich testing range, but had to pause following local complaints, including one from a man who said the work interfered with his meditation, according to a person familiar with the matter. Other residents were concerned that noise from the testing site would affect housing prices.
KNDS declined to comment.
In the German city of Troisdorf, Diehl Defence said it has struggled to get permission to expand a factory in the city center to boost production of detonators and other parts for the Iris T missile-defense system, which has formed a crucial part of Ukraine’s air defenses since the war began.
Troisdorf’s mayor, Alexander Biber, said the community was in constructive talks with Diehl, but asked whether a city center is better suited for homes or businesses than for factories producing explosives.
Diehl Chief Executive Helmut Rauch said that obtaining approval to build or expand defense facilities, which should take a few months, sometimes requires up to 18 months. Officials, he said, “don’t understand…that we are in a critical political situation in Europe.”
Rauch said the defense industry should have special laws, “not to wait forever.”
Money is also an issue. Defense companies complain that investors are often put off by European environmental, social and corporate-governance regulations, which make it easier to invest in the U.S. An even bigger problem, they say, is that some banks won’t lend to defense contractors, making life particularly tough for small companies in the industry’s supply chain.
Lorenzo Mariani, co-general manager of the Italian defense giant Leonardo , said banks are damaging small and midsize companies.
Some governments’ patience is eroding. Earlier this year, French Defense Minister Sébastien Lecornu suggested that if delivery delays continued, the government could take over defense companies’ assets or make some decisions for them.
He singled out the multinational missile maker MBDA, which has received an order from the French government for 200 Aster air-defense missiles for use in Ukraine and by French forces who have fired them against Houthi drones in Yemen. MBDA has slashed the time to make an Aster, but still expects to need almost 18 months a missile in 2026.
Defense companies, for their part, say that two years into the war in Ukraine, they still aren’t receiving enough long-term orders to plan and invest.
Britain has yet to restock its inventories of the Storm Shadow missiles that have been successful in Ukraine. MBDA’s German unit says that without new orders of its advanced Taurus missile, production might cease.
Inaction has created a vicious cycle: European defense companies, short of investment, struggle to deliver, prompting European governments to buy instead from American suppliers. That in turn means less money to European manufacturers, which risk falling even further behind in the race for new military and technological advances.
European Union countries directed 78% of their procurement spending to suppliers outside the bloc, including 63% to the U.S., according to the most recent EU statistics available, covering June 2022 to June 2023.
Frederiksen, the Danish prime minister, said Europe must cut red tape so defense production can accelerate.
“If we want to accomplish this, we need to blow up all our usual procedures,” she said.
Write to Sune Engel Rasmussen at sune.rasmussen@wsj.com and Alistair MacDonald at Alistair.Macdonald@wsj.com
