Europe’s industrial base for armour is hollow and too reliant on external partners, posing future risks

The ongoing conflict in Ukraine has revealed significant vulnerabilities in Europe’s defence strategies, particularly concerning its industrial base for armoured vehicles.

The issue was a key discussion point in the webinar “The Future of European Defence: Insights and Strategies Ahead of Eurosatory 2024”, held on 13 June ahead of Eurosatory.

European nations, in the face of escalating geopolitical tensions, have found themselves turning to external partners to bridge the gap in their armoured vehicle production capabilities. South Korea, with its advanced defence manufacturing infrastructure, has become a critical supplier.

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Countries like Poland have increasingly relied on platforms such as the K2 Black Panther and K9 Thunder to bolster their armoured forces quickly. This trend underscores a broader issue: Europe’s armoured vehicle production capacity is insufficient to meet current and future demands.

“The challenge here is that the willingness for commercial industry to invest in this additional capacity is always tempered by the boom and bust cycles of the industry,” explained Pat Kennelly, director at Cytec Consulting. European countries, previously content to reduce mass production, are now scrambling to rearm rapidly in response to increasing military budgets.

The industrial base for armour in Europe has indeed become hollow. Historical consolidation, outsourcing and efforts to streamline operations for cost efficiency have eroded the continent’s ability to scale up production swiftly in times of crisis.

Simon Wilkins, director at Cytec Consulting, elaborated on this point: “The lack of strong geopolitical kind of pressure within Europe for so long has probably led us to quite a complacent position in terms of our ability to produce at scale.”

A significant example of this issue is the production line of the Leopard 2 tank, one of Europe’s premier main battle tanks.

“KMW, the manufacturer of the Leopard 2, is down to one singular plant production plant in Munich, a decision they made about five years ago,” explained Sam Hart, land analyst at Shephard Defence Insight. This limited production capacity is a critical bottleneck, especially as demand for these proven platforms surges in response to the conflict in Ukraine.

The reliance on South Korea to fill this production void presents several risks. Seoul’s proximity to North Korea and the potential threat from China mean that its production priorities could shift rapidly, leaving Europe without a reliable supply of armoured vehicles in a crisis.

Efforts to address this hollow industrial base are evident but fragmented. Some European countries are exploring domestic production options, albeit slowly. Italy’s consideration of domestic production for Leopard 2 tanks is a step in the right direction, but the lack of existing production lines poses significant challenges.

Wilkins highlighted another dimension of the issue: “Our ability as an industry to respond with new innovations is quite a challenge.” The development and integration of advanced technologies into armoured platforms require substantial investment, time and resources which are currently stretched thin.

To counter these risks, a potential solution discussed during the webinar involves increasing investment in domestic production capabilities and fostering closer European cooperation on defence projects.

“Closer European cooperation could be the key,” suggested Wilkins. “Sharing the development burden and resources among European nations might help revitalise the industrial base and reduce dependency on other suppliers.”

Click here to view the full webinar “The Future of European Defence: Insights and Strategies Ahead of Eurosatory 2024”

Shephard's Eurosatory 2024 coverage is sponsored by: