This synthesis presents the main lessons from a conference held under the Chatham House Rule.

The ideas are presented without attribution to any individual, role or organisation. Companies and institutions are mentioned solely on the basis of public, verifiable information.

A transformation that has become strategic

On 19 October 2026, the Union IHEDN’s Defence Economics Committee held a conference at the École militaire on the challenges of ramping up production within the defence technological and industrial base, BITD.

Discussions focused on production capacity, skills, coordination between industrial sectors and financing the increase in scale. Official conference announcement by Union IHEDN https://fr.linkedin.com/posts/union-ihedn_conf%C3%A9rence-les-enjeux-de-la-mont%C3%A9e-en-cadence-activity-7513221695403503617-xtRV

The return of high-intensity conflicts, the war in Ukraine and the need to replenish military stocks require a profound transformation of Europe’s defence industry. The objective is no longer simply to possess high-performance technologies. It is necessary to be able to produce them quickly, in sufficient quantities and over a prolonged period.

This development concerns major groups, but also small and medium-sized enterprises, PME, intermediate-sized enterprises, ETI, startups, suppliers, financial institutions and public authorities.

France’s BITD brings together around 4 500 PME and ETI around several major prime contractors. It accounts for nearly 220 000 direct and indirect jobs and around 30 billion euros in annual revenue. Analysis of France’s defence industrial fabric https://www.lemonde.fr/economie/article/2025/03/26/comment-des-pme-de-la-defense-montent-en-cadence-c-est-une-tension-permanente_6586461_3234.html

Its development falls within the framework of the Military Programming Law for 2024 to 2030, with a budget of 413 billion euros. This programming should give manufacturers visibility over orders, investment and deliveries. Official presentation of the Military Programming Law https://www.defense.gouv.fr/actualites/loi-programmation-militaire-2024-2030-5-choses-savoir

An industrial increase in scale

Ramping up production does not simply mean running existing equipment faster. It requires building or transforming factories, automating certain operations, establishing stocks, recruiting and securing suppliers. Since 2022, several manufacturers have sharply reduced their production lead times.

Available public data indicate, in particular, a doubling of Mistral missile production, a significant increase in Caesar artillery production and a reduction in manufacturing time for certain military radars from eighteen to six months. Investigation into the production ramp-up of France’s defence industry https://www.lemonde.fr/economie/article/2025/07/21/defense-le-defi-industriel-de-la-montee-en-cadence_6622690_3234.html

This acceleration requires investment in buildings, machinery, automation and information systems. It also involves transforming how work is organised. Some companies must extend production hours and operate their sites at night or at weekends.

The challenge, however, is to preserve equipment quality, safety and reliability. In defence, an increase in volumes cannot lead to a reduction in technical requirements.

Moving from a technological model to an industrial model

The drone sector illustrates this transformation. Companies must move quickly from a technology development approach to a fully fledged industrial organisation.

Delair had 250 employees and generated 50 million euros in revenue in 2025, following several years of strong growth. Public presentation of Delair and 2025 figures https://delair.aero/press-releases/air-cosmos-delair-visite-et-interview/

The company is investing in a new production facility intended to triple its internal capacity. This transformation should enable it to meet growing orders while maintaining control over its technologies, data and supplies. Presentation of Delair’s industrial project https://www.lalettrem.fr/actualites/delair-veut-doubler-son-ca-cette-annee-pour-atteindre-100-meu

This example shows that scaling up cannot rely solely on recruiting or buying machinery. It requires a more structured organisation, stronger industrial functions, better protection of sensitive information and rigorous supplier management.

Sovereignty also depends on the ability to reduce dependence on certain foreign components. This requirement is particularly important for drones, electronic systems, software and communications equipment.

Building industrial ecosystems

The expansion of the BITD cannot rely solely on companies traditionally associated with defence. Expertise from the automotive, aerospace, electronics and digital sectors can contribute to the industrialisation of military equipment. These sectors have substantial experience in series production, cost control, automation and managing complex supplier chains.

The automotive industry offers an essential lesson: a product and its manufacturing process must be designed simultaneously. Technological choices must take account of costs, available skills, production capacity, maintenance and component availability.

Suppliers and equipment manufacturers must therefore be involved very early in design. This method makes it possible to identify industrial risks quickly and avoid developing a high-performance product that cannot be manufactured in sufficient quantities.

The traditional value-chain approach must thus evolve towards an ecosystem approach. Companies must share certain capabilities, mobilise expertise from other sectors and better coordinate design, procurement, production, quality and maintenance. This cooperation nevertheless raises questions about intellectual property, value sharing, project governance and the protection of strategic information.

Skills: the first source of vulnerability

Industrial capacity depends directly on the women and men able to operate production equipment. Shortages do not concern engineers alone. They also affect technicians, operators, welders, assemblers, electronics specialists and maintenance professionals.

In some areas, several companies recruit the same profiles simultaneously. This competition can weaken PME and smaller suppliers, which have fewer resources to offer high pay or attractive career prospects.

Training, employee retention and the transfer of skills therefore become central elements of industrial sovereignty.

The challenge of PME business succession

The skills issue is compounded by the ageing of PME leaders. The Ministry of the Economy estimates that around 500 000 businesses could be transferred over the next ten years as their leaders retire. This directly concerns the preservation of jobs, production facilities and industrial know-how. The Ministry of the Economy’s Objectif Reprises plan https://www.economie.gouv.fr/actualites/objectif-reprises-un-plan-daction-pour-faciliter-la-transmission-reprise-des-entreprises

In aerospace, a study conducted by the Banque de France for GIFAS indicates that 44 per cent of PME leaders are over 60 and 15 per cent over 70. Summary published by GIFAS https://www.gifas.fr/press-summary/le-gifas-mobilise-face-a-l-enjeu-de-transmission-des-pme-aeronautiques

Transferring these companies is therefore not merely a financial transaction. It concerns preserving skills, processes and industrial relationships sometimes built over several decades.

Closure, an unprepared sale or acquisition by a foreign actor can lead to the loss of a capability critical to the entire industrial chain.

Securing suppliers

A major manufacturer’s performance depends on several hundred suppliers and subcontractors. These companies face the same difficulties as large groups: recruitment, financing, raw-material supplies, increased stocks and investment in new capacity.

A weakness at a critical supplier can slow an entire production chain. The ramp-up must therefore be organised across the whole sector.

The Directorate General of Armaments supports companies with financing, cybersecurity, asset protection and strengthening industrial capacity. It also seeks to improve the transmission of order visibility from major prime contractors to their suppliers. Directorate General of Armaments action to support industrial capacity https://www.defense.gouv.fr/actualites/renforcement-capacites-defense-dga-se-mobilise

Financing the production ramp-up

Financial needs vary considerably according to the nature of the projects. A drone production line, a propellant factory and a major weapons programme have different lead times, risks and capital requirements. Financing must therefore combine several resources: shareholder contributions, customer orders and advances, public subsidies, private capital and bank debt.

Public procurement remains the primary lever. A company invests more readily when it has sufficient visibility over volumes, deadlines and the continuity of purchases.

This visibility must nevertheless reach PME and ETI. More than 75 per cent of the defence market goes through major prime contractors. Better information for suppliers about future orders would therefore improve their ability to invest and obtain financing. Ministry of the Economy response published by the Senate https://www.senat.fr/questions/base/2025/qSEQ250705657.html

The same source estimates that BITD companies could need an additional 4.1 to 5.8 billion euros in equity by 2030 to finance their industrial capacity. Dual-use technology companies could need around 3 billion euros more.

Gradual change in the banking sector

Relations between the defence industry and financial institutions have long been marked by misunderstandings, exclusion policies and sometimes insufficient appreciation of the sector’s particular constraints.

The situation is changing. According to the Ministry of the Armed Forces, financing of French defence companies by major banking groups rose by 26 per cent in 2025 to reach 46.6 billion euros. Review of the dialogue on BITD financing https://www.defense.gouv.fr/actualites/financer-entreprises-defense A study by the Defence Economic Observatory and the Directorate General of the Treasury nevertheless provides an important qualification. Manufacturers have regularly reported difficulties accessing financing, while French banks dispute that these difficulties are generalised.

This study analyses the situation of 2 072 PME and ETI in the sectors most representative of the BITD. It places the debate in a broader economic perspective. Study on the financial situation of BITD companies https://www.defense.gouv.fr/ssm/ecodef-etudes-ndeg-260-quelle-etait-situation-financiere-entreprises-bitd-guerre-ukraine-mars-2025

Eurenco: a publicly documented example of industrial financing

Eurenco provides a documented example of capital mobilisation to support the production ramp-up.

In February 2026, the company announced the signing of a 300 million euro credit facility bringing together fourteen European banks. This transaction should finance the expansion of its industrial capacity in energetic materials, propellants and explosives. Official Eurenco press release https://eurenco.com/fr/eurenco-leve-300-me-pour-accelerer-son-expansion-industrielle-en-europe/

The group’s order book is estimated at around 3 billion euros through 2030. Eurenco is simultaneously committing several hundred million euros to its industrial capacity, particularly at the Bergerac site. Investigation into the development of the Bergerac site https://www.lemonde.fr/economie/article/2026/03/06/en-dordogne-l-ere-des-guerres-et-du-rearmement-ranime-la-poudrerie-centenaire-de-bergerac_6669721_3234.html This example confirms that orders, equity, public support and bank debt must be combined to finance large industrial projects.

A necessarily European response

The national dimension is not sufficient to meet the scale of the needs. The expansion of the defence industry must also be considered at European level.

The European Defence Fund has 8 billion euros for the period 2021 to 2027. It finances collaborative research and capability development projects. Directorate General of Armaments presentation of the European Defence Fund https://armement.defense.gouv.fr/proposez-un-avant-projet-developpement-pme-pour-le-fonds-europeen-de-la-defense-fed-2026

The ASAP programme mobilises more than 500 million euros to strengthen European ammunition production capacity. Thirty-one projects have been selected. Official presentation of the ASAP programme https://commission.europa.eu/strategy-and-policy/eu-budget/performance-and-reporting/programme-performance-statements/regulation-supporting-ammunition-production-asap_en

The SAFE instrument provides up to 150 billion euros in loans to Member States. This financing should support joint procurement and strengthen the European industrial base. Official presentation of SAFE by the Council of the European Union https://www.consilium.europa.eu/fr/policies/safe/

The European Investment Bank has also broadened its financing criteria. Its support in security and defence exceeded 4 billion euros in 2025, compared with 1.2 billion in 2024. European Investment Bank financing policy https://www.eib.org/en/projects/topics/security-defence/index.htm These mechanisms reflect an important change. They nevertheless remain spread across several programmes with different rules and objectives.

Towards common European financing

The creation of European bonds dedicated to defence is among the proposals under discussion to finance major joint programmes.

The SAFE instrument already relies on the European Union’s borrowing capacity. The funds raised are then provided as loans to beneficiary Member States.

Genuine European debt dedicated to joint military programmes would go further. It would allow part of the financial effort to be pooled and support projects addressing shared European priorities.

This approach nevertheless requires political agreement on programme selection, sovereignty criteria, component origins and the distribution of the financial burden. Analysis published by EuroDéfense France https://www.eurodefense.fr/articles/178093-financer-la-defense-europeenne-un-defi-une-urgence-une-opportunite

Conclusion

Ramping up the BITD requires systemic transformation.

It rests on public procurement, industrial investment, available skills, PME business succession, robust suppliers and the mobilisation of French and European capital.

The real challenge is no longer simply to design the most advanced technologies. It is to be able to produce them quickly, in sufficient quantities and over time, with resilient supply chains.

Industrial sovereignty will therefore depend on the ability to anticipate needs, identify vulnerabilities and prepare production resources before a crisis makes their adaptation harder or more costly.

This reflection directly connects with METRICS’ work: anticipating risks, detecting dependencies, securing supply chains, industrial continuity, resilience and crisis management.