Industrial capacities and military effectiveness
The geopolitical developments of recent years clearly show that the shift in the security landscape in Europe is not a temporary phenomenon. It has become entrenched – politically, militarily and economically. States are realigning their capabilities, armed forces are restructuring, and industrial capacity is being built up at a pace not seen in Europe for a long time.
A shift in mindset
A key driver is Europe’s growing sense of self-reliance. What was formulated as a political demand just a few years ago is now an operational reality. The Paris conference at the start of the year 2026, with concrete troop commitments from European nations, made this clear. At the same time, negotiations in the Ukraine conflict have effectively stalled.
The demand for defence capability has become detached from any specific conflict. It is structural. This development has become particularly evident once again due to the events in the Middle East since the end of February.
There, a new, hybrid military pattern has emerged within a matter of days. Conventional air warfare using missiles and cruise missiles has been combined with swarms of drones, deployed in large numbers to deliberately overload existing air defence systems.
The often-discussed dichotomy between ‘drones or conventional systems’ dissolves in reality. It is about both – simultaneously, in large numbers and at increasing speed.
For defence, this has a clear implication. It is no longer sufficient to optimise individual systems. What becomes decisive is the interplay: sensors that detect early, electronic warfare that disrupts, effectors that deliver, and software that enables this interaction in real time. And it is precisely this interaction that lies at the heart of HENSOLDT’s expertise.
At the same time, the conflict has revealed something else: in a crisis, it is not only technology that matters, but also availability. Missile stocks are finite. Reproduction takes time. Delivery capability and industrial scale thus become a central factor in military effectiveness.
Deliver at scale – Integrated scaling logic
When demand becomes structural, the scale shifts. It is no longer the strategy as a concept that matters. Rather, it is the ability to implement it. The initiative of “Deliver at Scale” is HENSOLDT´s answer.
However, this is not about a single initiative. It is about the ability to master scaling as an integrated system – industrially, organisationally and technologically. Scaling begins in industrial reality.
Let´s illustrate this with a concrete example: Just a few years ago, HENSOLDT was producing radar systems on a one-off basis, around three tor five units per year. By 2025, we had ramped up production of our large air defence radars to just under 30 systems. That was already a significant step. But it is not the scale we will need in the future. Our target for the coming years is a capacity of several hundred radar units per year. Deliveries to Ukraine and programmes such as the European Sky Shield Initiative (ESSI) are already demonstrating today that this scaling is not theory, but reality.
This scaling path is representative of what we are achieving across the entire company. In recent years, we have already increased our production capacity by around 30 per cent. The next stage envisages a further doubling by early 2027.
In concrete terms this means: we are expanding our sites, investing in additional manufacturing infrastructure and building capacity, collaborate with industrial partners in license production, all complemented by targeted M&A cases. An expansion of our logistics centre strengthens our supply of materials, and our Repair Centre extends our services across the entire lifecycle.
A crucial factor in this context is the stability of supply chains. As an example, HENSOLDT has concluded long-term agreements for around one Million gallium nitride semiconductor components, securing a bottleneck that determines our entire radar production.
At the same time, our organisation is growing. We have planned to hire around 1,600 new staff this year, the workforce required to support this industrial expansion.
To scale our workforce expansion efficiently we – like all industries – have to be creative using the whole recruiting toolbox including partnerships with automotive companies and academia.
Industrial capacity alone is not enough. It must be complemented by scalable processes widely used in commercial industries. That is why HENSOLDT has launched a transformation programme that systematically develops our value chain along benchmark experience in other areas.
Architecture and digital value creation
Alongside industrial capacity and processes, technological architecture is the third decisive factor for scaling.
HENSOLDT is evolving from a sensor specialist into a systems architect and integrator. Our starting point remains sensor technology. But value is created where sensor data is consolidated, analysed and made usable for operational decisions.
With MDOcore, we have created a platform that does exactly that. For us, Software-Defined Defence (SDD) is no longer a future prospect, but has been implemented operationally. Systems can be further developed via software, platforms become more flexible, and life cycles are extended.
At the same time, we are expanding our capabilities through partnerships, following a clear logic. With numerous partners, we are operationalising SDD into deployable multi-domain sensor-to-shooter chains, connecting our sensor technology and MDOcore to a sovereign cloud, fog and edge infrastructure under European control.
And particularly in the field of counter-UAS, we are working with new players to integrate cost-effective interception drones into our Elysion Mission Core, which is a direct response to the threat landscape we have described at the outset.
What unites these partnerships is more important than the individual agreements.
HENSOLDT connects three levels of the emerging defence ecosystem: agile start-ups, sovereign digital platform providers and system integrators.
In a defence architecture that relies on networking and interoperability, integration becomes a decisive capability.
This is precisely the role we play. We are evolving into a “neo-system house”.
When you consider these three levels together, it becomes clear what ‘Deliver at Scale’ means to us. We are not just scaling up production. We are scaling up a system.
Budgets
Speaking about scaling includes the assessment of proportions: The Budget Committee of the German Bundestag approved a total of 103 procurement proposals for 2025, with a volume of around 83 billion euros. Prior to 2022, annual defence procurement stood at 15 to 20 billion euros. We are therefore talking about a fourfold increase. The 2026 defence budget stands at around 117 billion euros. The new federal government has enshrined a permanent increase in defence funding. Accelerated procedures lead to shorter cycles and more direct awards.
At European level, programmes such as SAFE, with a budget of 150 billion euros, are boosting investment momentum. At the same time, the goal of sourcing 55 per cent of procurement within Europe creates a clear industrial policy outlook.
What does this mean?
Demand is not only visible, it has become predictable. And that is precisely what is changing the logic of our market. We are operating in an environment with a clear outlook and, at the same time, with high demands on industrial implementation. Those who fail to deliver will be replaced.
We at HENSOLDT have laid the groundwork. Now it is a matter of implementation. That is what we will be judged by.