European defense industry expands as firms pivot to military production

European defense companies are experiencing significant workforce expansion and industrial shifts as the continent moves toward increased military self-reliance. Driven by the war in Ukraine and shifting US strategic priorities, major defense contractors like Indra and Rheinmetall have increased their defense-specific staff by over 50% in the last two years.

In the automotive sector, companies facing reduced activity are diversifying into defense manufacturing. French equipment manufacturers Forvia and Valeo have announced entries into military drone production. Several French factories are expected to begin drone manufacturing by the end of the year through partnerships involving companies such as Delair, Schaeffler, Renault, Turgis Gaillard, and Thales. These moves allow automotive firms to utilize existing mass-production capabilities to meet the urgent demand for rapid military scaling.

Other major players are also seeing growth: Leonardo’s defense electronics division grew by over 12% following the acquisition of Iveco’s military business, and BAE Systems reported a 12.4% increase in personnel. This trend reflects a broader transition from relying on US security to reactivating domestic production lines for armored vehicles, aircraft, and space systems.