NATO–EU Strategic Priority: Defence Industrial Base & Munitions Readiness
The emergence of large-scale war in Europe has redefined the strategic centrality of industrial capacity as a determining factor of deterrence credibility. The conflict in Ukraine demonstrated that high-intensity operations cannot be sustained without deep reserves of ammunition, explosives, propellants and missile components, exposing the gap between Russian wartime production and the far more limited European output. This imbalance carries structural implications for alliance security, because deterrence depends not solely on advanced platforms but on the ability to replace them and maintain operational tempo under pressure. NATO and the European Union have therefore elevated Defence Industrial Base Strengthening and Munitions Readiness to the level of core strategic priority, linking credibility in collective defence to the existence of a resilient, scalable and geographically diversified industrial base. This priority is driven by the recognition that future crises may require simultaneous support to Ukraine, defence of the Eastern Flank and responses to broader geopolitical shocks. It also reflects consensus that Europe’s defence architecture cannot rely indefinitely on external suppliers of explosives, energetics or semiconductors. The return of industrial policy to the security domain marks a structural shift: the DIB is now treated as an operational enabler, a strategic asset and a vulnerability that adversaries could exploit. The associated timelines, spanning the 2024–2030 horizon, indicate an expectation of prolonged instability requiring sustained capacity expansion rather than emergency measures. In this context, industrial resilience is viewed not as an auxiliary function but as a constitutive element of alliance deterrence. The analysis that follows examines how this priority is shaped, implemented and constrained across political, operational, industrial and financial domains.
The report is organised to reconstruct the full chain linking political intent to operational requirements and industrial execution. It begins with a strategic framing section that analyses how NATO and EU institutions define the priority, which documents underpin it and which threat perceptions — particularly those related to Russia’s escalation patterns and supply-chain vulnerabilities — drive the recalibration of allied doctrine. The second part examines the operational translation of this priority, focusing on joint planning, high-readiness forces, logistics integration and the alignment of land, air, maritime, space and cyber demands with industrial surge capacity. The third section addresses capability needs, identifying precise requirements across energetics, solid-rocket propulsion, industrial tooling, workforce pipelines and enabling technologies. This is followed by an implementation section detailing how EU regulations, NATO mechanisms and national policies interact through instruments such as ASAP, EDIRPA, EDIP, multi-year contracts and industrial cooperation platforms. The subsequent analysis isolates structural bottlenecks, including shortages of TNT and RDX, machine-tool constraints, workforce gaps, regulatory delays and dependencies on non-allied suppliers. The report then examines implications for companies, research institutions, technology clusters and capital providers, highlighting how incentives, procurement rules and funding schemes reshape the industrial landscape. The overall structure thus connects political drivers, operational demands, technical capabilities, administrative tools and market dynamics, offering a comprehensive assessment of how the Defence Industrial Base and Munitions Readiness priority is being constructed and where its constraints lie.
The return of large-scale warfare to Europe after Russia’s 2022 invasion of Ukraine has starkly exposed the critical importance of a robust defence industrial base (DIB) for alliance deterrence and resilience. The war of attrition in Ukraine saw enormous ammunition expenditure, with Russia’s industrial capacity rapidly retooling for wartime output – for example, Russian artillery shell production is estimated to rise from 0.4 million in 2022 to over 4 million annually by 2025[1]. By contrast, NATO’s own munitions output lagged: as of early 2023 the EU’s combined capacity for 155 mm artillery shells was only about 230,000 rounds per year[2], far below the scale needed for a prolonged conflict. This ammunition “production gap” poses a grave risk to deterrence: without the industry to sustain allied forces in a high-intensity fight, adversaries might doubt NATO’s ability to defend forward positions. The Alliance has therefore elevated Defence Industrial Base Strengthening & Munitions Readiness to a top strategic priority. NATO leaders explicitly resolved to expand their defence industrial capacity at the 2024 Washington Summit, pledging concrete measures to “accelerate the growth of defence industrial capacity and production” to maintain interoperability and capability[3][4]. Similarly, the EU’s 2022 Strategic Compass and the 2025 European Defence Industrial Strategy (EDIS) emphasize a “resilient European defence technological and industrial base” that can rapidly replenish stocks and reduce critical dependencies[5][2].
Threat perceptions and alliance cohesion drive this priority. The foremost concern is Russia’s aggressive military buildup on NATO’s Eastern Flank (from the Baltics and Poland to the Black Sea and Northern Europe) coupled with its increasingly cooperative ties with China, Iran and North Korea. These developments create a scenario where the Alliance might face simultaneous threats that demand sustained firepower (for example, defending NATO’s eastern flank while supporting Ukraine) and strain transatlantic unity. Ensuring the DIB can surge production underpins credible collective defence: it reassures frontline states that reinforcements will be supplied and signals deterrence by denial. NATO’s latest Strategic Concept reaffirms that collective defence requires not only advanced capabilities but also the industrial base to sustain them[4][6].
Accordingly, allied policy now treats the DIB as a core element of strategic stability. National and EU leaders call for concrete arms-industrial measures – from reviving old munitions factories to forging joint procurement schemes – rather than “big speeches” or unfunded targets[7]. Politically, this reflects consensus that deterrence depends on material readiness as much as on doctrine. While the priority is most acute in the near-term (2025–30) to address urgent ammunition shortfalls, it also has a mid- to long-term dimension: building a sustainable industrial base over the next decade that can support higher defence spending (NATO Allies agreed to aim for 5% GDP on defence by 2035[8]) and counter emerging threats. In short, Defence Industrial Base Strengthening & Munitions Readiness is now seen as vital to preserving the European security order and Alliance cohesion in the face of intensified great-power competition and supply-chain shock vulnerabilities.
Operational Dimension and Multidomain Architecture
At the operational level, the industrial base priority manifests as comprehensive warfighting sustainment and procurement concepts. In NATO and national planning, this priority translates into concrete initiatives such as NATO’s Defence Production Action Plan (agreed at Vilnius 2023) and the Industrial Capacity Expansion Pledge (Washington 2024). These frameworks direct efforts to aggregate demand, streamline procurement, and synchronise national stockpiles. NATO Allies have begun coordinating strategic logistics and readiness planning to ensure that forces (especially those on high readiness or on the Eastern Flank) can draw on sufficient munitions. For example, NATO Support and Procurement Agency data show it has already delivered hundreds of thousands of rounds of 155 mm and 120 mm shells, along with thousands of air-defence missiles, to reinforce allied stocks[9].
The priority cuts across multiple domains. On land, the emphasis is on sustaining high-intensity ground combat: large-scale artillery, rocket artillery, and armoured maneuvers all rely on continuous ammunition flows. The new NATO Regional Defence Plans foresee Arctic, Northern, and Eastern theatres where artillery attrition will be decisive; sustaining these forces requires pre-positioned stocks and assured production. On air and missile defence, shorter-range and long-range air-to-air and surface-to-air missiles demand the same surge capacity, as seen by allies speeding production of IRIS-T and Patriot ammunition to protect Eastern flank airspace. Maritime forces also need munitions (naval gun ammo, anti-ship missiles), so naval readiness and base stockage plans incorporate increased industrial support. Even space and cyber domains tie in: space-based ISR helps managers locate ammunition needs, and cyber protections secure the digital control systems of munition factories and logistics networks.
NATO’s force posture and readiness models have been adjusted accordingly. Standing high-readiness units (24/48/72h response forces) are now anticipated to have larger reserve stocks; simulation exercises and war games include scenarios of deep stockpile depletion followed by industrial surge. Alliances have placed greater emphasis on exercises and data collection for logistics. Command-and-control arrangements now feature greater integration between military planners and defence ministries/industry: for instance, NATO’s Defence Industrial Production Board (a multinational forum of industry and military experts) has been formed to share best practices on capacity planning[10]. Intelligence, surveillance and reconnaissance (ISR) architectures, traditionally thought of as sensors and drones, have also acquired a logistic twist: allied ISR now includes economic and supply-chain intelligence (monitoring foreign munition stockpiles and supplier bottlenecks) to inform production requirements. In sum, the Defence Industrial Base & Munitions Readiness priority is explicitly embedded in allied force planning and C2 as a cross-domain sustainment challenge: the Alliance acknowledges that land, air, and sea operations cannot be conceived without aligning them to industrial surge capacity and joint procurement mechanisms[11][12].
Tactical and Capability Requirements
Translating these operational needs into capabilities reveals concrete technical and performance requirements. The capability families involved span munitions manufacturing, logistics and sustainment, as well as enabling domains. Chief among them are energetics and munitions production systems and logistics and infrastructure. Within energetics, the priority emphasizes explosive components: TNT/RDX/propellant production (DFM-TC-IND9-01) must scale dramatically. The goal is to increase European output of propellant powders and high explosives by several thousand tonnes per year to match consumption rates. Functional requirements include rapid ramp-up and redundancy: new powder plants and chemical lines must come online with little lead time, implying modular manufacturing and stockpiled raw inputs. Current planning suggests production must reach on the order of 10,000 extra tonnes of powder and 4,300 tonnes of explosives annually to double shell output[13]. The TNT/RDX lines must operate under strict safety and environmental controls; hence advanced process monitoring, simulation (digital twin) and robotics are emerging needs. These requirements lean on technology clusters such as Advanced Materials for insensitive munitions (DFM-TECH-MAT) and advanced fabrication.
Solid rocket propulsion is another critical capability (DFM-TC-IND9-02). NATO requires enough solid rocket motor manufacturing capacity to equip artillery rockets and air/missile defence systems in quantity. Requirements include manufacturing precision composite propellants, large scale assembly, and rigorous ground-testing. Factories must deliver heavy missile booster tubes and shaping at scale, with precise metrology to ensure performance. The performance metrics involve consistency and reliability: explosive motors must have very low failure rates, rapid manufacturability, and the ability to incorporate new propellant formulations if needed. This connects to technology clusters like Propulsion/Energy storage (DFM-TECH-NRG) and advanced manufacturing (DFM-TECH-MFG) for composite motor casings.
Workforce and industrial tooling (DFM-TC-IND9-03 and DFM-TC-IND9-04) underpin both production lines. The workforce must be large and skilled: tens of thousands of trained engineers, chemists, and technicians need to be recruited and retained. Functional requirements for the workforce pipeline include fast recruitment-to-deployment times and continuous training programs; for example, the UK munitions strategy allocates long-term contracts to give industry confidence to train apprentices[14]. Similarly, factories must maintain surge tooling and spare capacity—meaning physical machinery (presses, castings, and assembly jigs) can be quickly replicated. Redundancy is key: multiple parallel tooling lines or “warm” backup lines ensure that if one factory is damaged or busy, another can take over production. Interoperability requirements demand that munitions meet common standards: NATO STANAGs for caliber and fuzing ensure that shells and rockets produced in different countries are interchangeable[15]. Reaction time is specified in defense planning: some national targets envision doubling ordnance output within 12–24 months of crisis onset. Endurance requirements translate into multi-year sustainment: industries must maintain skills and facilities well into peacetime so they can be fully mobilized when needed.
Emerging and disruptive technologies also intersect with these requirements. For instance, additive manufacturing (DFM-TECH-MFG) is being explored for rapid prototyping of ordnance components. Advanced sensors and robotics (DFM-TECH-AUTO, DFM-TECH-SENS) can accelerate quality control in explosives and weapon assembly. Semiconductors (DFM-TECH-SEMI) are critical for smart fuzing and guidance, so a resilient microelectronics supply is vital. Any capability shortfalls are being explicitly identified: NATO’s analyses note shortages not just of bulk shells but of critical components like detonators and radar-guided missile seekers (often reliant on non-NATO suppliers). The European Commission and member states have found specific gaps in high-end missile components and electronics, fueling initiatives such as chips security roadmaps. In sum, the capability profile demands not only raw output volumes but high standards of reliability, interoperability and adaptability, tying this priority to the listed tech clusters (energetics, advanced materials, manufacturing, and power/propulsion) and driving urgent platform and subsystem procurement.
Administrative, Regulatory and Industrial Implementation
Implementation of this priority is orchestrated through a web of policies, funding instruments and regulatory changes at the EU, NATO and national levels. Within the EU, key initiatives include the Act in Support of Ammunition Production (ASAP) and the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA)[16][17]. Under ASAP (Regulation 2023/1525), €500 million has been earmarked to expand ammunition output. In March 2024 the Commission announced selection of 31 projects (with €513m combined EU/Norway funding) to build new powder and explosive plants, aiming to push EU shell capacity to 2 million rounds per year by 2025[16][13]. EDIRPA provides up to €310 million to subsidize joint procurements – for example, multi-country tenders for artillery ammo, air defence missiles and armored vehicles – thereby signaling long-term demand and encouraging companies to invest in capacity[17]. These instruments carry strict eligibility rules: to qualify, consortia must include at least three member states and 65% EU-sourced components, and projects must commit to EU-wide licensing. They also emphasize ‘Made in Europe’ content and include provisions to streamline certification (e.g. NATO standards adoption).
Complementing these, the EU’s European Defence Industrial Strategy (EDIS) and interim European Defence Industrial Programme (EDIP) (totalling ~€1.8 billion for 2023–27) address longer-term capacity. EDIP extends ASAP/EDIRPA logic, offering subsidies for joint production and R&D across the EDTIB[18]. It also introduces regulatory tools: the new Structure for European Armament Programme (SEAP) will simplify multi-country procurement, and a European Defence Procurement Act (to be adopted in 2024) introduces incentives and fast-track procedures for cross-border defence contracts. EU research funding (e.g. the EDF) now explicitly prioritizes manufacturing technologies relevant to munitions and dual-use production (counter-hypersonics, resilient comms etc.).
At the national level, Allies are loosening rules and boosting direct investments. The UK’s 2023 Defence White Paper initiated a “munitions strategy” that dedicates £10 billion over the next decade to rebuild the ammunition pipeline, emphasizing onshore production and multi-year contracts[19]. Germany’s new Defence Industry Strategy similarly calls for joint procurement and the revival of dormant factories. Export control regimes have been relaxed in some cases (for example, ad hoc waivers for Ukraine aid) while new harmonized EU rules (Common List) aim to ensure critical inputs are licensed across the bloc.
NATO institutional tools are also pivotal. The NATO Defence Production Action Plan (Vilnius 2023) and its 2025 update drive collective efforts: they codify sharing of national industrial roadmaps, coordinating procurement to avoid duplication[3][20]. The newly formed Defence Industrial Production Board (an outcome of the Action Plan) brings military logisticians and industry together to monitor capacity and supply chains[10]. NATO’s alliance-level dialogue and working groups facilitate best-practice exchange on best procurement methods (e.g. NATO‘s push for multi-year contract models akin to US Foreign Military Sales) and on harmonizing standards.
Additionally, NATO and EU are increasingly aligning: NATO Deputy SecretaryGeneral Sims has noted that both the EU and NATO address raw-material and cyber supply-chain challenges jointly, with the EU’s Critical Infrastructure protection rules and chips strategy supplementing NATO’s Roadmap on Defence-Critical Supply Chain Security[15][10]. Defence innovation initiatives are also leveraged: NATO’s DIANA accelerator and the EU’s EIC EUDIS schemes are nudging SMEs toward dual-use tech (e.g., digital logistics management, additive manufacturing for spare parts) that supports a resilient production base. In sum, the priority is implemented by strategic funding programs (ASAP, EDIRPA, EDIP, EDF calls), legal instruments (new procurement laws, military sales mechanisms), and targeted NATO/EU collaboration forums – all designed to localize production, guarantee secure supply, and expedite capability delivery in line with the political intent.
Structural Bottlenecks and Strategic Dependencies
Notwithstanding these efforts, several critical bottlenecks and dependencies persist. Raw-material and component shortages top the list. Europe’s explosives industry exemplifies this: for decades there has been just one major TNT producer (in Poland), and limited global suppliers for RDX and rocket propellants[21]. Accordingly, shortages of TNT/RDX mean that even if casing and assembly capacity doubles, core inputs could constrain output. The EU ASAP program explicitly targeted this by allocating roughly €248 million to new powder plants and €124 million to explosives manufacturing[13], indicating prior undercapacity. However, ramping chemical production also depends on feedstock availability and environmental permits, so these raw-material chains remain a vulnerability. Similarly, the specialized components for advanced munitions (guidance electronics, fuzing, propellant additives) often rely on non-allied suppliers. For example, some precision-guided missile elements come from East Asia, and critical semiconductors for weapon guidance raise overlapping supply risks.
Second, industrial capacity bottlenecks are acute. Decades of underinvestment left many EU munitions factories idle or working below scale. Bringing idle lines online requires long lead times: building a new artillery shell plant can take years for design, construction and safety certification. Many allied defence industries face shortages of key machine tools and test facilities. This “two-tighteners” problem is exacerbated by workforce issues: Europe’s explosives workforce has aged, and few countries taught munitions production in the post-Cold War drawdown period[22][23]. While many nations are now boosting training pipelines, the lag between hiring and a fully qualified shift supervisor can be a strategic gap.
Regulatory and procedural impediments add to the delays. Complex environmental and safety regulations for explosives manufacturing mean long permitting processes – a trade-off between resilience and safety. Allied corporate leaders have cited EU bureaucracy and export licensing (even intra-EU arms transfers can be slowed by national procedures) as needing overhaul. The ICDS think tank notes that even policies like the EU’s arms export code sometimes conflict with joint industrial goals[24]. Furthermore, siloed defence budgets and short planning cycles can limit large capital projects: companies hesitate to invest in new lines without guaranteed long-term orders, while some governments have only recently reached the 2% spending target, reflecting a long-tail of underfunding[24].
Finally, dependencies on external suppliers and geopolitical rivals remain a risk multiplier. As the ICDS brief and think tank studies observe, European states still source a high fraction of equipment from the United States (63% in mid-2023)[25]. This means that if a crisis strains transatlantic relations or U.S. production is diverted (for example to Pacific security), the EU would face critical gaps. Supply of chipsets, rare-earth magnets (for motors), or titanium (for casings) is often globalized; China dominates many of these value chains. In worst-case scenarios, adversaries could attempt to cut supplies of dual-use materials or cyber-sabotage industrial facilities – vulnerabilities that NATO’s Critical Supply Chain Security Roadmap explicitly highlights[15]. Each bottleneck impinges on readiness: for instance, insufficient TNT production would limit the size and number of ammunition stockpiles, while manpower shortages could throttle peak wartime output. Overall, the priority’s risk profile is shaped by just a few pinch points – notably key explosives inputs and electronics – which alliances are now racing to diversify or domesticate to avoid strategic shocks[21][26].
Implications for Companies, Technologies, Research and Capital
This priority reshapes the landscape for all actors in the defence-technology-capital ecosystem. For industrial enterprises, prime contractors and specialized SMEs alike will see both opportunities and obligations. Large primes (such as Rheinmetall, MBDA, Thales, Nammo, BAE Systems) will be central in expanding volume production; they are being asked to convert some capacity to “surge mode” and to lead joint procurement consortia. Mid-sized and niche firms (e.g. explosives manufacturers like EXPAL, munition component makers, defense electronics SMEs) are in high demand to share risk, innovate in process improvements (e.g. green propellants), and collaborate in supply-chain networks. New and re-established joint ventures (potentially EU-backed) are expected for missile and rocket production on continental territory. Meanwhile, deep-tech startups focusing on advanced materials, robotic assembly or additive manufacturing for munitions components may receive enhanced support – as seen by EDF and EIC calls for projects in hypersonics and advanced manufacturing. Technology clusters like Energetics and Propellants (DFM-TECH-AMMO) and Advanced Manufacturing (DFM-TECH-MFG) are particularly prioritized, alongside Propulsion/Energy (DFM-TECH-NRG) for motors and power. Cybersecurity firms and data platforms that secure the supply chain also see rising demand.
Research organizations have a prominent role: national defense research labs (e.g. France’s DGA labs, Germany’s BWB R&D, UK’s DSTL and Fraunhofer IFAM), technical universities, and public R&D consortia will be tapped to solve problems like new propellant chemistry, simulation of production processes, and advanced sensors for quality assurance. Universities with materials science or chemical engineering strengths (e.g. in Scandinavia, the UK and central Europe) are likely to increase collaboration with industry through centers of excellence. Facilities such as test ranges and industrial pilot lines (for example, nitration plants or rocket motor test stands) may be upgraded via joint EU projects (like those in the EDF or Horizon Europe). Conversely, basic science institutes may see indirect impact as reliance on proven, low-risk technologies grows for munitions; innovative “novel” tech might take a back seat to proven volume-production solutions in the immediate term.
For capital providers, the priority signals where investment will be needed and (hopefully) de-risked. Defence firms will seek expanded project finance: national development banks (e.g. KfW in Germany, Bpifrance) and sovereign wealth funds might underwrite major expansion programmes, recognizing the strategic imperative. Within the EU, instruments such as the European Defence Fund (EDF) and InvestEU could offer guarantees or co-financing for large-scale production projects. At the corporate level, arms manufacturers have already begun tapping capital markets or forming public-private partnerships to build factories (the €2.3 billion Belgian ammunition project being one example[21]). Venture capital and private equity funds with a security mandate may be invited to invest in specialized supply-chain firms – for instance, small producers of explosives or composite materials. The new “EU Defence Innovation Scheme” (EUDIS) under EDF funds start-ups and may catalyze early-stage investments in dual-use technologies (e.g. energy-dense materials, smart factory software), allowing innovation to feed into the capability needs.
Over the 2025–2030 horizon, we expect the industrial ecosystem to evolve into a more integrated transnational network. Political authorities (NATO, EU, allied governments) will likely push for consolidation of production in fewer, but capacious and interconnected, facilities. Joint ventures across borders will become more common to meet the 65% domestic-content rules. Companies are incentivized to align products to NATO/EU standards from design, to ease pooling. Research actors will form pan-European consortia targeting these capability goals (for example, multi-country R&D projects on insensitive munitions or automated manufacturing lines). Funders may cluster around defense “champion” firms that can deliver scale: for instance, corporate strategic investment from defense primes into smaller suppliers, or blended finance combining EU grants with private loans.
The net effect should be to raise Europe’s strategic autonomy: by mid-decade, the aim is that Europe can supply itself with core munitions without external reliance. Success here will reinforce deterrence: an adversary that sees Europe quickly ramping up shells and rockets will hesitate. However, bridging today’s gaps will require sustained public support and coordination. The entwining of governments, industry, researchers and capital providers in this priority creates a virtuous cycle (with targeted subsidies and contracts forcing market adjustments) but also carries risk: if partners misalign (e.g. member states fail to agree joint purchases or industry fails to invest in time), the bottlenecks could persist. Ultimately, the Defence Industrial Base & Munitions Readiness priority drives a reconfiguration of Europe’s defence ecosystem – one that elevates manufacturing and supply-chain resilience to the heart of deterrence strategy and opens new fields for technology and investment in the coming decade.
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