Name: Has Europe staked its economic future on war? | Business Beyond
Uploaded: 2026-03-06T17:04:17.000Z
Duration: 22 min 48 s
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A sector which had gone cold has suddenly gotten very hot.

For years, the continent neglected its security, but

now the need to defend itself from foes and ever more fragile friendships has become abundantly clear.

As demand and production ramp up, European defence companies are booming.

Since the full scale Russian invasion of Ukraine in 2022, European defence companies have doubled and even tripled in value.

In this episode, we'll take you to companies at the centre of the rearming of Europe.

We will speak to the CEO of one of Europe's leading defence firms and find out first hand how the sector is adjusting to the new reality.

What if we were to continue where we come from, grossly underspending on defence?

We're facing an adversary and the Ukrainians are actually fighting for their very existence.

And we'll ask what all the money is being spent on and whether the defence industry could inject desperately needed momentum into the European economy.

It's all coming up on Business beyond first, to get an understanding of how the new era of defence investment is playing out for companies, we've come here to Germany's central Harz region to visit Ilsenberger Groblech, a maker of steel slabs.

As Thorsten Gynthout, the company's managing director, explains, it's been a tough few years for the steel sector in Germany and Europe.

The last two years were not good, not good, not good at all.

Because as every steel company, we are suffering due to high energy costs we have here in Europe we have to deal with.

And at the same time we are suffering with quite low steel prices too.

Low steel prices compared to the cost level we have because.

Mainly because of overcapacity and because of imports coming from companies or from countries outside of Europe into Europe on a price level which is not sustainable for us.

Ilsenberger Groblesh makes steel for many sectors, especially wind energy and construction.

But as outlined by Torsten Gyntout, these are tough times for manufacturing firms like theirs.

With a general trend of deindustrialization raising existential questions in an attempt to find a new niche, the company took the decision in 2017 to invest heavily in a growing but complicated new division, so called secure steels.

The slabs of steel produced at this facility have many possible uses, but

an increasingly important one for this business is for the production of what's known as armor grade steel, which is needed for, among other things, the production of military tanks.

Producing steel for defence companies which supply the German armed forces is not easy this heat treatment facility, essential for the production of armor grade steel, took five years to build and required massive investment from Ilsenberger Groblek's parent company, Salzgitter.

Then there's the question of the product meeting the necessary standards of the German armed forces.

What makes it so demanding is that the quality standards the Bundeswehr is asking for are very high.

And the test procedures they have to do before we get the approval to deliver to those companies take time wise.

And also again, the quality standards are very high.

So it just takes a lot of time and effort to get through the process.

The company's head of product development says that ultimately steel for the defence sector is still a relatively small part of their output and that they will be able to scale back or scale up when necessary.

Companies like Ilsenberg or Groblesh clearly see the defence sector as a possible way to offset the many headwinds they have been facing.

And when we look at developments in that sector, it's easy to see why some people see it as a potential saviour.

European defence is big business by any measure now.

EU member states spent almost 400 billion euros on defence in 2025.

Some of Europe's biggest defence companies include Airbus Defence and Space, Germany's rheinmetall and the UK's BAE Systems.

They are part of a group of European defence firms experiencing a huge surge in growth.

The defence sector's surge is rooted in European governments having decided to ramp up investment in their militaries.

And that was a decision that was made necessary by Russia's invasion of Ukraine.

By and increasing uncertainty over the USA's commitment to the NATO alliance.

From 2021 to 2024, European defence sector turnover climbed by 48% to more than 180 billion euros.

It's a big employer too, including its civil and aerospace aspects.

The sector now employs more than 1.1 million people in the EU, with more than 300,000 jobs added in the last decade.

We've gotten an insight into what it means for suppliers to the sector.

But what about for the major defence companies themselves?

We've come here to the Airbus military aircraft production facility at Manching, just north of Munich, to see a part of Europe's defence scale up, up close.

This is an example of pan European cooperation in defence production.

Here at this final assembly line, aircraft described as being part of the backbone of European defence are assembled the Eurofighter Typhoon fighter jet.

A Persistent complaint about European defence is that its various national industries don't work well together and struggle to collaborate on joint projects.

One example, a project between France, Germany and Spain, the Future Combat Air System, or fcas, is reportedly close collapse.

So that makes this project symbolically and practically important.

Eurofighter Typhoon jets are built as part of a consortium involving Airbus in Germany and Spain, the UK's BAE Systems and Italy's Leonardo.

Before 2022, when European governments were still dragging their heels on defence investment, the Eurofighter program was struggling.

The US made F35 stealth fighter was seen as by far the preferred choice in European capitals.

It has also ramped up demand for the Eurofighter.

Last October, the government approved a 3.75 billion euro order for 20 new Eurofighters, in addition to 38 ordered in 2020.

Spain, Italy and Turkey have also made significant orders recently, meaning the books are quite full for the coming years, according to Andreas Hammer, head of Combat Air Systems at Airbus and the Site Director here in Manchin.

So the Eurofighter is playing an incredible role for bringing sovereignty and deterrence and defence capabilities to these countries.

And yes, we have incredible momentum right now and we are ramping up.

Marco Gumbrecht is the head of sales for Combat Air Systems at Airbus, but

before he took on that role, he spent a decade in the cockpit of the Eurofighter itself as a fighter pilot, taking part in several NATO operations.

As the threat from Russia escalates, the Eurofighter has become especially important in securing the Baltic airspace.

From a deterrent standpoint, it's by far the most used aircraft in on NATO's eastern flank.

And that's just been going on for many, many, many years.

But he says the Eurofighter program and the sector generally is not just about defense, but

Besides just providing just quote, unquote, providing security and deterrence, it's obviously also securing high tech jobs in the areas for our countries.

And you know, in the past, let's say 20, 30 years ago, we all the high tech innovation, most notably gps for instance, came from military equipment.

And with all the investments now going not just into procuring new airplanes, but

the tech that's inside, you know, there's a big, big, big space for innovation coming from the military sector that's dual use and flow into the civilian side, mostly on AI aspects of it.

And as the order books fill up here, Andreas Hammer says the advantage of the Eurofighter program is that it helps to both develop strategic sovereignty and can boost the local economy.

In case of tensions and conflict and war, you don't want to be dependent from some others.

And you never know whether the alliances and friendships are changing.

The second point is, by doing so, of course, you are creating a job machine just for the Eurofighter program.

The Eurofighter program is creating 100,000 jobs in Europe, 25,000 jobs just in Germany.

We have 400 suppliers and a lot of suppliers, I think more than 100 suppliers just in Germany to build on that.

You also bring back money which you invested because via taxes, tax return, you have the people employed.

Some have made the connection between the rearming of Europe and a possible reinvigoration of of its flagging industrial base.

A growing criticism, particularly here in Germany, is that far too much of the new spending has been on traditional military equipment, things like tanks and fighter jets, and

that not enough has been on more innovative technology, things like AI enabled military tech or drones, which have been so important on the battlefield during the war in Ukraine.

Then there's the charge that European countries don't collaborate well enough on defence.

The Eurofighter project is one example that clearly does work, but in too many other areas.

Europe's defence giants are struggling to come together to consider some of these questions and the wider context of Europe's big bet on defence.

We sat down with Mike Schulhorn, he's the CEO of Airbus Defence and Space and is one of the leading voices in the sector.

So obviously, so much has changed in the four and a half years that you've been CEO of Airbus Defence and Space in the defence sector itself.

And when you look at the numbers, you know, when we look at a graph and we see the percentage of GDP that different countries like Germany, France, the uk, Poland, have been spending historically on their defence and how that's changing at the moment and indeed projected to change over the coming years, going from where they were struggling to hit the 2% mark to trying to hit these new targets of 3.5%, 5%.

How is Airbus and companies like Airbus adjusting to this new reality?

Well, indeed, that's quite a remarkable change that I have personally gone through and that the company has gone through.

When I joined mid 21, I think Germany was at a 1.6% of GDP spending.

Now we're above 2 already and we aim for 3.5.

So that's basically doubling everything that Germany is spending within a relatively short amount of time for the company has meant a Major transformation.

We came from a time where the spending was meant to sort of keep you in the race, but

spread out and delay everything as much as possible.

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Has Europe staked its economic future on war? | Business Beyond

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