A defense-tech perfect storm brews in Europe
If there's any moment Europe should double down on its own defense, it's today.
The big picture: European policymakers don't trust Russian President Vladimir Putin to stop at Ukraine, and they can no longer count on the U.S. to protect and arm its NATO allies indefinitely.
There's suddenly a lot more money for defense, and a keen interest in accelerating domestic manufacturing.
NATO boss Mark Rutte called for a 400% spending increase for air-and-missile defenses, arguing a "quantum leap" is necessary to remain relevant. Meanwhile, President Trump bangs the burden-sharing drum.
Stateside defense-tech companies are looking to expand. Chatter of Europe's rearming could serve as a springboard.
Driving the news: There is a distinct national-security twist to this year's Paris Air Show, among the highest-profile aerospace get-togethers in the world.
Defense News reported that 45% of the show is dedicated to defense and security — a "strong increase" from the previous show in 2023. But there is little Pentagon presence.
"We're hearing this directly from European countries: 'We don't know if we can rely on the United States to actually supply us weapons,'" Firestorm Labs CEO Dan Magy said in an interview.
"So how they're solving that problem is they're desperately looking to onshore or near-shore — whatever you want to say — their manufacturing."
Inside the room: Analysts and executives Axios chatted with see urgency, opportunity and nuance.
"The issue for European countries is less about finding the money and resources for defense ... and more about how to spend the funds effectively and in ways that ensure European defense readiness, technological edge and sovereignty, and deterrence, while ensuring interoperability with allies and partners," Federico Borsari, an expert at theCenter for European Policy Analysis, told Axios.
"As Europeans rethink and modernize the continent's entire defense ecosystem," he said, "it's essential to avoid following a marketing-centric and techno-fetishist approach."
Trae Stephens, a partner at Founders Fund and the executive chairman at Anduril Industries, separately told Axios there are "tremendous opportunities in Europe."
Anduril and Germany's Rheinmetall on Wednesday announced a partnership through which European variants of the Barracuda missile and Fury robo-wingman will be produced. Solid rocket motors are on the table, too.
Stephens said he would "love to see" one of his company's Arsenal mega-factories "built in continental Europe." (Its first, Arsenal-1, will be erected in Columbus, Ohio.)
Yes, but: All these good omens could unravel because of the most universal of challenges: workforce. Competition for top tech talent and skilled tradesmen haunts industries and militaries alike.
"It is increasingly clear that Europe faces critical talent scarcity," Randstad CEO Sander van 't Noordende told Axios. (Randstad is among the world's largest recruitment-and-staffing businesses.)
"Increased defense spending, while a strategic necessity, will be severely limited without a corresponding investment in human capital," he said. "The growing mismatch between defense investment and workforce readiness demands urgent action."
Van 't Noordende in a piece for Fortune this month said Europe has more than 17 million "skilled professionals in adjacent industries" who could make the jump to defense with proper guidance.
The bottom line: Increased resources for defense in Europe are a good thing, as "we're stronger together than we are separately," Sen. Jeanne Shaheen (D-N.H.) told a small group of reporters at the air show.
"It's been a priority of this administration in the United States, obviously, to increase European defense spending, and we're seeing a response to that."
"If you combine the United States with Europe — whether it's on the economic front or the national security front — we are a lot more formidable," she added. "That's how we should be operating."
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