Now. Shares and defense companies rallied on Monday, and European bonds slipped on the growing expectation of more military spending in Europe and potentially more government borrowing to fund it. Joining US now is ASD Secretary General Jan P. The ASD is the voice of the European aerospace, security and defense industries based in Brussels. Yeah, thank you so much for joining us this morning. Your members must be gearing
up for more defense spending. Do you have any idea of how much defense spending we could be seeing?
Well, it's difficult for me, so first of all, thank you for inviting me. It's difficult for me to actually point the numbers on how much we would be seeing. But we expect the major race in the defense spending
on the European side. I think what we're looking at is to pay the price for the underinvestments indicates if the US is pulling out, and obviously this is going to be for European industry to ramp up and to deliver towards what would be expected from member states to be able to continue first of all the support to themselves and to continue to support their support to Ukraine. I think we are in for a very tough situation. But the further you would push that down the line,
the tougher it would be. And I think at the same time, it's evident that we have extremely good examples of how quickly European industry can ramp up when we're given the orders. We see that on the ammunition side, with the Iran metall as an example, gearing up from seventy thousand rounds of one fifty five millimeter ammunition to one point one million in five years. We see sab Net recruiting six three hundred employees in only two years, and we see MBDA, and the list could be made long.
MBDA is making a lot of own investments. So when we're getting the orders, the industry is ramping up quickly. The problem today is that for the bigger systems, for the bigger platforms, we don't get the orders. There's a lot of policy making, a very little action on the European side.
President Trump, though, who suggested that you can buy US made weapons to give to Ukraine to use for themselves as well, are you concerned that there will be pressure on Europe to buy American Are you concerned that domestic European manufacturers will be bypassed.
And that's absolutely a major concern. I think there will be a huge political pressure for European leaders to place the orders there on the US market, and I think this is one of the biggest mistakes and failures Europe can do. If you want to have a sustainable and strong and non dependent European defense industrial base, the only solution, the only way to get there is to place the
investments on the European side. So I think what our leaders need to do is to stay firm against that and actually invest in the European defense industry.
When we're looking at investments in the defense industry, are you having your eye on whether Europe will agree to joint financing for this debt? Is that something as something in your view, can make the amount of defense spending even larger.
It's one of those things where it's a bit difficult for us to have a view on exactly how things should be done when it comes to the scope or the size of the spendings that needs to be done. It's really a political issue. We try to deliver when we get the orders. What we see right now is that it seems to be blocking in the system where the need is very well identified and the orders are still not coming. So indeed there's a huge challenge to
find the money. What I personally is very concerned about is every time I hear that Europe cannot afford to build up or ramp up its own defense industrial base or defense capabilities in general. I think this is simply, if you excuse my language, economy, it's only about priorities. Europe has the GDP, it has the economy, it has financial strength, but it needs to get it's act together.
Okay, all right, so it's a strong language on that. What do you make then, as you say, Europe knows the difficulty. It's a German defense minnester only a few months ago talked about Russia's military producing in three months what Europe produces in a whole year. How do you assess Europe's defense production capacity? Now you've talked about when you get the orders you can ramp up. How quickly do you think you can really ramp up to a level that we you know, potentially needs to deter Russia.
Well, I think, as said in the beginning, I think, first of all, to be very blant and very honest this is going to be tough, but I think at the same time, European defense industry today as we speak, is not challenged at is maximum capacity. Even now. What we see is a number of companies that are challenged to a hard capacity or high capacity level on certain products, but we do have major European players that are not
even challenged at all. Even the contrary, they could be challenged to keep production going at a low rate for as long as possible, And an excellent example of that is the A four hundred M where we see I don't recall the exact numbers, but if I take it from my back of my head, roughly some hundred and sixty or some one hundred and sixty to one hundred and seventy aircraft or something like that has been ordered.
Three quarters of that has been actually delivered. And now maybe with a ten or twelve deliveries per year, there's a few more years to go, three or four more years to go before before the quarter is filled and we don't get new orders. And when the last aircraft has been delivered, if Europe then realizes we need more four one hundred a four hundred M and the last aircraft has already been delivered. The supply chain has been dissolved, you lose the capability, so we won't be able to
ramp up correctly. So my point being that as we speak, there are so many companies that are not being challenged to their maximum capacity, so it's simple important to have that part of the picture as well.
Are your members focused on making more interoperable weapons across Europe or is manufacturing for these products still siloed?
It is unfortunately siloed to a very large extent. It is not what our members want. What we ask for on the industry side is harmonization of the military requirements. We ask for consolidation. On the demand side, we ask for much large, larger procurements. But the consolidation really needs
to come on the demand side. As long as every nation is playing on their own ground, if I may say so, dealing with the detailed requirements that the other the neighboring nation didn't have, what they don't align budgetary processes, et cetera, et cetera. As long as that is the situation, we will have a fragmented industry as well. Industry wants the consolidation, so get that right, because if we don't get it. We believe that we will have a very tough being a competitive in the long run.
Yeah, I mean, and potentially Europe looks to be fragmenting already in terms of a core number of countries gathering in Paris, and the proposals may be put to a wider group in March. But you know, it's that core kind of capability that gathered with Immanuel Macon yesterday, including I should say the UK. Britain has had a really disastrous run in terms of large purchases and in terms
of acquisition of military hardware. The Public Accounts Committee and Defense Committee have called defense procurement in the UK broken in twenty twenty three. They call for root and branch reform to break a cycle of costly delay and failure. Britain supposedly wants to be sort of at the forefront of a defense in Europe, maybe even sending troops to Ukraine. Is that credible. As far as the industry that you lead as concerned that the UK could ramp up enough.
Well, you know, from our perspective, a UK is a very appreciated member of AD and I think roughly the UK industry is behind some one third of the middle of the industrial defense industry capabilities in Europe as a whole. So to us, the UK is an extremely important component. It has knowledges, it has skills, it has competency, it has technologies that we desperately need on the EU side. If iMac so then and vice versa. So the interlinqual we think, I know Brexit was a fact and it
is what it is. We have to live with it. We think Brexit was wrong from the very first day day and also the our UK members had that feeling and our a SD members in the rest of the organization had the same feeling. It is what it is. We have to live with it. But it doesn't change the fact that that UK is part of Europe and the industrial corporation across the channel is very strong.
Terms of a timeline, you know, some parts of Europe are it would seem perhaps more on a war footing. Obviously Ukraine deeply in conflict for three years. How quickly do you think things are going to move in terms of the industry expectations now for actual spending. This is what the Trump administration is talking about all the time. Action, less talk, more action. When do you think the action or more spending might actually come through to your mind.
Well, that is again it's it's a very tricky question because it's a political decision making that we're looking for. If you, if you, if I take it from my perspective and say what would we want to see, we'd say that we're already too late, too slow, too little. All the orders that would be placed in order to have a European defense industrial base that is ready to sustain are the members military capabilities if Europe would be
in a large scale conflict with Russia. Those orders should have been placed five years ago, not tomorrow, and still we don't see them in place as we speak. We see it Frome's we see ammunition, but we see a lot of For example, on battle tanks, we only see orders to replace those battle tanks that has been sent to Ukraine. We don't see orders to increase the stocks of battle tanks in Europe. So, from from my perspective,
what we see is far too slow. The political leadership seems to know what to do, but do not dare to do it or do not find the finances to do it. So it is extremely will it change expectations on our side? Is hopefully yes. Of course. This is really what we want to see, is that there would be a major shift in going from policy making to action, and in that perspective, I think mister Trump is absolutely right.
Okay, yeah, and Pet, thank you so much for your time with us this morning. We really appreciate the front conversation.