# REPORT: €250 Billion Pledged, But Can European Arms Factories Keep Up?

> On June 25, 2026, NATO Secretary General Mark Rutte, during a conversation at the Atlantic Council, dropped this staggering figure: "This year and last year combined, it's about $250 billion in additional defense spending by Europeans and Canadians in nominal terms. That is colos

- Author: Maxime Marquette
- Publisher: MadMax (https://mad-max.co)
- Section: Reportage
- Published: 2026-06-27
- Canonical URL: https://mad-max.co/en/article/250-milliards-promis-mais-les-usines-d-armement-europeennes-peuvent-elles-suivre

## Introduction: The Money Is There, the Tanks Are Not Yet

### €250 Billion in Two Years: A Breathtaking Figure

On **June 25, 2026**, **NATO** Secretary General **Mark Rutte**, during a conversation at the **Atlantic Council**, dropped this staggering figure: **"This year and last year combined, it's about $250 billion in additional defense spending by Europeans and Canadians in nominal terms. That is colossal."** He described this rearmament as **"breathtaking"** and praised the speed at which a new **Rheinmetall** ammunition factory in **Germany** moved from blueprints to production in **just over a year**.

These **$250 billion** represent political will — expressed in budgetary commitments. They sound like a victory. But honest reporting must ask the question that official communiqués gloss over: can the European defense industrial base actually deliver what governments have promised? Do the factories exist? Are the engineers available? Are the supply chains ready?

### Bloomberg Summarizes the Paradox

The opinion piece published by **Bloomberg** on **June 25, 2026** on **Rheinmetall** and **KNDS** puts the problem plainly: **"after Russia invaded Ukraine in 2022 and NATO members caved to Trump's pressure to properly fund their militaries, investors thought European defense companies couldn't lose. Since then, they have learned that rearmament is no smooth sailing."** Defense stocks have fallen. And governments might not honor their spending pledges if peace returns to **Ukraine**.

*This is the central tension of any rearmament effort in a democracy: budgetary promises are made in times of crisis, but they must be executed over years — and crises, by definition, do not remain in a state of emergency. The question is always: how long will political will hold when the costs become visible?*

## KNDS: The Tank Giant Marching Toward the Stock Exchange

### Leopard 2, Caesar, and Boxer: An Explosive Order Book

**KNDS** — merging the French capabilities of **Nexter** and the German ones of **Krauss-Maffei Wegmann** — is at the heart of the European rearmament effort. Its order book exceeds **€33 billion**. Over the period **2023-2025**, revenues increased by **35%** and production capacity **doubled** for some products. For **2026**, it targets revenue growth of approximately **30%** over **2025**, with sales of **€4.4 billion** and operating profit of **€661 million** recorded in **2025**.

In **June 2026**, **KNDS** announced its intention to list on **Euronext Paris** and the **Frankfurt Stock Exchange** — an IPO valued at around **€5 billion**. Simultaneously, **Germany** joins **France** as an equal shareholder in the company, each taking **40%** of the capital. This governance shift reflects **Berlin's** desire to assume a strategic role in the European defense industry — a major cultural shift for a country long inhibited by its history.

### The Bottlenecks: Armored Steel, Electronics, and Skilled Labor

But as the **Army Recognition** analysis of **June 2026** notes: **"an IPO does not produce more tanks, howitzers or ammunition in 2026. Production still depends on engines, armored steel, electronics, skilled labor, explosives, testing capacity, and the speed of government procurement."** This common-sense reminder is crucial: financing is necessary, but not sufficient.

**KNDS** is in advanced talks with **Volkswagen** and **Mercedes-Benz** to convert idle automotive plants to military production — notably the **Mercedes** site at **Ludwigsfelde** for the production of wheeled armored vehicles **Boxer**. A fourth **V STAR** production unit will be added at the **Roanne** site for aluminum components. These expansions are real — but they will take time. Large-scale production will not be available before **2027-2028**.

*Converting automotive plants into arms factories — I would not have thought I'd be writing that sentence in Western Europe in the twenty-first century. But this is the world we live in. And honestly, if Volkswagen and Mercedes can help produce armored vehicles to defend Ukraine, so be it.*

## Rheinmetall: The German Champion Under Pressure

### 350,000 Shells Per Year and Global Ambitions

**Rheinmetall** has become the symbol of European rearmament. **Rutte** himself cited the company as an example of industrial speed: **"a new ammunition factory that went from plans to bricks and mortar in just over a year. That is pace."** This factory will soon produce **350,000 artillery shells per year**. **Rheinmetall** launched a joint venture with the **Netherlands** — **Rheinmetall Destinus Strike Systems** — to mass-produce cruise missiles and rocket artillery systems, with annual production capacity already exceeding **2,000 cruise missile systems** in **Europe**.

In **North America**, **American Rheinmetall** announced a capital investment of **$41 million** in six American factories in **Michigan**, **Ohio**, and **Maine**, with **$12 million** already committed. This geographic diversification serves two objectives: maintaining access to the American market despite trade tensions, and reducing dependence on a single industrial base in the event of a conflict extending to the European continent.

### The Limits: Backlog, Valuation, and Political Risk

Despite these successes, analysts from **Deutsche Bank**, **UBS**, and **JPMorgan** have flagged significant risks in their recent sector notes: **bottlenecks in ammunition production**, questions about **stock market valuations** in a high-interest-rate environment, and the major political risk — if peace is negotiated in **Ukraine**, governments may slow their orders. Defense stocks have indeed **fallen** according to the Bloomberg June analysis, reflecting this uncertainty.

The consolidated order book of **Rheinmetall**, **KNDS**, and others exceeds current production capacity by several years. This is technically positive for investors. But for end users — the European armies that need equipment now, not in five years — it is a frustrating reality. The political promises of NATO summits and the actual industrial deliveries are not on the same clock.

*There is a cruel irony in the fact that defense stocks fall precisely because investors fear peace returning to Ukraine. This is where we are: financial markets have integrated the war as a structural given. I refuse to get used to it.*

## The Debate Over Tanks and Traditional Artillery in the Drone Age

### The Drone Revolution Upends Everything

While factories are accelerating production of **Leopard 2** tanks and **PzH 2000** howitzers, a fundamental strategic debate is agitating military staffs: are conventional weapons systems still relevant in a world transformed by drones? The war in **Ukraine** showed that tanks can be destroyed by cheap drones. The **Bloomberg** analysis explicitly notes: **"with drones transforming the battlefield in Ukraine and the Gulf, there is a debate about what they should buy and whether costly tanks and artillery are still relevant."**

This debate is real and important. Tanks remain useful in certain scenarios — armored breakthroughs, combat in complex terrain, protection against certain threats. But their vulnerability to low-cost FPV drones has altered investment calculations. The most advanced armies are developing armored vehicles with active protection systems against drones — but this increases costs and complexity.

### The Balance Between Heavy and Asymmetric Systems

The most coherent response is emerging gradually: the future of European defense lies in a mix of conventional heavy systems (tanks, artillery, air defense) and innovative asymmetric capabilities (swarm drones, cruise missiles, electronic warfare). **Rheinmetall** is investing in both dimensions. **KNDS** is developing armored vehicles capable of operating in drone-saturated environments. The **European Union** is simultaneously funding Ukrainian drone production under the **USL**.

**NATO**'s stated objective is to spend **5% of GDP** on defense — a level that exceeds the current ambitions of many members. **Rutte** insists on the need for each nation to take its responsibilities and to **"truly increase defense production from its own industrial base."** The **EU** plays a crucial coordination role for the **23 countries** that belong to both **NATO** and the **EU**.

*This debate about tanks versus drones reminds me of discussions before the Second World War, when some thought cavalry would withstand tanks. Technologies change. The principles of war — surprise, concentration, protection — do not. What changes is how quickly you must adapt.*

## The Gap Between Promises and Capabilities: The Schedule Problem

### What $250 Billion Cannot Buy Immediately

The **DW** (**Deutsche Welle**) report of **June 23, 2026** is blunt: **"a significant gap persists between ambitions and results, with many weapons manufacturers struggling to accelerate production."** This industrial reality is often ignored in political discourse. Training a tank operator takes years. Building an artillery shell production line takes years. Developing and qualifying a new drone takes years.

**Europe** is in catch-up mode — but the war in **Ukraine** demands deliveries in the present, not in five years. That is why the **EU** reserved the right, within the **USL**, to purchase outside the **EU** equipment that European industry cannot provide quickly enough and in sufficient quantity. This is a painful concession for European industrial policy, but it is realistic.

### The Risk of Political Fatigue

The director of **2EU Brussels** warned that **Europe** **"risked missing its 2030 readiness target unless it buys, produces, and finances together."** This warning points to the risk of national fragmentation in procurement — each country buying its own systems with different specifications, creating interoperability incompatibilities and missed economies of scale. Defense procurement pooling at the European level is progressing, but remains insufficient.

There is also the political risk of **war fatigue**: if the war in **Ukraine** drags on for several more years, governments that made ambitious budgetary pledges against a backdrop of acute security urgency will have to defend them in the face of public opinions worried about deficits, public services, and the cost of living. Maintaining **$250 billion per year** over the long term will require political pedagogy that very few European leaders have yet begun.

*I see two Europes: the one of speeches, which promises €250 billion and tank factories in a year. And the one of realities, where skilled workers are scarce, supply chains are fragile, and political will can evaporate as quickly as it appeared. The Europe I want is the one that turns its promises into action.*

## The Race for Skilled Workers: The Human Bottleneck

### Training a Defense Worker Takes Years, Not Weeks

Behind the billions and contracts lies a reality that press releases never mention: **Europe lacks skilled workers to produce the weapons it promises**. Tank, artillery, and ammunition factories require very specific skills — specialist welders, ballistics technicians, CNC machine operators — that cannot be recruited in a matter of weeks. **Rheinmetall** announced plans to hire **5,000 additional employees in Europe by 2027**, but the industrial labor market in **Germany** and **France** is already under structural strain.

The defense sector is therefore in direct competition with the automotive industry, civil aviation, and renewable energy for the same profiles. **BMW**, **Airbus**, and wind turbine manufacturers offer comparable salaries and often a better image among younger workers. Active vocational training policies — funded by member states — will be needed to close this human deficit before **2030**, the target date set by the **NATO** summit for new operational capabilities.

### The Emblematic Case of 155mm Shell Production

**Ukraine's** demand for **155mm** artillery shells exposed the extreme fragility of the European production chain. The **EU** had set an objective to deliver **one million shells** to **Ukraine** by March 2024 — it delivered only around **520,000**, barely half. The problem was not financial: orders had been placed, budgets allocated. The problem was purely industrial: shortage of propellant powder, bottlenecks in fuze manufacturing, insufficient subcontractor capacity.

These painful lessons led the **EU** to create the **ASAP** program (Act in Support of Ammunition Production) and mobilize an additional **€500 million** to accelerate production. But even with this effort, **IISS** analysts estimate that **Europe** will not achieve sufficient shell production capacity to sustain a high-intensity conflict before **2026-2027** at best. This is a reality that the **$250 billion** figure alone cannot erase.

*When I hear European ministers promising massive deliveries within impossible timelines, I think about the workers in those factories — the real craftsmen of the continent's security — who know better than anyone how far political promises tend to stop at the workshop door.*

## Interoperability: The Technical Challenge Nobody Wants to Pay For

### When Every Army Orders to Its Own Standards

**Europe's** defense suffers from a chronic ailment: each member state tends to order equipment with slightly different national specifications, creating a mosaic of operational incompatibilities that reduces collective effectiveness. **Leopard 2** tanks exist in **seven different variants** depending on purchasing countries, with partially incompatible spare parts. Communication systems do not all speak the same protocol. Ammunition does not all have the same tolerances.

This fragmentation is not trivial: it increases maintenance costs, complicates multinational logistics, and reduces the capacity for mutual emergency stockpile pooling. **NATO** has identified this problem for decades — with little practical success. The pressure of the war in **Ukraine** is now forcing Europeans to think more seriously about standardization, particularly within the program for the next-generation main battle tank — **MGCS** (Main Ground Combat System) — a joint **France-Germany** project whose future remains uncertain despite **KNDS** announcements.

### The MGCS Project: Shared Ambition, Real Tensions

The **MGCS** project is intended to replace the French **Leclerc** and German **Leopard 2** by **2035-2040**. It illustrates both the ambitions and the limitations of European defense industrial cooperation. The two countries struggle to agree on task and technology sharing — **France** wanting to preserve its expertise in cannon and turret design, **Germany** seeking to dominate the propulsion system. These tensions have delayed the program by several years and fuel doubts about Europe's ability to produce a common next-generation platform.

In this context, the **KNDS IPO** — planned with a valuation of around **€5 billion** — sends a strong signal to financial markets: investors believe in European defense as a sector with a future. But a stock price does not deliver tanks. What matters, in the end, is **KNDS**'s and its competitors' ability to convert this capital inflow into operational production lines, within timelines that the strategic situation demands — and that governments still too often refuse to acknowledge publicly.

*Interoperability is the word nobody truly wants to fund. It is expensive, unglamorous, and never makes front-page news. Yet without it, the €250 billion risks producing an army of Babel — powerful on paper, cacophonous in the field.*

## Dependence on Raw Materials: The Silent Achilles' Heel

### Rare Earths, Propellant Powders, Specialty Steel: Europe Imports the Essentials

A main battle tank or a modern missile system contains dozens of critical materials that **Europe** depends on massively from external suppliers. **Rare earths** — essential for permanent magnets in electric motors and guidance systems — are dominated by **more than 80%** by **China**. Propellant powder for artillery shells depends on supply chains passing through non-**EU** suppliers. Specialty armor steel is produced in insufficient quantities in **Europe** to sustain a prolonged war effort.

This is not a discovery of 2024: strategic European reports were warning about these dependencies well before the Russian invasion of **Ukraine**. But diversification takes time — and money. The **EU** launched the **Critical Raw Materials Act** in **2023** to reduce these dependencies, with domestic production targets set for **2030**. This is a sound policy. But until then, if **China** decided to cut rare earth exports to **Europe** — as it has already done partially toward **Japan** in 2010 — the consequences for the European defense industry would be immediate and severe.

### The Ukrainian Lesson: Strategic Reserves as a War Weapon

**Ukraine** learned at its expense that war is also a war of stockpiles. The ammunition shortage periods of winter **2023-2024** — when Ukrainian artillery was rationed to a few dozen rounds per day — showed that the absence of strategic reserves can cost kilometers of territory. **Rheinmetall** and its partners are working to rebuild these reserves, but at a pace insufficient by **NATO** standards, which recommend **30 days of high-intensity munitions** for each member. Few member countries meet this threshold today.

The true measure of European rearmament success will not be the number of billions spent or the speeches at summits. It will be the quantity of munitions stored in **NATO** depots in **2028**, the production rate of the **Düsseldorf** and **Kaiserslautern** lines, and European armies' ability to sustain a high-intensity conflict for **90 days** without external assistance. These metrics, governments do not communicate. They remain classified — and that may be the real problem of democratic transparency.

*We talk about billions and show tanks rolling. We never show the half-empty warehouses, the unfulfilled purchase orders, the rare earths that all come from China. The invisible dependency is often more dangerous than the visible threat.*

## Conclusion: The Money Is There, Now Comes the Hardest Part

### The Political Will Is Real — Execution Is the Challenge

This report does not aim to minimize Europe's rearmament effort. The **$250 billion** are real, the new factories are under construction, **KNDS** and **Rheinmetall** are recruiting and investing at an unprecedented pace. This is considerable progress compared to the atrophy of previous decades. And it deserves to be acknowledged.

But journalistic responsibility also requires pointing out the gaps between **Rutte**'s speeches and the industrial reality documented by analysts: bottlenecks persist, delivery timelines remain long, and the political risk of fatigue is real. **Europe** has taken the first steps — now it must go the distance, with the same discipline it demands of **Ukraine** for its reforms.

### What Rheinmetall and KNDS Cannot Resolve Alone

**Rheinmetall** and **KNDS** are private companies whose role is to produce what governments buy. If governments reduce their orders — for lack of budget, political will, or because peace returns — production will slow. The true guarantee of European rearmament is not industrial. It is political. It rests on the ability of European democracies to hold the course, to explain to their citizens why this rearmament is necessary, and to convince them that **Europe's** security can no longer be outsourced to the **United States**.

*I end this report with a deep conviction: European rearmament is not an illusion. But it will only be real when the factories are running at full capacity, when the warehouses are full, when the workers have been trained. The money was the easiest problem to solve. The industrial, political, and human will that follows — that is where the continent's security is truly decided.*

**By Maxime Marquette, columnist**

## Columnist's transparency note

### Editorial stance

I am not a journalist but a **columnist and analyst**. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

I do not claim the cold objectivity of traditional journalism, which stops at reporting facts. **I claim analytical clarity**, rigorous interpretation and a deep understanding of the complex issues that concern us all. My role is to give meaning to the facts, to place them in their historical and strategic context, and to offer a critical reading of events.

### Method and sources

This text keeps the basic distinction between **verified facts and interpretive analysis**. The rule never changes: a factual claim is published only when a verifiable source supports it, and the sources this article actually used are listed under **Sources**, never here.

**Primary source families** used by the publication, when the story has them: official statements from governments and international institutions, public statements by political leaders, reports from intergovernmental organisations, dispatches from recognised international news agencies.

**Secondary source families**: specialised publications, internationally recognised news media, analyses from established research institutions, reports from industry organisations.

When an article cites statistical, economic or geopolitical data, it comes from the institutions that produce it (intergovernmental organisations, central banks, national statistics offices), and the exact institution is named under **Sources**.

### Nature of the analysis

The analyses, interpretations and perspectives in the analytical sections of this article are a **critical, contextual synthesis** based on the information available, the trends observed and the expert comments cited in the sources consulted.

My role is to interpret these facts, to set them in the context of today's geopolitical and economic dynamics, and to give them a coherent meaning within the larger story of the changes shaping our time. These analyses reflect expertise built through continuous observation of international affairs and an understanding of the strategic mechanisms that drive global actors.

This article describes a documented state of affairs on its publication date, not a prediction: later developments may shift its outlook. No update is promised in advance; when an article is corrected or completed, the change is dated in the text.

## Sources

### Primary sources

- [Bloomberg Opinion — Europe's Weapons Makers Are Facing a Battalion of Problems — June 25, 2026](https://www.bloomberg.com/opinion/articles/2026-06-25/rheinmetall-knds-european-weapons-makers-face-a-battalion-of-problems)

- [NATO — Atlantic Council Front Page Conversation with NATO Secretary General Mark Rutte — June 25, 2026](https://www.nato.int/fr/news-and-events/events/transcripts/2026/06/25/atlantic-council-front-page-conversation-with-nato-secretary-general-mark-rutte)

- [Army Recognition — Germany Joins France in Equal Control of KNDS Before Leopard 2 Tank Maker IPO — June 26, 2026](https://www.armyrecognition.com/news/army-news/2026/germany-joins-france-in-equal-control-of-knds-before-leopard-2-tank-maker-ipo-as-europe-rearms)

### Secondary sources

- [Defense News — Tank maker KNDS plans stock market listing, Germany to buy 40% stake — June 24, 2026](https://www.defensenews.com/global/europe/2026/06/24/tank-maker-knds-plans-stock-market-listing-germany-to-buy-40-stake/)

- [Deutsche Welle — Europe's defense ambitions get reality check — June 23, 2026](https://amp.dw.com/en/europe-is-spending-billions-to-rearm-so-why-the-delays/a-77650976)

- [Army Recognition — Germany Launches New Cruise Missile Production Venture with Netherlands — June 21, 2026](https://www.armyrecognition.com/news/aerospace-news/2026/germany-launches-new-cruise-missile-production-venture-with-netherlands-for-long-range-strike)

- [Defence Industry — KNDS plans IPO on Euronext Paris and Frankfurt Stock Exchange — June 24, 2026](https://defence-industry.eu/knds-plans-ipo-on-euronext-paris-and-frankfurt-stock-exchange-as-germany-prepares-investment-alongside-french-state-to-support-growth/)

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Source: Maxime Marquette, MadMax. When citing, name the author and link https://mad-max.co/en/article/250-milliards-promis-mais-les-usines-d-armement-europeennes-peuvent-elles-suivre