MBDA, a leading European missile manufacturer, has made significant investments in new equipment over the past three years and hired hundreds of workers to accelerate production in response to strong demand that has driven orders to record levels.

These efforts are positioning the group, best known for producing the Storm Shadow/Scalp missile, to double its production this year compared to 2023. MBDA has also faced intense pressure from the French army to deliver long-range Aster missiles more quickly, but like other European defense companies, it has struggled with expansion costs and strained supply chains.

According to the Financial Times (FT), the company recognizes that inefficiencies that were insignificant during peacetime are now a handicap.

MBDA’s order book has reached €37 billion, and at its current pace, it would take approximately seven years to fulfill this backlog. Chief Executive Officer Éric Béranger stated that the group needs to do more to adapt to a war economy where speed and volumes are critical, a situation not seen for decades.

In an interview with the FT, Béranger said, “We need to be much more industrial, so to speak, to face the challenges of increasing production.”

The complex production process of MBDA’s Aster missile exemplifies this. The incomplete weapon is shipped between France and Italy across the Alps several times for different stages of production, resulting in months spent for little industrial gain.

Béranger noted that if MBDA were a normal company, such problems would be “quite easy to solve.” However, it is much more difficult for a cross-border defense group that must balance the interests of its shareholders—Airbus and British BAE Systems, each holding 37.5%, and Italian Leonardo with a 25% share—and the armed forces it serves.

Nevertheless, two individuals familiar with the matter stated that Béranger’s proposal last year to simplify the “production footprint” was rejected by France, which viewed the restructuring as a threat to its leadership within the group and disruptive to efforts to increase production.

One of these individuals added that the UK was also not particularly supportive, with both countries viewing the proposal as favoring Italy.

While noting that discussions are ongoing, Béranger said, “I put on the table the question of whether we should consider improving the organization,” but given how MBDA provides weapons that are vital to their sovereignty, the issue was expected to be “very sensitive” for the countries involved.

Established in 1996 as a French-British collaboration and joined by Italy in 2001, MBDA stands out as one of Europe’s few successful multinational defense companies in a region still largely fragmented with national players. The company produces some of the world’s most sought-after missiles and competes with US groups such as RTX and Lockheed Martin.

Béranger suggested that MBDA could be a vehicle for additional joint weapons programs at this “moment of truth” for Europe, adding, “Being a tool for cooperation is in our DNA.”

However, critics argue that MBDA has not done enough to adapt. Sash Tusa, a defense analyst at Agency Partners, asserted that the company is structured according to weak demand from past decades and is “currently failing.”

Tusa added that MBDA “should proactively build working capital, heavily finance its suppliers, and create second sources for key components like rocket motors so that it can increase production.”

Tusa also questioned whether MBDA’s shareholders are limiting its ability to invest by demanding regular dividend payments.

Béranger declined to comment on dividends. The CEO stated, “So far, we have been able to mobilize the investments that we thought were necessary.”

MBDA plans to invest €2.4 billion from 2023 to 2028 to increase production, and Béranger said that this amount could increase if necessary.

A key focus within the company has been increasing the production of the Aster missile. Comprising 10,000 components, from titanium fins to high-performance computer chips, the missile is among the most complex weapons MBDA produces.

Approximately €50 million was spent last year to increase the number of robotic machines performing various stages of production to 50, with an additional dozen to be installed next year.

The workflow has been overhauled to accommodate the equipment and personnel. Weekend shifts have increased from three to 13 people, while the total working hours within the group are on track to double from 2020 to 2025.

During a recent visit, robots in the hangar-like factory floor where the Aster is assembled sanded metal components and fabricated carbon fiber storage boxes that can prevent accidental explosions.

According to the FT, accelerating production has also required creative thinking. Instead of waiting a year or more for robotic machines to be delivered, a production manager for Aster flew to Germany and Japan last year and convinced manufacturers to sign long-term lease agreements for three “showroom models.” These machines were operational in Bourges, France, just four months later.

The production time for Aster has been reduced from over three years in 2022 to just over two years, and the company aims to reduce the time further. Progress has been better on the smaller, simpler Mistral and Akeron missiles.

An employee at the company admitted that Aster was designed at a time when no one thought mass quantities would be needed, so complexity was not a disadvantage.

This person said, “Production was divided into pieces like a puzzle to make every country happy. It’s an extraordinary product that has proven its effectiveness on the battlefield, but from an industrial point of view, it’s a complete nightmare.”

However, accelerating some steps, such as making a critical component of the missile’s guidance system—a circuit board filled with chips—has been difficult. Reducing the number of trips between France and Italy will also be both challenging and risky.

According to officials, new production lines will need to be recertified, and quality standards could decline. Like some of its peers, MBDA believes that vertical integration will help increase its production and acquired solid rocket motor supplier Roxel last year.

MBDA will now pump more cash into growing the group and also prevent its competitors from buying up the under-supplied rocket motors.

When asked whether MBDA should acquire more suppliers similar to Roxel, Béranger said he was open to it, adding, “There is no dogma. The important thing is that it is efficient.”

The agency’s Director General, Josef Aschbacher, told Euractiv that the ESA is preparing plans for a military-grade reconnaissance satellite network with the EU as part of a record €21 billion budget spend.

The war in Ukraine and geopolitical tensions with the US have dispelled the ESA’s reluctance to invest in defense, prompting Aschbacher to discuss spending plans at a meeting with EU officials in Warsaw on Tuesday.

“We have a package that we are preparing already… it is in the order of magnitude of plus or minus around €21 billion today,” said Aschbacher.

The space agency is not part of the EU but has a partially overlapping membership, including the UK and Switzerland. Every three years, space ministers from ESA member states meet to determine and share spending on a range of science and exploration programs.

At the last summit in Paris in 2022, the capitals pledged a record spend of €16.9 billion.

National budget constraints were expected to hamper efforts to further increase the budget at the next ministerial meeting in Bremen in November.

But Elon Musk’s threats to cut off Ukraine’s access to Starlink and a more belligerent White House have upended those assumptions, focusing attention on developing space assets as part of a broader European defense push.

As part of the Bremen plan, Aschbacher is working to develop a reconnaissance satellite constellation program that will beam ultra-high-resolution optical infrared imaging from anywhere in the world to militaries and governments on demand every 20 or 30 minutes.

A number of EU companies, including Finland-based ICEYE, which provides commercial satellite services to Ukraine, have called for such a program to boost the bloc’s startup scene.

Regarding the plan, Aschbacher said, “This is exactly breakthrough, we don’t have this in Europe. I know that China is developing it, the US is developing it too.”

The Austrian space chief said that with all programs combined, the final ESA budget figure to be presented to ministers in November will be over €21 billion.

Europe is still a relative minnow in this area, spending a fifth of what the US allocates to its space programs each year.

The new German government, which overtook France as the largest contributor to the ESA budget last time and is a hub for rocket ventures, has made it clear that it intends to further increase its spending at the Bremen summit to help the mission catch up.

Polish Prime Minister Donald Tusk declared that “naive globalization has ended,” calling for the country’s economy, markets, and capital to be under greater Polish control.

“In this brutal competition of egos in global markets and on war fronts, Poland will no longer be a naive partner,” Tusk said, warning that Polish companies should not be disadvantaged against international giants.

Speaking at the European New Ideas Forum (EFNI), Tusk emphasized that future success would belong to those who draw the right lessons from today’s global changes and position Poland to defend its economic sovereignty and compete on a level playing field.

Calling for increased national control, Tusk also advocated for the “re-Polonization” of Polish markets and capital.

Polish leader emphasizes ‘national economy’

In a symbolic move, he announced that operations at the Sławków transshipment terminal, strategically located for east-west trade, would be entirely in the hands of Polish companies, reinforcing the government’s commitment to national control over key infrastructure and securing what he called a future cornerstone of Ukraine’s reconstruction.

“Sławków will be a key hub for transportation and logistics in the region,” the Prime Minister said, adding that regaining control of such assets is not only a national but also a European priority.

The Prime Minister announced a broad plan to reorganize the economy, tasking the state, administrators, and public institutions with protecting “national economic interests.”

Tusk said, “Our task today is this, and this task is for the state, for managers, for officials, for ministers, for Polish companies… to act effectively, ruthlessly if necessary, and always in the interests of Polish entrepreneurs, Polish companies, Polish capital.”

‘State-owned companies should prioritize national interests, not profitability’

He also referred to a recent meeting with the heads of Poland’s largest state-owned energy companies, which highlighted the economic dilemmas facing the country, and underlined that public ownership should prioritize national interests over profit.

Tusk said, “When it comes to an energy company, for example, the first task is to ensure energy security for the Polish state, to provide energy to Polish families, Polish households, and Polish entrepreneurs as cheaply and universally accessible as possible. The state-owned company does not have to maximize its profits.”

Emphasizing the importance of national identity in economic strategy, Tusk called for a greater role for Polish firms in public tenders and promised stricter oversight of state-owned companies to guarantee local participation.

Tusk said, “We must ruthlessly and selfishly pursue the interests of Polish entrepreneurs.”

The Prime Minister’s statements triggered a negative market reaction, with energy company shares falling rapidly. PGE fell by 6.6%, Enea by 3.5%, and Tauron by 8.5%. Orlen also experienced a slight decline, and all four companies are state-owned.

‘Re-nationalization’ linked to militarization

Tusk also pointed to key investment areas where domestic firms would be favored, including the expansion of the Sławków terminal, a freight hub connecting the broad-gauge railway from the east to the European network, and the construction of Poland’s first nuclear power plant in Choczewo.

The Prime Minister said that the government had made an “irreversible” decision to channel the 53 billion zlotys (€12.37 billion) from the nuclear power plant project directly to Polish companies. While some high-tech components will still require foreign partners, these will be limited.

Poland cannot legally prioritize domestic firms solely based on their nationality under EU competition and tender rules. However, the government can promote local participation through quality requirements and subcontractor quotas.

Westinghouse, the US-based prime contractor, has stated that up to 50% of the Choczewo project will involve Polish companies.

Tusk also said that rebuilding the country’s industrial capacity is among the investment priorities.

Citing the boiler manufacturer Rafako, which declared bankruptcy last year, as an example of how the state can effectively support industry, Tusk suggested that the company’s potential should be used for arms production.

Tusk also cited Huta Częstochowa as an example, saying that the company was saved thanks to the state’s determination and has become an important element in supporting the Polish army.

Tusk approaches PiS policies

Tusk’s emphasis on prioritizing national interests in economic policy is thought to reflect the language used by the previous Law and Justice (PiS) government.

During the PiS era, the state sought to bring key sectors of the economy under domestic ownership, justifying these moves as necessary to protect “national sovereignty.”

This included Orlen’s purchase of hundreds of regional media outlets from a German company in 2020. While PiS defended the move as a safeguard against foreign influence, critics described it as an attempt to increase government control over the media.

The PiS administration also floated ideas such as creating a state-owned chain of stores and expressed interest in buying back large private assets such as the Żabka market network.