Europe considers subscription-style models to sustain defence industrial capacity amid rearmament surge

Europe’s drive to rebuild military readiness is forcing a wider question: not just what weapons to buy, but how to keep the industrial base alive once the current rearmament surge eases.

As EU governments work towards 2030 preparedness goals, some executives and analysts are arguing that the old procurement model is too blunt for a security environment defined by speed, uncertainty and rapid technological change. Eirik Lie, who leads Kongsberg Defence & Aerospace, says th...

e sector needs funding arrangements that allow firms to maintain capacity rather than simply produce to order. Kongsberg, one of Norway’s main defence suppliers, has long positioned itself around air defence, missile systems, surveillance and command-and-control technologies.

The idea gaining attention is sometimes described as a subscription model, although that label means different things to different people in the industry. In its simplest form, it would shift governments away from one-off purchases and towards recurring payments for access, readiness or continuous delivery. Supporters say such arrangements could help preserve supply chains, keep skilled workers in place and ensure factories can expand quickly in a crisis.

Linus Terhorst, a defence industrialisation specialist at RUSI, argues that the real issue is whether states are prepared to pay for industrial readiness before a conflict begins. He compares the logic to firefighting: governments do not fund emergency crews because there is a blaze every day, but because they need the capability to respond immediately when one starts. Applied to defence, that would mean paying not only for finished kit, but for the dormant capacity to produce more of it at short notice.

The concept, however, divides the sector. Some manufacturers see recurring payments as a practical way to smooth the boom-and-bust cycle that often follows geopolitical shocks. Others say the model fits software and services better than heavy equipment. Renaud Bellais, MBDA’s chief defence economist, has questioned whether “subscription” is even the right term, arguing that defence firms already rely on recurring income through maintenance, training, communications and partnership contracts.

There is also a long-running precedent for more flexible procurement. Saab’s leasing of Gripen fighter jets to the Czech Republic and Hungary showed that states can, under the right conditions, pay for access rather than outright ownership. Yet Bellais and others argue that missiles, artillery and armoured vehicles are different from aircraft leasing or satellite bandwidth: they are physical goods with shorter relevance horizons and much harder-to-price risk.

That distinction matters because the defence market is changing at different speeds in different segments. For companies building drones, autonomous systems and battlefield software, the service model is already becoming normal. Ricardo Mendes, chief executive of Tekever, says clients increasingly want capability that updates continuously, rather than kit that is effectively frozen at the point of delivery. His point is that software never truly stops evolving, particularly once electronic warfare and artificial intelligence are involved.

Tekever, which began in maritime surveillance before moving deeper into defence after Russia’s full-scale invasion of Ukraine, illustrates the shift. In its civilian business, it already sells surveillance as an ongoing service. In defence, the appeal is similar: customers want the latest version, not last year’s technology. That makes recurring revenue easier to justify in software-heavy areas than in traditional manufacturing.

Kongsberg itself is adapting to that environment. In recent interviews and company materials, Lie has stressed the importance of working closely with armed forces and research partners, while also using commercial technologies to improve speed and efficiency. The company says it aims to meet both Norwegian and allied security needs while staying competitive internationally, a reminder that defence firms increasingly sit at the intersection of state demand and private-sector innovation.

For Brussels and national capitals, the broader challenge is whether Europe can design financing models that sustain industrial readiness without permanently inflating procurement costs. The answer may not be a literal Netflix-style subscription for tanks and missiles. More likely, it will be a mix of service contracts, readiness payments, leasing arrangements and longer-term industrial guarantees.

But the direction of travel is clear. If Europe wants a defence industry that can surge in a crisis and still retain its skills, tooling and production lines in quieter times, it may have to stop thinking only about buying weapons and start paying for the ability to make them.

Source: Noah Wire Services