Key research takeaways
Production Capacity Depleted: Europe has underinvested in its militaries since the end of the Cold War, requiring an extended period of investment to reconstitute fighting forces. Contractors’ backlogs are swelling, though products will be built over several years since aerospace and defense supply chains are already stretched.
European Contractors Favored: Regional manufacturers such as BAE and Leonardo will likely receive orders when their technologies are close to state of the art. Other contractors like Rheinmetall will see additional gains as US equipment is partially built in the region. We expect defense products with high costs and large run rates to be built in the region to boost local economies and offset increased government debt.
Real Risk Will Require US Products: US products, such Lockheed’s F-35 fighter and Precision Strike Missile or Boeing’s Apache attack helicopter, may get the nod in some cases, given they have better capabilities after being developed over decades and tested in battle
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