The consulting firm KPMG identifies the fragmentation of the defense industry as one of the major challenges currently facing the sector in Europe, according to the partner responsible for Industry, Defense, and Automotive of the firm in Spain, Jorge Sainz.
The company emphasizes that "never, in the recent history of Spain and Europe, has the budget dedicated to this matter reached such a level or grown so fast."
"However, having more budgetary resources does not guarantee success by itself," points out the expert, who adds that the "real challenge consists of transforming that investment into lasting industrial, technological, and productive capabilities."
Europe, facing the great champions of the United States and China
In its analysis, KPMG states that, while the United States and China have developed large national champions capable of concentrating resources, technology, and production capacity, Europe continues to operate through a very dispersed network of companies, state interests, and industrial chains distributed across different countries.
"The fragmentation is reflected in the very configuration of the sector," says Jorge Sainz, emphasizing that, while Europe distributes its industrial capabilities among numerous states, companies, and national programs, China concentrates a much larger part of its productive and technological resources in a limited number of large conglomerates.
According to Sainz, this difference in size "has direct consequences on competitiveness." "The result is a more limited capacity to concentrate investments, accelerate strategic programs, and achieve the production volumes demanded by the new international security scenario," he adds.
Predominance of SMEs in the Spanish defense industrial base
KPMG also recalls that the defense industrial base in Spain is mostly composed of small and medium-sized enterprises, so that eight out of ten companies in the sector are SMEs, according to the latest data published by the Ministry of Defense.
However, their economic contribution is not proportional to their number, as they only represent 7.9% of the total defense sales.
"Spain has highly competitive companies in certain technological niches and with prominent positions in areas such as naval, aerospace, or certain defense systems," highlights Jorge Sainz, who concludes that, despite this, "a good part of the sector lacks the necessary size to compete on equal terms internationally."