Defence firms 'need reassuring' that big orders will be long-term

Published On Aug 26, 2024, 2:21 AM

The defence industry has experienced significant growth since the onset of the war in Ukraine, with increased military spending among NATO countries, particularly in Europe. BAE Systems reported a 13% rise in half-year revenues, reaching £13.4 billion. The order backlog for the company is at a record high of £74.1 billion, indicating ongoing demand for defence products. Challenges persist in ramping up production, as many facilities had been underutilized for years. Experts suggest that the spike in military expenditure is unlikely to be temporary, as nations prepare for a more uncertain security landscape post-Ukraine conflict. Defence companies are encouraged to invest in new production capabilities supported by long-term government contracts, despite challenges like rising costs and recruitment difficulties. Overall, the defence sector is witnessing a surge in orders and a rise in share prices, particularly for companies like Lockheed Martin, General Dynamics, and BAE Systems.