From innovation to industrial capacity: The defence and dual-use opportunity

Recent events at TechBBQ, DALO Industry Days and the German-Danish Defence Network Forum highlighted a common challenge for Europe’s defence industry: how to turn technology and existing industrial capabilities into deployable solutions faster.

At TechBBQ, the focus was on the barriers facing defence and dual-use start-ups. How can they raise capital? How do they sell to the defence sector? How can civilian technologies find military applications? And how can start-ups and established companies work together to bring new capabilities into operational use?

At DALO Industry Days and the German-Danish Defence Network Forum, many of the same questions were considered from the perspectives of industry, procurement and military end-users.

Together, the events highlighted an important point: Europe does not only need more defence innovation. It needs the industrial capacity, suppliers, investment and partnerships required to turn innovation into production.

For Lolland-Falster, this creates two connected opportunities: helping regional companies assess where their existing capabilities could enter defence and dual-use value chains, and attracting companies that need industrial sites, production capacity, maritime infrastructure and access to Northern European markets.

Speed is now an industrial requirement

Europe needs to develop, test, produce and deploy defence capabilities faster.

That does not mean reducing standards for documentation, security or operational performance. It means shortening the time between identifying a military need and delivering a solution that works.

One recurring message was the importance of involving military end-users and industry earlier. Companies need to understand the operational problem before investing heavily in a product. Defence organisations, in turn, need effective ways to test new solutions before every requirement and specification has been fixed.

This requires closer cooperation between end-users, technology companies, manufacturers, investors and procurement authorities.

For businesses, speed is not only about product development. It also concerns decision-making, production capacity and the ability to respond when an opportunity arises.

Companies identifying a relevant defence application need to be prepared to investigate it, find the right partners and determine whether there is a credible route to market.

Civilian capabilities can have defence applications

Many future defence solutions will not originate exclusively within traditional defence companies.

Technologies developed for logistics, maritime operations, energy, construction, automation, communications, drones, AI or cybersecurity may also solve military problems. This is a central element of dual-use innovation.

The same principle applies to established manufacturing capabilities.

Companies working with metal, components, electronics, electrical systems, automation or industrial maintenance may already possess capabilities relevant to a defence supply chain. Entering the market does not necessarily require developing a complete defence product.

A company could instead:

• Produce components for a larger system
• Adapt an existing product to a new application
• Provide specialist manufacturing or assembly
• Support testing, installation or maintenance
• Become a subcontractor to an established defence supplier
• Develop a solution with an end-user or technology partner

The starting point should therefore not necessarily be:

“How do we become a defence company?”

A more useful question is:

“Which defence or security problem could our existing capabilities help solve?”

Direct sales are not the only route into defence

The Defence & Dual-Use Summit at TechBBQ focused specifically on the difficulties of selling directly to defence organisations.

Procurement processes can be lengthy and complex, particularly for smaller companies without previous defence contracts. Requirements may cover security, documentation, traceability, testing, export controls and financial capacity.

For many start-ups and SMEs, business-to-business sales may therefore provide a more realistic route into the market.

This could mean supplying a larger defence company, joining a consortium or working with a system integrator that already understands the customer and procurement process.

The same opportunity was visible at DALO Industry Days and the German-Danish Defence Network Forum. Larger defence companies need suppliers, production partners and specialist capabilities. Smaller companies need access to these businesses and a clearer understanding of where they fit within the value chain.

Matchmaking is therefore more than networking. Done effectively, it can connect an existing capability with a concrete commercial opportunity.

Opening the supply chain requires trust

Europe needs more suppliers and greater production capacity. At the same time, defence customers need confidence in who controls a company, where components originate, how data are handled and whether delivery can continue during a crisis.

New suppliers may therefore need to document ownership, processes, quality systems, cybersecurity, subcontractors and their ability to protect sensitive information.

Not every company needs every certification before exploring the market. However, businesses need to understand the requirements and be prepared to invest in compliance as opportunities become more concrete.

For companies considering the market, several questions are relevant:

• Is management prepared to prioritise the defence market?
• Can the company document its processes and supply chain?
• Is it willing to invest before revenue is secured?
• Can it meet demanding requirements for quality and delivery?
• Is it prepared for longer sales and approval processes?
• Would it be stronger as a supplier or partner than as a direct contractor?

Defence can create significant new business opportunities, but market entry requires preparation, commitment and a realistic understanding of the route to revenue.

Capital must follow technology into production

TechBBQ also raised another important question: who finances defence technology as it moves from development towards production?

Investor interest in defence and dual-use technology has increased. However, financing early-stage development is only part of the challenge.

As a technology progresses towards production, a company may require working capital, machinery, facilities, skilled employees and capacity to fulfil larger orders. These requirements can exceed what a young company can finance or establish on its own.

The investment case must therefore cover both technology and industrialisation.

This is where Lolland-Falster’s industrial proposition becomes relevant.

Companies moving towards production need facilities, infrastructure, suppliers and room to expand.

Existing premises at Business Park Lolland may suit companies seeking production, warehouse or technical-service facilities.

Projects requiring substantial land, maritime access or heavy production infrastructure can explore the potential of Femern Port & Industrial Park.

The Port of Orehoved and Port of Nakskov may also be relevant for maritime, logistics, maintenance and industrial activities.

The regional opportunity extends beyond attracting defence headquarters. It includes production facilities, satellite operations, warehousing, maintenance, maritime services and businesses supporting larger European defence and dual-use supply chains.

Start-ups and established industry need each other

Turning innovation into operational capability also requires stronger connections between technology companies and established industry.

Start-ups may provide specialist technologies, speed and new approaches to solving operational problems. Established companies bring production expertise, supply-chain capacity and experience with customers, compliance and large-scale delivery.

This creates opportunities for companies in Lolland-Falster.

A regional manufacturer may not have its own defence product but could have the capability to manufacture, assemble, test or maintain a solution developed elsewhere. Conversely, a company with production expertise may need a technology or defence partner to identify the right application and route to market.

The opportunity lies in combining capabilities rather than expecting every company to develop and deliver an entire solution independently.

Cross-border cooperation must lead to business

The German-Danish Defence Network Forum reinforced the importance of closer industrial cooperation between Denmark and Germany.

European defence production cannot be strengthened through national supply chains alone. Companies need to be able to work across borders, qualify as suppliers and contribute to larger programmes.

Lolland-Falster’s position between Scandinavia and continental Europe provides a relevant geographical starting point. The Fehmarnbælt Tunnel will strengthen the physical connection, but commercial value will depend on the partnerships and supply chains built around it.

For regional companies, stronger German-Danish cooperation can provide access to customers, technology partners, specialist knowledge and larger defence programmes.

For incoming investors, Lolland-Falster can provide a location from which to serve both Nordic and continental European markets, combined with industrial sites, ports and potential regional suppliers.

The objective must be commercial. Cooperation should ultimately lead to supplier relationships, product development, production and orders.

What this means for Lolland-Falster

The opportunity for Lolland-Falster lies at the intersection of business development and investment attraction.

For existing companies, the task is to identify where manufacturing, engineering, electronics, construction, logistics, maritime or technology capabilities could serve defence and dual-use value chains.

That requires capability mapping, market understanding, knowledge of compliance requirements and targeted introductions to potential customers and partners.

For investors, the proposition is different but complementary.

Lolland-Falster offers industrial sites, ports, existing facilities and space for expansion that may be relevant to manufacturers and suppliers requiring production capacity, maritime access, logistics infrastructure or a Northern European location.

Connecting these two areas strengthens both.

Incoming investors can gain access to regional capabilities and coordinated establishment support. Regional companies can gain new customers, partnerships and routes into wider European supply chains.

From capability to new business

The objective is not to label every manufacturer as a defence company.

It is to identify where there is a credible match between an operational need, an existing capability and a commercial route to market.

For regional companies, that means assessing whether existing technologies, products or production capabilities could serve defence and dual-use value chains.

For investors, it means assessing whether Lolland-Falster can provide the physical capacity, infrastructure, partners and market position required to establish and scale operations.

For Invest in Lolland-Falster, the task is to connect the two: identifying capabilities, developing relevant partnerships and helping companies move from opportunity to establishment, production and new business.

Our next steps include mapping relevant regional capabilities, strengthening knowledge of defence procurement and compliance, connecting companies with larger suppliers and technology partners, developing opportunities for testing and demonstration, and presenting relevant industrial locations to companies requiring production and logistics capacity.

Could your company’s existing capabilities serve a new market? Or are you looking for production capacity and partners for a defence or dual-use investment?

Contact Invest in Lolland-Falster for a confidential discussion about business development, partnerships or establishment opportunities in Lolland-Falster.

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Could your company’s existing capabilities serve a new market? Or are you looking for production capacity and partners for a defence or dual-use investment?

Contact Invest in Lolland-Falster for a confidential discussion about business development, partnerships or establishment opportunities in Lolland-Falster.