NDS has interviewed Ann Lundberg, Senior Analyst at the Swedish Defence Research Agency (FOI – Totalförsvarets forskningsinstitut), about a new report that for the first time maps the Swedish defence industry. The report consolidates previously isolated data and reveals, among other things, a sharp increase in defence materiel sales, but also that the overwhelming majority of companies in the sector are small and do not export at all.
– The origin of the idea actually came from writing another report in June entitled Swedish Competitiveness on the Defence Market, says Ann Lundberg.
There was a need for background information on who the Swedish defence companies actually are, but the material proved difficult to gather. This led to the mapping exercise becoming its own project in a second phase, not least because the Ministry of Defence had also requested the underlying data.
– These various sources have existed previously, for example at the ISP (Inspectorate of Strategic Products), via the Ministry of Foreign Affairs, and at the Swedish Defence Materiel Administration (FMV), which holds its own internal compilations based on data from its business systems, Ann Lundberg continues.
The industry association SOFF (Swedish Security and Defence Industry Association) also publishes its own statistics, but no one had previously attempted to combine these sources to create a comprehensive picture of the defence companies. According to Lundberg, the information had previously only been available in fragments and in isolation.
When data from sources including the ISP, FMV, and SOFF was compiled, just under one thousand Swedish defence companies were identified. A notable finding was how little these sources overlapped with one another.
– I was very surprised when I saw that, because I had assumed there would be considerably more overlap, explains Ann Lundberg.
The reasons for the discrepancy lie in how different actors define the market. Industry associations gather companies that wish to be active in the security and defence market in a broader sense. FMV primarily registers prime contractors, while the ISP focuses specifically on war materiel, which most often involves the manufacturing industry. What was particularly interesting about this was that it illustrates the difficulties in obtaining a consolidated picture of the defence companies.
The report further shows that many prime contractors are small companies. This may have practical consequences for the country's supply chains.
– One can assume that many of those prime contractors are service companies, while the small manufacturing companies and workshops are primarily subcontractors, says Ann Lundberg.
The service companies proved to be financially strong across several key metrics, while larger system-integrating companies displayed lower levels of solvency.
– The larger ones are more vulnerable to the need to invest in infrastructure now that production capacity must be increased, explains Ann Lundberg.
The fact that the large companies are now taking on debt suggests they are making significant investments and are in a growth phase, according to the report.
The sector is in strong expansion, driven by the exceptional security environment. Defence materiel sales have increased by fifty per cent since 2020, and close to one hundred new companies have established themselves in the market. Despite Sweden being known as an exporting nation, the statistics show that two thirds of defence materiel-producing companies do not export at all.
– Both things are true. We are a major exporting country because our large companies export to a significant degree, notes Ann Lundberg.
The majority of companies engaged in manufacturing are further down the supply chains, supplying Sweden's large defence companies rather than exporting directly themselves.
– I think this picture becomes more balanced in relation to what one receives from SOFF and the ISP, she says.
A large share of exports is consistent with reality, but at the same time there is a very large proportion of companies that operate exclusively at the national level, Lundberg argues in her report.
When it comes to the European defence industry and initiatives such as the European Defence Fund (EDF), relatively few Swedish small and medium-sized enterprises participate as contractors.
– We have given some thought to why that is the case. One hypothesis is that it may be a structural issue — that it is primarily the system-integrating companies that enter the EDF, explains Ann Lundberg.
The large players have the resources required and are often the ones invited into projects. The same tendency, whereby the proportion of smaller companies is low, is also visible in other defence industry-heavy countries such as France, Germany, and Italy.
Breaking into the defence market as a new start-up requires time and perseverance.
– It is difficult to enter the defence market. It is an industry built on trust in itself, and it also has a great many rigid structures, since there are often long-standing dependencies between companies and the state once a procurement has been made, she says.
The easiest way to establish oneself is within new areas where established defence companies do not yet have a presence.
New companies frequently emerge within these niche technology areas, but the trend is that the larger players eventually acquire them.
– Either the influx of new expertise occurs through partnerships, or a company may be acquired. Contacts between new and established players can arise through smaller companies pitching themselves at various meetings and trade fairs, says Ann Lundberg.
The mapping exercise is seen as an important first step, but further analysis is needed to fully understand the supply chains. The government presented a defence industry strategy in June 2025 that demonstrates political will to invest in defence companies, while also placing demands on research and development.
– You need this foundational knowledge in order to get a sense of where exactly we should be focusing our efforts, she says.
To follow up on the strategy, Lundberg argues that more in-depth studies of subcontractors are required, as it is currently primarily the upper tiers of the industry associations that are visible in the statistics. Going forward, she wishes to examine cross-tabulations more closely in order to understand how companies are distributed between large and small players across different areas of activity.
– There is also value in looking more closely at, for example, those companies that exclusively export their war materiel. What type of companies are they? Are they supplying foreign prime contractors, or are they exporting to Swedish prime contractors' operations abroad? asks Ann Lundberg.
The compilation is a form of pilot study that can serve as a foundation for future research.
– It falls to the government and the Ministry of Defence as to whether they wish to proceed with this type of follow-up, but if one wants to understand how developments are progressing and how the structure of the sector is changing, it must be monitored in some way, concludes Ann Lundberg.