IN Brief:
- Multi-year US missile frameworks, and White House pressure on shareholder payouts, signalled procurement moving from annual buying into capacity governance.
- Europe’s rearmament remained uneven: new approvals and state stakes on one hand, hard delays in energetics and fill lines on the other.
- Counter-UAS, autonomy, and defence space kept industrialising — lasers, low-cost guided effects, expendable engines, and proliferated satcom contracts all moved further into serial reality.
February’s industrial defence story was still being written by the battlefield even before the month’s late escalation elsewhere. Russia’s winter campaign against Ukraine’s energy system continued to push drones, missiles, interceptors, and spares into the same uncomfortable position it has since the conflict began: one in which operational endurance is being decided by factory throughput and logistics discipline more than by platform prestige. Kyiv reported repeated large-scale strike packages through the month, including attacks involving hundreds of drones and dozens of missiles aimed at energy infrastructure and transport nodes.
The US response to that reality has become increasingly structural. Raytheon’s February framework agreements with the Department of War were framed as a deliberate re-engineering of demand certainty to unlock upstream investment, with published output targets that read like a mobilisation spreadsheet: Tomahawk rising towards more than 1,000 annually, AMRAAM at at least 1,900, and SM-6 above 500, alongside increased SM-3 interceptor production. It is difficult to overstate what that implies for the supplier tiers — and for competitors trying to bid into a market driven by capacity.
That shift is being reinforced, bluntly, from the centre. The Pentagon reportedly prepared a list of underperforming contractors who could face restrictions on buybacks and dividends under an executive order linking shareholder payouts to delivery and capital investment, with remediation plans and potential enforcement actions sitting behind the rhetoric.
Europe’s month looked like the same industrial logic, filtered through a more complicated political and regulatory reality. Italy approved the start of production at Rheinmetall’s Domusnovas site in southern Sardinia after environmental compliance was confirmed, with Rheinmetall stating it planned to begin production shortly and noting an investment of around €50m. The delay that preceded the approval screams as loudly as the approval itself — a reminder that Europe can now talk about rearmament funding with growing confidence, while still treating defence production sites as planning disputes to be managed rather than strategic assets to be accelerated.
The UK’s own munitions picture remained more awkward. BAE Systems’ new Glascoed explosives facility, intended to support a major uplift in 155 mm shell output, has still not opened, with the delay linked to a mid-build decision to double capacity and an ongoing testing phase. In practical terms, this is what “surge capacity” looks like when it collides with commissioning risk, programme governance, and the reality of physical site expansion.
On land systems, Europe’s consolidation instincts continued to surface in more explicit form. Reportedly, Germany considering a minority stake in KNDS — framed around maintaining influence as the Franco-German group moves towards a high-value IPO — which is less a corporate finance footnote than it is a strategic posture. Governments want production and IP inside their own control envelope, and they appear increasingly willing to pay for that leverage.
Lasers, low-cost effects, and the infrastructure layer
Counter-UAS is still where manufacturing is doing the most obvious work. February saw EOS open a Singapore production centre as an Asian hub for manufacturing, integration, and test of high-energy anti-drone lasers, including 100 kW-class systems for export customers, with the company pushing the per-shot economics hard. Whether every operational user agrees with the cost claims is secondary; the industrial direction is the story — directed energy moving from demos into exportable, supportable product lines with regional manufacturing footprints.
In parallel, low-cost precision continues to win because it is manufacturable in volume. BAE Systems’ US business marked delivery of its 100,000th APKWS laser-guidance kit in late February, underlining the continued pull of “good enough” guided effects that can be fired, stocked, and replenished without consuming the high-end missile inventory that governments increasingly treat as politically sensitive as well as militarily finite.
Hypersonics also edged closer to normal procurement mechanics. The UK MoD announced a £12m contract with Amentum UK to accelerate hypersonic missiles and systems, while Amentum described an Industry Mission Partner model focused on programme support and sovereign capability building. Arguably the most notable thread here is the institutional intent to lock engineering, test planning, and integration discipline early.
Autonomy’s industrial problem also sharpened in February, in the least glamorous place: engines. The US Air Force moved propulsion development for Collaborative Combat Aircraft, with Honeywell and the GE Aerospace–Kratos team both winning awards tied to small-thrust-class designs and explicit “aggressive cost” language. That is procurement admitting that autonomy only becomes operationally meaningful when the bill of materials and the production line support it.
As if it had not brought us enough change, February also saw the regulatory plumbing begin to shift. The European Commission amended the EDF 2026 work programme to simplify procedures and expand investment areas, including STEP-related changes designed to ease access to complementary funding — not thrilling, but relevant if Europe is serious about turning fragmented R&D into industrial capacity.
February also reminded UK aerospace that industrial uncertainty still comes with a price. Late-month reporting suggested Treasury sign-off for a £1bn medium-lift helicopter deal at Yeovil was imminent, with the political and workforce implications made uncomfortably explicit by the time pressure around the site. Even when the decision finally lands, the damage from indecision does not neatly unwind.
February’s wildcard
We didn’t anticipate rolling this section forward for a second month, but these things can rarely be accurately anticipated.
The month’s “and then everything changed” moment arrived on 28 February, when the United States and Israel launched major strikes on Iran, with Iranian state media confirming the death of Supreme Leader Ali Khamenei, and Tehran responding with missile attacks across the region alongside threats around the Strait of Hormuz. Whatever view one takes of the politics, the industrial implication is immediate: high-tempo operations do not ask permission from stockpile plans, and they do not wait for new capacity to come online.
Early indications already point to that collision between strategy and inventory. Reports indicated that the Trump administration planned to convene major defence contractors at the White House to press for accelerated weapons production as the Pentagon works to replenish supplies after the Iran strikes, alongside discussion of a supplemental budget request of around $50bn to replace munitions expended in recent conflicts. We can read the urgency and the conflict between the lines simply by viewing the mix of weapons used in the Iran operation. Reportedly, this included Tomahawks, fighter aircraft, and low-cost one-way attack drones — the sort of campaign profile that burns through high-end and affordable mass inventories in parallel.
This makes February’s industrial announcements read differently in hindsight. Raytheon’s multi-year missile frameworks, the Pentagon’s pressure on payouts and delivery schedules, European moves to unblock munitions production, and the steady industrialisation of lasers, engines, and satcom infrastructure were already part of a long arc. The Iran war simply removed the remaining ambiguity about pace: capacity-building is no longer being justified as prudence. It is seemingly now the price of staying in the fight.
