The importance of the development of the Spanish Defence industry
The Association of Companies Contracting with Public Administrations (AESMIDE) held the event ‘40 years at the service of the defence industry’ in Madrid to celebrate its 40th anniversary and to analyse in depth the situation of the defence sector in Spain and public-private cooperation in this field.
Through this meeting organised by AESMIDE, various authorities and experts on the subject analysed how the business sector has evolved in the Defence environment. They addressed issues such as dialogue and advice together with public-private collaboration in a sector as important as defence.
In recent years, Spain has invested in improving the quality of life of citizens and the Armed Forces, modernising and professionalising Defence.
Technological planning by the Ministry of Defence together with the Armed Forces has made it possible for those needs of yesteryear to become capabilities through integration and cooperation with industry. The private sector and the companies linked to AESMIDE have contributed to satisfying these needs with maximum efficiency and quality, as pointed out by the organising entity.
The evolution of AESMIDE has been parallel to the transformation of the Armed Forces and these have been a reflection of the evolution of society, with a capacity to adapt to the needs of companies.
This was AESMIDE's 22nd forum in its 40 years of existence. And it came at a time of great development of the Spanish Armed Forces, with more than 3,600 soldiers deployed abroad in 2024, a record figure so far. AESMIDE and more than 70 associated companies have played a key role in this process of development and modernisation, providing logistics and equipment for the members of the Spanish Army.
‘Defence is essential and companies are increasingly providing more investment and innovation in defence,’ said Gerardo Sánchez Revenga, president of AESMIDE.
For her part, María Amparo Valcarce García, Secretary of State for Defence, said that ‘the fundamental work of AESMIDE generates synergies and helps to provide the Armed Forces with the needs they require’.
Gerardo Sánchez Revenga also pointed out in his speech that it is important for Defence to be aware of the business fabric and for companies to be aware of the needs of the Armed Forces and the Ministry of Defence.
For her part, Amparo Valcarce pointed out that the defence industry must be ‘innovative, solid and competitive’.
With regard to the current geopolitical situation, the Secretary of State for Defence indicated that Spain is committed to Ukraine and to the search for peace in the Middle East. She also recalled that Spain is an essential player in ‘contributing to stability in the Sahel and North Africa’.
The Secretary of State also added that the new European Commission ‘reinforces its commitment to peace and security in Europe and the world’.
With regard to the European Defence Industry Strategy presented in 2023, Amparo Valcarce reiterated the Spanish government's commitment to the gradual growth of investment in defence. The challenge is to reach an investment of 2% of Gross Domestic Product (GDP) in defence by 2029.
Amparo Valcarce also highlighted the effort made, given that in 2023 the defence budget growth was 26 %, and that by 2024 a contribution of 15 billion euros is expected.
According to the Spanish Secretary of State for Defence, all of this will provide the Armed Forces with the capabilities they need and will allow for an increase in Spanish and European technological capacity, as we should be talking more and more about the Spanish and European defence industry. Amparo Valcarce also indicated that industry and the technology sector must supply the defence sector in the necessary quantities and within the appropriate timeframe, with innovation and competitiveness as the cornerstones.
The Secretary of State also called for boosting national industry as a beneficiary of the planned investment in the sector: ‘I would like to ask industry to have the capacity to absorb this investment in defence with national capabilities’. She insisted on the need to be competitive, since the competitiveness of companies ‘will allow them to position themselves successfully’. A scenario that will lead to job creation, talent retention and a beneficial fiscal return for the State's coffers.
‘We cannot have a strong defence without a strong defence industry,’ said Amparo Valcarce, who spoke of the existing commitment to invest more than 43 billion euros and create more than 73,000 jobs. This is an important objective for the industry and for the Ministry of Defence, with the challenge of integrating new technologies such as artificial intelligence and robotics.
Amparo Valcarce spoke of the need for public-private collaboration in new technologies at the service of the Armed Forces and the Ministry of Defence.
In his turn, Jordi García Brustenga, Director General of Industrial Strategy and SMEs of the Spanish Ministry of Industry, gave the lecture ‘Industry and Innovation’.
Jordi García Brustenga alluded to the importance of the current geopolitical situation that threatens international security. ‘We are entering a new era of growth and development of opportunities for the sector’ due to the fact that security and defence increase their value in times of conflict, with the increase in resources that this entails, said García Brustenga, who added that conflicts have been joined by other setbacks such as pandemics, global trade wars and the risks that threaten supply chains. Eventualities that make everyone more aware of domestic production and the need for access to critical products, including defence products.
For the Director General of Industrial Strategy and SMEs, the value chain involved in securing critical products in a crisis makes it important to develop the defence industry. ‘One day, borders may close and we must have everything inside,’ explained Jordi García Brustenga.
The representative of the Ministry of Industry alluded to the need to increase industrial competitiveness, with a ‘green ambition’, but oriented towards the competitiveness of industry, and highlighted the importance of digitalisation and ‘products made in Spain’. He alluded to industrial innovation within the new law for the national industry strategy and strategic autonomy with three-year plans. García Brustenga also spoke of the need to develop an industrial plan with more funding.
The Director General for Industrial Strategy and SMEs alluded to the concept of Strategic Autonomy, which consists of having industrial capacities to generate critical products at specific times. To achieve this, it would be necessary to define what products are needed and what the industrial capacities are. According to the Ministry of Industry, Spain does not produce or export more than it imports 60 of all the products listed as strategic products. It would be necessary to see who could produce these products in Spain in times of crisis or even non-crisis, to see who can produce them and who has the talent to do so in the country.
This was followed by the round table discussion entitled ‘Defence Economics’, with the participation of Bruno Pérez Vázquez, ABC's Economics editor, as moderator, Antonio Fonfría Mesa, Professor of Applied Economics at the Complutense University of Madrid, Major General José Luis Sánchez Martínez, Director General of Economic Affairs of the Ministry of Defence, Javier Torres Seco de Herrera, Director of the Defence and Interior Area of INETUM, and Lorenzo Pardo, Chief Financial Officer of Oracle.
Antonio Fonfría said that the ‘size of the Spanish defence industry is small compared to other European countries and has potential for growth’. He also explained that the basis for growth at the macro and industrial level is the capacity for innovation, because it provides the capacity for competitiveness’.
According to the professor of Applied Economics at the Complutense University, it is necessary to ‘look for more productivity’.
Major General José Luis Sánchez Martínez indicated that we are currently at 1.17% of GDP for defence in Spain, compared to the 2% expected for 2029.
The Director General of Economic Affairs of the Ministry of Defence explained that funding depends on the national economic state and that the budget cannot be touched now. He also explained that previously it had been regulated in order not to spend, and now it would be necessary to regulate in a more agile way in order to be able to spend more, with the objective that the industry would grow.
Sánchez Martínez explained that the defence industry and the administration must do their homework well in order to be competitive.
For his part, Javier Torres Seco de Herrera pointed out that companies want certainty because it ‘helps them a lot’. ‘If we have budgets that guarantee investments in 4 or 6 years, the industrial base will allow large corporations and the rest of the business fabric to make plans,’ said the director of the Defence and Interior Area of INETUM. ‘To be competitive, you have to have something to offer and do it in the country’, he explained.
Lorenzo Pardo spoke of the main objectives of private enterprise, which are to adapt and orientate itself. For Oracle's CFO, the company is trying to adapt because investment flows are not easily predictable in Defence.
The panel discussion also touched on the importance of the concept of Strategic Autonomy. Europe must focus on security and defence, improving competitiveness. The fact that Europe is the world's second largest investor in defence and that 63% of this investment remains in the United States, with very little going to European suppliers, was highlighted.
Antonio Fonfría highlighted the historical dependence on the United States in security matters and explained that it is difficult to break out of this dependence.
‘There is fragmentation in the EU’, said the professor from the Complutense University of Madrid, who called for more trust and cooperation between European countries.
For his part, Admiral Aniceto Rosique Nieto, Director General of Armaments and Material of the Ministry of Defence, was in charge of giving the lecture ‘Needs vs. Capabilities’
Aniceto Rosique explained the new organisation in Defence, which allows for a new distribution of tasks. The Director General of Armaments and Material of the Ministry of Defence alluded to the reduction of bureaucracy and the need to favour cooperation between ministries and university and research centres.
Aniceto Rosique spoke of the need to have a defence culture and a defence industrial culture, and addressed the Spanish defence industrial strategy, integrated with the European, NATO and United States strategies.
The round table discussion entitled ‘Industry's Response’ then featured Miguel Ángel de la Cruz, President of the Association of Defence Journalists, as moderator, Alberto Fabra Prat, Chairman of the Defence Committee of the Spanish Congress of Deputies, Captain Manuel Ángel Bouza, representative of SDG PLATIN of the Ministry of Defence, Juan Antonio Tébar Chumillas, Director of Innovation Policies of the Centre for Technological Development and Innovation (CDTI), Carlos Calvo González-Regueral, Director of Strategies and Business Development of GAHN, and Jesús Abraham Fernández, Head of Innovation and Business Development for Defence at Telefónica.
Alberto Fabra outlined the objectives of the Congressional Defence Committee, which are to disseminate the culture of Defence, improve the living conditions and salaries of members of the Spanish Armed Forces and help the sector.
The Chairman of the Congressional Defence Committee indicated that the Committee is there to ask questions of the Ministry and debate motions, but that it is also there to offer its services to the defence sector. ‘We want to help and generate parliamentary diplomacy to highlight the value of what is done every day abroad,’ said Alberto Fabra.
For his part, Manuel Ángel Bouza recalled that Spain's Industrial Strategy came into being in 2023, alluding to the concepts of Strategic Autonomy and Europe of Defence and the consolidation of the Spanish Defence technological base.
Meanwhile, Juan Antonio Tébar Chumillas indicated that the CDTI sees Defence as ‘the end of the chain in which we want to be a transmission axis for companies’. He also stated that funding is necessary in this area.
Meanwhile, Carlos Calvo González-Regueral said that industry is now being asked for more ‘agility and immediacy’ because on the battlefield they cannot wait to receive certain things. The GAHN representative highlighted the need for greater production capacity, being ‘stricter in terms of deadlines, costs and requirements’.
‘We must develop technology and incorporate it quickly,’ said Carlos Calvo, who pointed out that adversaries introduce technology more immediately into combat systems.
Finally, Jesús Abraham Fernández stressed the importance of the technological and industrial base of defence and of the ‘New Defence’ because we must be ‘agile’ for the new changes that are taking place.