Interview: Inside Sweden’s defence boom

Rising demand is accelerating Sweden’s defence sector - but also exposing strain across the industrial value chain.

The Swedish defence industry, like its Nordic neighbours, is experiencing unprecedented growth. While broadly positive, the pace of expansion is placing pressure on production capacity, supply chains and access to capital.

- There is strong political focus not only on procuring new equipment, but also on security of supply, innovation and speed of delivery says Robert Limmergård, secretary general of the Swedish Security and Defence Industry Association (SOFF).

Sweden was already closely integrated with NATO, but membership has reinforced trust in Swedish industry

Robert Limmergård, secretary general, SOFF

Sweden’s accession to NATO has further reshaped market conditions.

- Sweden was already closely integrated with NATO, but membership has reinforced trust in Swedish industry. This is affecting the sector from prime contractors through to multiple tiers of subcontractors.

Double-up

As part of a wider survey, Defence Nordic asked industry leaders in Denmark, Finland, Norway and Sweden to assess the strength of the region’s defence industrial base and the potential for deeper Nordic cooperation.

The final interview in the series focuses on Sweden - the largest defence industrial base in the Nordics.

Turnover among member companies rose by almost 56 percent from 2023 to 2024, reaching SEK 99.7 billion in 2024 - equivalent to more than 9 billion euro. This is more than double that of Norway, the second-largest market, and is largely driven by Saab, BAE Systems Hägglunds and BAE Systems Bofors.

While the primes continue to anchor growth, a broader shift is emerging across the industrial base.

- It is an entire ecosystem that is growing - not only the primes. We see a sharp increase in SMEs operating in high-technology segments. They often act as integrators and team up in larger contracts. This is new.

One example is Svekon, which in 2024 was awarded a contract by the Swedish Defence Materiel Administration (FMV) to develop and produce a new utility vessel, working alongside Alukin Boats and Nimbus Group.

- This is a technical consultancy, together with partners, delivering a physical platform. We see more integrators entering the market, says Limmergård.

Flexible industrial structure

The shift points to a more distributed and flexible industrial structure, where smaller firms take on integrator roles traditionally held by larger contractors. However, this evolution is unfolding under increasing strain.

As in other Nordic countries, the value chain is under pressure from rising demand and limited production capacity. In Sweden, access to investment capital remains a key constraint - and it starts with contracts.

- These companies are privately owned. They often require signed contracts before investing in new capacity. That creates strain in the value chain and introduces uncertainty.

Procurement practices add to the pressure. Customers continue to favour established suppliers, which, while reducing risk, can slow delivery timelines and limit opportunities for new entrants.

It is a challenge, Limmergård says.

Strategic relevance

Against this backdrop, Nordic cooperation is gaining renewed strategic relevance.

- There is an entirely new perspective on Nordic cooperation. It is no longer symbolic - it is strategic, shaped by the Arctic, Karelia and a shared threat environment, he says.

- By joining NATO, Sweden and Finland have become more operationally relevant to the alliance.

There is an entirely new perspective on Nordic cooperation. It is no longer symbolic - it is strategic

Robert Limmergård, secretary general, SOFF

Limmergård describes the Nordic region as the first of several concentric circles for Swedish industry, characterised by high levels of trust, similar political systems and competitive companies.

- When we ask our members which countries they find most interesting, they point to the Nordics and the Baltics. There is a clear and deep-rooted interest in working together and developing solutions.

In Finland, the industry association expects fourfold growth to 12 billion euro by 2030. In Sweden, Limmergård also anticipates significant expansion, though at a more moderate pace.

- Turnover will increase and is likely to peak around 2030. Our members currently hold close to 40 billion in orders, which is high - but whether this can be sustained over the longer term is less certain, says Robert Limmergård.