Billions to flood Nordic defence industries through offset deals

Foreign defence suppliers hold at least 15 billion euro in outstanding industrial obligations across Denmark, Norway and Finland, tied to major procurement programmes.

For Denmark and Norway, figures obtained by Defence Nordic are based on publicly available national data and offer a rare consolidated view of the scale of offset-driven industrial activity.

- Industrial cooperation agreements remain crucial for breaking down trade barriers and giving Norwegian companies a real opportunity to compete, says Torleiv Opland, chief executive of the Norwegian defence industry association FSi.

Combined obligations to Denmark and Norway amount to 11.7 billion euro, linked to orders spanning combat aircraft, missile systems, naval platforms and land equipment.

No comparable data is available for Sweden and Finland, where differing procurement frameworks and limited transparency make the industrial impact harder to quantify.

While Finland does not disclose aggregate figures, the Ministry of Defence applies industrial participation requirements, it said in response to Defence Nordic.

- In both the F-35 and Pohjanmaa-class corvette programmes, there is a requirement for industrial participation of 30 percent of the procurement value, wrote the Ministry of Defence.

With an estimated combined procurement value of 10.8 billion euro for those two programmes, this implies industrial participation in the range of 3 to 3.2 billion euro.

Strategic tool

These figures reflect outstanding commitments to be fulfilled over time rather than completed investments, and underline a structural feature of the Danish and Norwegian defence markets: market access comes with obligations.

In Denmark, industrial cooperation requirements are embedded directly in contracts between the state and foreign suppliers, with defined financial obligations, timelines and project scopes tied to individual procurements.

In Norway, the system plays a similar role but is also used as a strategic tool for industrial development.

Taken together, the two approaches provide a relatively transparent picture of how defence spending is channelled into national industry, not as a policy ambition but as a contractual requirement.

Foreign primes entering these markets are required to establish industrial partnerships, place production locally, or integrate domestic firms into global supply chains. The result is a pipeline of industrial activity directly linked to procurement decisions.

Differing approaches

For Denmark’s defence industry the impact has been significant, even if the system has not always been applied strategically, says Joachim Finkielman, director of DI Danish Defence and Security Industries - the National Defence Industry Association in Denmark.

- The value of offset has been substantial for our members. It has been fundamental to the Danish defence industry, he says.

Outside Denmark and Norway, the picture is less clear.

Sweden does not operate a formal offset system, instead relying on procurement law, national security exemptions and case-by-case industrial arrangements. One of the main reasons is that Sweden exports more defence-related goods than it imports.

Finland, as mentioned, applies industrial participation requirements in major defence programmes but publishes little aggregated data on outcomes.

According to the MoD, there are currently three companies with industrial participation obligations in Finland: Saab for the Pohjanmaa-class corvette combat system programme, and Lockheed Martin together with Pratt & Whitney for the F-35 programme.

These differing approaches mean that, while similarly large defence investments are underway across the Nordic region, the industrial impact cannot be measured on a comparable basis.

Outstanding obligations do not automatically translate into immediate economic impact.

Denmark and Norway illustrate how defence procurement can systematically channel spending into national industry, but they also expose a fragmented regional landscape.