Terma executive: - Europe lacks subcontractors for the defence industry

Denmark’s largest defence company, Terma, is struggling to find enough qualified subcontractors as demand for defence equipment continues to rise across Europe.

The challenge is particularly acute in specialist manufacturing processes, where suppliers must meet stringent military standards and certification requirements.

- We constantly run into challenges. For example, if we need to have components surface-treated, we cannot simply call the first surface-treatment company we find. We can only use companies that have military approval and the right production equipment, says Søren Busk, factory director at Terma Aerostructures in Grenaa.

Terma Aerostructures manufactures critical components for military aircraft, including the F-35.

In the 2025/26 financial year, Terma reported revenue of DKK 3.4 billion, primarily from defence activities, an increase of 17 percent compared with the previous year.

Busk says a broader pool of capable suppliers would help ease pressure on delivery schedules, but acknowledges that entering the defence supply chain requires significant investment and regulatory compliance.

- We would certainly like there to be more subcontractors that can and want to do this. It is something that puts pressure on our ability to deliver. But I am well aware that it is difficult and relatively costly to enter the defence industry, he says.

According to Busk, the shortage of qualified suppliers extends beyond Denmark and reflects a wider challenge facing Europe’s defence industrial base.

- There is a lack of capacity. The industry is characterised by long lead times. This is an industry that, for many years, has not faced capacity constraints. Suddenly, everyone has to start building up capacity, he says.

While governments increasingly emphasise national defence production, Busk argues that the issue should be viewed at a European level.

- From my perspective, it is not a question of whether the suppliers are Danish or not. I look at it from a European perspective. European defence production would benefit if there were more subcontractors.

Certification and approvals

Participation in major defence programmes often requires specialised certifications and export-control compliance.

- It is entirely possible to supply more standard products to the defence sector, but if you want to take part in major programmes such as the F-35 or missile programmes, you need ITAR approval from the US Department of Defense, he says.

The International Traffic in Arms Regulations (ITAR) govern the handling, export and transfer of US defence-related technologies and products.

- If, as a subcontractor, you want to enter this industry, you need to have the necessary approval and the right production equipment, says Busk.

This article was first published by Defence Nordic's affiliate publication metal-supply.dk.