Advertorial Article from the Handelsblatt Journal Defense
For German SMEs, a substantial market is opening up in the security and defense industry. However, new demand alone does not create business. Those who want to enter these supply chains need machinery, equipment, and capacity, and above all, financial resources.
The new arms debate in Germany is mostly conducted in a political arena. In many companies, however, it has long since become an operational reality. With rising defense spending, not only is the need for large platforms and systems growing, but so is the demand at the industrial level: among suppliers, specialists, electronics engineers, and mechanical engineers. According to the German government, around €82.7 billion is earmarked in the core budget of the Ministry of Defense for 2026; together with the special fund, this figure exceeds €108 billion. According to financial planning, spending is projected to rise to around €152 billion by 2029.
Real opportunities for small and medium-sized enterprises
A special survey conducted by the DIHK (Association of German Chambers of Industry and Commerce) at the end of April showed that this market has long since reached the SME sector. According to the survey, one in three industrial companies sees opportunities in the security and defense industry. Already, 17 million of these industrial companies are part of the corresponding value chain. The proportion is particularly high in investment-related sectors: in the automotive industry, it is 36 million, and in electrical engineering and mechanical engineering, 25 million.
But even traditional upstream sectors like metal production and processing showed an above-average share of suppliers, at around 30 %. Even the textile industry showed a surprisingly strong level of integration, at 27 %, particularly in the production of specialty and protective textiles. This is an indication that an industrial growth area is emerging here.
For many medium-sized companies, this is a rare starting point. They possess precisely what counts in demanding supply chains: specialization, precision, flexibility, and short decision-making processes. However, these strengths alone are not enough. The ticket to this market is not technological expertise, but reliable delivery capability. Those who want to win orders must ensure quality, demonstrate capacity, maintain stable processes, and meet deadlines. Opportunities only translate into business when they can be realized on the shop floor.
Investment financing as a strategic factor
That's precisely where the hurdle lies. The DIHK (Association of German Chambers of Industry and Commerce) explicitly speaks of "high technical and regulatory barriers to entry." In other words, anyone wanting to grow into this business must invest – in machinery, equipment, more modern production processes, and often additional capacity. And not just sometime in the future, but early enough. Those who wait until demand and order volume are fully apparent risk others scaling up faster.
The problem is that investment is currently easier to demand than to finance. The Deloitte CFO Survey Spring 2026 describes an environment characterized by weak demand, geopolitical risks, and rising energy, raw material, and labor costs. At the same time, the results show that despite the high cost pressure, companies must continue to invest in growth and efficiency. The dilemma can hardly be described more precisely: companies must strengthen their production base while simultaneously managing capital responsibly.
Furthermore, money once again comes at a price. According to KPMG, the weighted average cost of capital (WACC) is 8.5 per thousand three months across all industries; in the industrial manufacturing sector, it's even higher at 9.4 per thousand three months. Therefore, anyone building machinery and equipment today must not only be technologically sound but also make sound financial calculations.
Leasing – a question of positioning
This is where leasing gains importance. Not as a sales pitch, but as an industrial tool. Because anyone wanting to grow into new markets often has to invest before sales and capacity utilization have fully caught up. Leasing can ease this upfront investment: without a large one-off payment, with predictable monthly installments, and with more flexibility for personnel, materials, and further expansion. In a market that is currently reorganizing itself, this is more than just a financing detail. It's a question of positioning. The real shift, therefore, is that it's not just technical excellence that matters, but financial flexibility. Small and medium-sized enterprises (SMEs) have real opportunities in the security and defense industry. However, they will primarily benefit from these opportunities if they translate their strengths into production capacity in a timely manner. Or, to put it another way: it's not the recognized opportunity that creates the advantage, but the financed ability to deliver.
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