- Ukraine is keen to attract Western defence companies to Ukraine to help scale up supply and maintenance capabilities
- Companies like BAE Systems, Northrop Grumman, Rheinmetall, and Saab are among the more than 20 already established in-country
- Russia is continuing its bombardment of Ukrainian cities, focussing against on energy infrastructure as winter close in
Amid the destructive reality of the Ukraine-Russia war, opportunity exists for overseas defence companies to locate key manufacturing, maintenance, and supply capabilities into Ukraine, which is keen to attract Western investment.
Detailed in a 22 October 2025, release from Ukraine’s Ministry of Defence (MoD), it was restated that 25 international companies were listed as “progressing through various stages of localising their operations in Ukraine”, part of an ongoing ‘Build in Ukraine’ initiative.
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This reiterates a similar call made in the previous month on Western defence companies moving into Ukraine.
Through the initiative, the Ukrainian government is encouraging foreign defence companies to establish production facilities in Ukraine, partly to reduce the logistics line to supplying and maintaining its own forces, but also with an aspiration to make Ukraine a “full-fledged player” in the global defence market.
According to the MoD, a number of Western companies are currently operating or expanding in-country production, including BAE Systems (joint production and maintenance of L119 howitzers; Rheinmetall (establishment of repair and production facilities for armoured vehicles; Saab (agreements on joint production of air defence systems; and Northrop Grumman (agreements on joint production of ammunition).
Ukraine’s MoD added that the country was attracting companies specialising in uncrewed systems, cybersecurity, and counter-drone capabilities.
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By GlobalDataIn September 2025, Sergiy Boyev, Deputy Minister of Defence of Ukraine, met with German company Flensburger Fahrzeugbau Gesellschaft (FFG), to discuss a joint project on armoured vehicle repairs that includes an in-country repair hub.
Specifically, the project relates to the repair of Leopard main battle tanks by FFG in Ukraine, which have been donated in significant numbers by European allies.
The same month Ukraine’s Minister of Defence Denys Shmyhal said the Ukrainian government would offer alternative structures to accommodate Western defence companies seeking to establish themselves in Ukraine.
“We offer our partners various models of cooperation, including the ‘Danish model’ and the ‘Build with Ukraine / Build in Ukraine’ initiative. The priority is that the main share of companies’ production be directed to the needs of the Ukrainian military,” Shmyhal stated.
In addition, in order to “minimise risks” for investors and joint ventures, Ukraine will establish Defence City, a legal framework that provides tax incentives, streamlined customs procedures, expanded state financial support, among other benefits.
“We call on foreign companies to invest in Ukraine and set up their production here,” Shmyhal said at the time.
During a trip to Ukraine in September, Army Technology reported the establishment of joint ventures was a prime way for Ukrainian defence companies to work with Western counterparts in building up internal capacity while also accessing the wider European defence market.
Russian bombardment of Ukraine continues
With the coming winter bringing a change in conditions on the ground, Russia has kept up its bombardment of Ukrainian cities, using Shahed drones, and cruise and hypersonic missiles.
On 26 October, Ukrainian President Volodymyr Zelenskyy said over the previous week more than 1,200 attack drones and missiles had been launched against Ukraine. Through September and October Russia has struck major cities throughout the country, including western regions such as Lviv.
Meanwhile in a 24 October intelligence update from the UK Ministry of Defence (MoD), it was revealed that North Korean (DPRK) military personnel had been conducting reconnaissance operations to enable Russian strikes on Ukrainian forces in the Kursk region.
While DPRK forces were primarily being used for offensive assaults on Ukrainian positions, it was described as “highly likely” that they were also adapting to use tactical drones, which are emerging as a dominant capability on the battlefield.
The UK MoD added DPRK forces has sustained around 6,000 casualties in operations against Ukraine, more than half of the 11,000 personnel originally sent by Pyongyang.
