Sweden's Defense Industry Boom: How a Small Town Became a Major Arms Manufacturing Center in Europe
The war in Ukraine has transformed Sweden's defense industry into one of the most dynamic arms production centers in Europe, a change that is particularly visible in the northern town of Ornskoldsvik, where armored vehicle maker Hagglunds is based, Reuters reports.
Gripen fighter jets SHUTTERSTOCK PHOTO
The company, owned since 2004 by the British giant BAE Systems, has an unusual history: it started in the late 19th century as a family business in the furniture business, later moving into the production of buses, trams and planes, before turning to armored vehicles in the 1950s.
After the Cold War ended, demilitarization hit the company hard. In 2012, when Tommy Gustafsson-Rask became CEO of BAE Systems Hagglunds, his first decision was to cut staff by 30%.
The situation has changed radically in the last decade. “I think the annexation of Crimea in 2014 was when we saw something start to happen,” he told Reuters from the Hagglunds test track in Ornskoldsvik, adding that “it all blew up right before the Russian invasion of Ukraine in 2022.”
The growth is spectacular: “From a typical order book of a few hundred million dollars, we have now reached $8 billion. It's a huge development,” said Gustafsson-Rask.
Sweden's arms exports have more than tripled to 28 billion kroner (about $3.02 billion) in 2025, up from 8 billion in 2015. The defense industry employs about 30,000 people, mostly at Saab, known for the Gripen fighter jet and the A-26 submarine.
Hagglunds invested $300 million to expand production capacity, including adding a third manufacturing line. Production has increased by 400% since 2020 and the number of employees has tripled to 2,600, up from 800 previously, making the company the largest employer in the city of just 56,000 inhabitants.
A battle-tested vehicle, the engine of growth
The engine of this growth is the fifth-generation CV90 infantry fighting vehicle. With a crew of three and the ability to carry up to eight soldiers along with equipment, the model has sold more than 1,300 units, with more than 600 already on order.
Tested on the battlefield in Afghanistan and currently in use in Ukraine, the CV90 is considered one of Sweden's most successful exports. Hagglunds hopes to win new contracts for another 500 units to reach five European countries later this year.
Feedback from Ukraine is mostly positive, although drones remain a serious threat. However, according to the company, no Ukrainian soldiers have died inside a CV90. Ukrainian President Volodymyr Zelensky personally thanked Gustafsson-Rask during a visit to Sweden.
“He came up to me, hugged me and told me that our CV90s are saving the lives of our soldiers, and now I'm getting goosebumps,” he said.
A CV90 vehicle costs about $10 million and has been sold to ten European countries. Sweden, which was militarily neutral for more than two centuries before joining NATO in 2024, is currently the European Union's seventh-largest arms exporter, according to the Stockholm International Peace Research Institute.
