by Radu Magdin*
Romania has been here before. Not in defense, but in manufacturing / industry. Twenty years ago, it was widely seen as Europe’s low-cost periphery. Then came the automotive wave. Step by step, Romania embedded itself into some of the most demanding industrial supply chains in the world, delivering at scale for German, French, American and Turkish manufacturers. The lesson from that transformation matters today, because Europe is entering another industrial decade—this time driven by security, not mobility.
The next factory Europe needs will not be glamorous. It will produce ammunition, propellants, spare parts, maintenance services, drones and dual-use components. It will focus on volume, resilience and reliability. And increasingly, Romania looks like the place where that factory will take shape.
From automotive discipline to defense readiness
The automotive boom did more than create jobs. It reshaped Romania’s industrial DNA. Process discipline, quality control, tiered supplier ecosystems, export compliance and just-in-time logistics became routine rather than exceptional. These are not “car skills.” They are modern manufacturing skills, directly transferable to defense production—especially in areas such as electronics, mechanics, maintenance, materials and systems integration.
This is why Romania’s industrial credibility matters. Defense manufacturing follows trust more than wages. It flows to places that can meet standards, respect procedures and deliver under pressure. Romania earned that trust the hard way, inside German-led and Western-led supply chains. That credibility is now being repurposed.
Geography has reasserted itself
Security reshuffles maps. Romania’s location, once considered peripheral, has become central to Europe’s strategic calculus.
Proximity to Ukraine places Romania close enough to matter and far enough to function industrially. It is a natural sustainment and logistics zone for repairs, replenishment and production linked to the eastern flank. The Black Sea and the Danube reinforce this role, turning Romania into a logistical hinge between East and West at a time when supply routes must be redundant and resilient.
NATO has quietly but decisively reinforced this logic. Romania hosts key command-and-control structures and has become a permanent pillar of the Alliance’s southeastern posture. In defense-industrial terms, that matters: long-term security relevance translates into long-term industrial confidence.
Germany’s budgets, Romania’s credibility
If European defense has a metronome, it is Germany. For decades, Berlin’s restraint shaped the continent’s security economics. That era is over. The shift in German defense spending—both the scale and, more importantly, its durability—has reset procurement logic across Europe.
What matters is not only money, but who is trusted to produce. Here, Romania’s “German credentials” play a decisive role. Years of automotive cooperation created familiarity, standards alignment and institutional comfort. That is why German industrial players are not just selling to Romania, but increasingly looking at Romania as a production partner.
The move toward establishing strategically critical capabilities—such as propellant and ignition powder production—signals something deeper. These are not symbolic investments. They address Europe’s most acute bottlenecks. When such capabilities are placed in Romania, it reflects confidence not only in cost structures, but in governance, reliability and long-term alignment.
American interest follows NATO and regional logic
Alongside Germany, the United States is part of this industrial equation. American defense companies increasingly see Romania not only as a customer on NATO’s eastern flank, but as a credible base for regional production, maintenance and sustainment.
This logic mirrors the U.S. approach elsewhere: forward-position industrial capacity close to operational theaters, inside allied territory, with trusted partners and interoperable standards. Romania checks all those boxes. Long-standing military cooperation, growing defense budgets and deep integration into NATO planning make it a natural anchor for U.S. defense firms looking to shorten supply chains and expand European capacity.
The result is a quiet but steady alignment: U.S. technology, European financing, Romanian industrial execution.
Europe’s SAFE moment: financing meets capacity
What changes the equation further is Europe’s evolving financial architecture. The EU’s new SAFE instrument is explicitly designed to support joint procurement, industrial scaling and cross-border defense production. This is not abstract Brussels policy—it is capital looking for credible capacity.
Romania is well positioned to absorb this funding. It offers scale without Western-European cost inflation, NATO alignment without political ambiguity, and industrial depth without greenfield risk. SAFE rewards exactly this mix: member states that can turn financing into output quickly.
In this context, Romania is no longer competing only with neighbors. It is competing with time. And on speed-to-capacity, it has an advantage.
Asia’s strategic turn: from South Korea to Japan
Asia has already entered Romania’s defense equation. South Korea moved early, pairing procurement with industrial ambition and positioning Romania as a regional hub for production and maintenance. That early momentum matters—it validated Romania as a serious defense-industrial partner beyond the transatlantic space.
Now, attention is gradually shifting east within Asia itself. Japan is emerging as a potential next strategic player. Tokyo’s defense industry is undergoing a historic opening, driven by regional security pressures and a reassessment of its role as a security provider. As Japan looks to deepen cooperation with NATO countries and expand its industrial footprint abroad, Romania stands out as a credible candidate.
For Japan, Romania offers a stable EU and NATO environment, proximity to Europe’s most pressing security challenges, and an industrial base capable of absorbing high-precision manufacturing and strict quality standards. For Romania, Japanese involvement would add technological depth, diversification and long-term strategic balance to its defense ecosystem.
Beyond the West: Romania as a global platform
Taken together, these dynamics point to a broader shift. Romania is no longer attractive only as a market. It is becoming a platform—capable of hosting manufacturing, sustaining regional demand and integrating seamlessly into European, transatlantic and wider supply chains.
This diversification strengthens resilience. It reduces dependence on any single partner and accelerates skills transfer across sectors. Most importantly, it anchors Romania firmly inside the strategic core of Europe’s defense-industrial future.
Affordability with capability
Romania’s advantage is often mischaracterized as cheap labor. That misses the point. What Romania offers is affordability combined with capability.
The country has a large, experienced industrial workforce shaped by decades of export-oriented manufacturing. Engineering talent is deepening. Supplier networks already exist and know how to scale. Costs remain competitive relative to Western Europe, but the real value lies in the ability to deliver complex products under demanding standards.
Just as important is diversification potential. Automotive suppliers can pivot to defense components. Electronics firms can move into dual-use technologies. Logistics, maintenance and software capabilities can be repurposed rapidly. Romania has done industrial adaptation before—and faster than most.
The unglamorous work ahead
Becoming Central and Eastern Europe’s defense factory will not happen by default. It requires policy choices that favor continuity over noise.
Industrial governance must be stable and predictable, surviving electoral cycles and avoiding ad-hoc reversals. Infrastructure upgrades—rail, ports, roads—must be treated as part of defense strategy, not merely civilian development. And the focus must extend beyond headline deals with large primes toward building dense networks of small and medium suppliers, where most of the real industrial value is created.
The automotive playbook already exists. It now needs to be translated into a security context.
A factory by design, not by accident
Europe’s defense demand is no longer cyclical. Germany’s spending trajectory, U.S. strategic (re)alignment, EU SAFE financing, Asian engagement and the long shadow of the war in Ukraine all point in the same direction: sustained, large-scale production will be required for years.
Romania sits at the intersection of these forces. It has the geography, the credibility, the workforce and the industrial memory to respond.
The automotive boom taught Romania how to integrate, scale and deliver. The security decade demands those same skills—applied to different products, under tighter constraints, with far higher strategic stakes.
Romania will not become Central and Eastern Europe’s defense factory by accident. But if it chooses to align policy, capital and capacity, it is increasingly clear that Europe—and its transatlantic and Asian partners—are already preparing to treat it that way.
*CEO, Smartlink Communications
By: N. Peter Kramer
