Honeywell to develop European defense products as NATO spending jumps 20%

Honeywell Aerospace will develop defense products for Europe designed without restricted US technologies, tapping into a surge in allied spending that reached $54 billion in US equipment procurement last year.

Honeywell Aerospace plans to develop additional defense products free of restricted US technologies, responding to a surge in European defense spending that has created demand for components not subject to potential American export roadblocks.

"This new approach — NATO 3.0 — moves the Alliance toward greater burden sharing and self-reliance," the White House said in a fact sheet following the NATO 2026 Ankara Summit, where allies announced $3 billion in new defense deals.

NATO allies committed to spending 5 percent of their gross domestic product on defense by 2035, the most ambitious pledge in the alliance's history. Allied investment jumped more than 20 percent last year alone, with members spending $120 billion more than in 2025. In 2025, NATO allies procured more than $54 billion in defense equipment from US companies, supporting nearly 200,000 American jobs.

The move by Honeywell reflects a broader recalibration of the transatlantic defense industrial base, as European primes seek supply chains that can operate independently of US export licensing. The strategy positions Honeywell to capture a share of the fastest-growing defense market outside the US while insulating itself from potential export control disruptions.

European Supply Chains Take Shape

At the Ankara Summit, Lockheed Martin announced plans to establish a Patriot Advanced Capability-3 missile sustainment facility in Europe and partnered with Rheinmetall to produce Army Tactical Missile Systems on the continent. Northrop Grumman signed letters of interest with 10 nations to purchase MQ-4C Triton drones, while Germany and the Netherlands committed to buying Raytheon's Stinger missiles with European production as a condition, aiming to double output by 2030.

Anduril committed to provide Poland with Barracuda-500 missiles, establishing a new production line in the country. Boeing and Rheinmetall-Italy are exploring a partnership for Small Diameter Bomb production and sustainment. The White House said procurement coalitions would allow allies to combine demand signals, lowering unit costs and closing capability gaps.

The push for European production capacity extends beyond prime contractors to the supplier base. Honeywell's strategy of designing products without restricted US technologies allows European defense primes to source components that avoid potential delays from US export licensing — a growing concern as the Department of War reviews US force posture in Europe and returns troop levels to pre-2022 numbers.

The last time US defense suppliers faced similar pressure to localize production was during the Cold War, when co-production agreements for the F-16 and Patriot systems established European manufacturing lines that operated for decades. The current push is broader in scope, spanning missiles, drones, munitions, and now components — the building blocks of the defense supply chain.

For Honeywell, the strategy opens a new revenue stream tied to rising European budgets while reducing exposure to US export control risk. The company's aerospace division supplies engines, avionics, and mechanical systems for military platforms including the F-35 and C-130. With European defense spending on track to exceed 5 percent of GDP by 2035, the addressable market for US suppliers willing to localize production is expanding rapidly.

This article is for informational purposes only and does not constitute investment advice.