Ukraine war drives Sweden’s defense boom, BAE plant surges in Ornskoldsvik
A factory that once cut a third of its staff now runs three lines and 2,600 workers, as Ukraine-fueled orders push Sweden into a defense boom.
In Örnsköldsvik, a town of about 56,000 in northern Sweden, BAE Systems Hägglunds has become a symbol of how the war in Ukraine has flipped Europe’s defense economy. A plant that once cut a third of its workforce in the post-Cold War slump is now running at full tilt, adding a third production line and hiring so fast that its headcount has more than tripled to 2,600 from 800.
Managing director Tommy Gustafsson-Rask said the change began accelerating after Russia’s seizure of Crimea in 2014 and then took off again before the 2022 invasion. The company’s order book has expanded from a few hundred million dollars to about $8 billion, and Hägglunds has invested $300 million to expand capacity. “From having a typical order book of a couple of hundred million U.S. dollars, we’re now at 8 billion U.S. dollars,” Gustafsson-Rask said.
The centerpiece of that boom is the CV90 infantry fighting vehicle, a fifth-generation combat vehicle built to carry a crew of three and up to eight soldiers with equipment. The platform has sold more than 1,300 units and has more than 600 on order, a backlog that reflects how heavily European buyers now prize equipment proven in Afghanistan and Ukraine. Defense News reported that BAE Systems expected an order for hundreds of CV90 tracked combat vehicles from up to six European nations in the second quarter of 2026, with signing targeted for June.
What is happening in Örnsköldsvik reaches far beyond one factory. Sweden’s government says military defense appropriations will total SEK 175 billion in 2026, while defense spending is expected to equal 2.8 percent of GDP under NATO’s definition that year and rise to 3.1 percent by 2028. Sweden’s arms exports more than tripled to 28 billion crowns, or $3.02 billion, in 2025 from 8 billion crowns in 2015, and the country’s defense industry now employs about 30,000 people, most of them at Saab, which has an order backlog of more than 274 billion crowns.
The surge in demand has turned Sweden into one of Europe’s fastest-growing weapons hubs and helped redraw the country’s industrial map. What was once a story of contraction, layoffs and stranded capacity is now a test case for NATO rearmament, as governments scramble to rebuild stockpiles, expand production lines and lock in long-term defense capacity for a more dangerous Europe.
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