Civil to military manufacturing transition: Opportunities and challenges

United States: Reshoring and modernization of manufacturing base

In the United States, President Trump has made it a key objective to revive the manufacturing sector. The Trump Administration’s “Made in America” trade strategy is intended to “reshore” manufacturing facilities and jobs to the United States from China and other countries. Trump has also emphasized the need to modernize the U.S. military, including pushing for increased defense spending and development of next-generation military technology. Soon after taking office, Trump issued an Executive Order setting forth a policy to “accelerate defense procurement” and “revitalize the defense industrial base.”

Since then, the U.S. government has taken steps to expand U.S. defense manufacturing capacity, including increased appropriations for defense procurement and industrial base support, expanded use of Defense Production Act (DPA) authorities, and procurement reforms intended to accelerate acquisition timelines and provide manufacturers with longer‑term demand certainty. These measures are designed to incentivize private‑sector investment and facilitate the conversion or expansion of existing commercial manufacturing capacity for defense and national security applications. These developments have been accompanied by proposals for new air and missile defense initiatives, including a “Golden Dome” system modeled on Israel’s Iron Dome.

European Union: Rapid expansion of defense spending and production

In the European Union, the policy direction is now moving toward rapid expansion of defense industrial capacity, increased joint procurement, and stronger localization of supply chains. Since Russia’s 2022 invasion of Ukraine, the EU has moved beyond traditional market coordination and has begun using dedicated defense-industrial instruments to stimulate production and demand, including the Act in Support of Ammunition Production (ASAP) to ramp up ammunition and missile-related production capacity and European Defence Industry Reinforcement Through the Common Procurement Act (EDIRPA) to incentivize joint procurement by Member States. In March 2025, the European Commission also presented its White Paper for European Defence – Readiness 2030 together with the “ReArm Europe / Readiness 2030” package, which is intended to mobilize significant additional defense investment and further strengthen the European defense technological and industrial base. These measures increase the commercial logic for civilian manufacturers to assess whether existing facilities, tooling, workforce, and supply chains can be adapted for defense output.

Germany is likely to remain a focal point of this trend. The German Federal Ministry of Defense’s 2024 National Security and Defense Industry Strategy explicitly frames industrial capacity, resilience of supply, and faster procurement as strategic priorities. At the same time, German commercial industry is under pressure from weak demand, Chinese competition, and broader restructuring dynamics.

Against that backdrop, several European automotive manufacturers are reportedly pursuing plans to transition idle or underused civilian industrial capacity to produce weapons systems. This trend is playing out across a range of other industries too, particularly in sectors with transferable manufacturing capabilities such as aircraft, rail, heavy engineering, electronics, and advanced materials.

United Kingdom: Leveraging civil supply chains for military programs

The UK, with its robust suite of national defense primes and a less vertically integrated automotive sector, is responding to the current environment by encouraging the defence prime contractors to consider integrating components from the wider civilian supply chain. It is also looking to regional initiatives to help transition skilled workers from automotive to defense and aerospace roles, addressing labor constraints in high-precision and composite manufacturing.

Transitions to military production generate broad range of legal considerations

Across all of these jurisdictions, the shift from civil to military manufacturing will require companies to navigate a complex legal and regulatory landscape. Manufacturers with little to no experience in the defense arena will be exposed to new risks and will be subject to myriad additional requirements. Relevant laws and regulations may also be administered by multiple different government agencies across multiple jurisdictions. Key legal and regulatory considerations for companies considering entry into the defense manufacturing space include:

• Government contracting/public procurement. Transitioning into defense manufacturing subjects companies to specialized government contracting and public procurement regimes that impose heightened compliance obligations, increased costs, and greater audit and enforcement risk, as well as requirements to mitigate foreign ownership, control and influence. In the United States, these requirements arise under the Federal Acquisition Regulation (FAR) and defense-specific regulations, while, in the UK, single-source defense contractors are subject to stringent reporting, open-book audit, and profit controls under the Single Source Contracting Regulations 2014. The EU and its Member States have adopted complex defense procurement rules
• Unique government financing opportunities. Governments may offer targeted financing and incentive programs to support the conversion of civilian manufacturing capacity to defense and national security use, including loans, price support agreements, and multiyear contracting commitments. These opportunities require careful structuring to address defense procurement rules and other applicable laws.
• Export controls. Transitioning to defense manufacturing subjects requires companies to comply with stringent export control regimes. In particular, U.S. manufacturers must comply with International Traffic in Arms Regulations (ITAR) registration, licensing, and technology-control requirements, while the EU and the UK have separate, but similar, regimes.
• IP considerations. Companies transitioning from civil to defense manufacturing must implement robust intellectual property management practices to protect proprietary technology while complying with government data-rights regimes. Clear differentiation between background and foreground IP, disciplined documentation and marking practices, and review of license agreements will be necessary.
• Industrial cooperation and JV structuring with non-EU partners. Industrial cooperation and joint ventures involving non-EU partners in the defense sector raise significant foreign investment and national security considerations, including transaction screening, government restrictions, and information-sharing limitations. In addition, ownership and control structures can affect eligibility for EU defense funding and procurement programs.
• Labor and employment. Workforce transitions associated with defense manufacturing can raise labor and employment issues, including potential labor disputes as employees move into more specialized and regulated roles.
• Commercial contracts. Transitioning civilian production to defense manufacturing requires rigorous certification, security vetting, and quality-assurance processes. Manufacturers must often invest in specialized equipment, restructure and harden supply chains, and balance defense commitments with commercial obligations.
• Real estate. Repurposing civilian manufacturing facilities for military use in the United States requires careful analysis of local zoning, entitlement, and permitting requirements. Facility modifications and security enhancements can trigger additional approvals and licensing obligations.
• Regulatory certification/qualification of new products. Transitioning to military production often requires new regulatory certification. In the aerospace sector, for example, military authorities conduct independent reviews, apart from FAA certification.
• Government relations and public affairs. Governments are increasingly engaging directly with civilian manufacturers to accelerate the repurposing of commercial capacity for defense and national security. To capitalize on these opportunities, manufacturers must adopt coordinated government relations and public-facing strategies to engage key decision-makers.
• Litigation. Government efforts to incentivize civilian-to-military manufacturing, through financing and operational influence, can blur the line between private enterprise and government-backed activity, increasing litigation risks. Companies may face heightened exposure to contract disruption claims, tort liability, bid protests, organizational conflicts of interests, and third-party liability claims arising from operational use of assets.

Through its Geopolitical Risk and National Security (“GRaNS”) Initiative, Hogan Lovells can help clients assess and execute the transition from civilian to military production by addressing the full spectrum of these legal, regulatory, transactional, and risk considerations. Our integrated, cross-border team advises at every stage of the transition – from government contracting and financing to export controls, investment screening, supply chains, labor, IP, and litigation risk – enabling clients to pursue defense and national security opportunities with speed and confidence in a rapidly evolving policy environment.

For assistance in any of these areas, please reach out to our key contacts below:

• GRaNS Co-Leads –
  • Robert Gardener
  • Stephen Propst
• Government contracting/public procurement –
  • Michael Mason
  • Malcolm Parry
  • Stacy Hadeka
• Unique Government financing opportunities –
  • Stacy Hadeka
• Project Finance through the Office of Strategic Capital –
  • Alexis Sainz
• Export Controls –
  • Elizabeth Cannon
  • Aline Doussin
  • Stefan Kirwitzke
  • Deborah Wei
• IP considerations –
  • Audrey Reed
• Industrial cooperation and JV structuring with non-EU partners –
  • Stefan Kirwitzke
• Labor and employment –
  • George Ingham
• Commercial contracts –
  • Malcolm Parry
  • Steven Kaufman
• Real estate –
  • Lee Berner
• Regulatory certification/qualification of new products –
  • Laura Ochoa
  • Arjun Garg
• Government Relations and Public Affairs –
  • Robert Gardener
  • Ari Fridman
  • Malcolm Parry
• Litigation –
  • Thomas Hunt
  • John Talotta

The Hogan Lovells Geopolitical Risk and National Security initiative specializes in helping clients anticipate and manage these risks. Our expertise spans regulatory compliance, supply chain strategy, and crisis management. We help businesses not just survive, but thrive, in a world where national security and business strategy are increasingly intertwined.

Hogan Lovells is a leading global law firm, bringing together more than 2,800 lawyers worldwide to help clients navigate complex legal and regulatory challenges. Drawing on deep sector insight and experience at the intersection of business and government, we provide forward looking advice and practical solutions to help organizations respond to change, manage risk, and identify new opportunities.

Authored by Stephen Propst, Stefan Kirwitzke, Deborah Wei, Kelly Heesch, and Elizabeth Shneider, along with the contacts above.