The Latvian government’s strategic push to boost defence spending and nurture local industry is beginning to bear fruit. A decade of growth in this sector reached a significant milestone with the inauguration of a new armoured vehicle production facility in Valmiera. Over the next four years, Latvia plans to boost its defence budget by 70 percent.
Russia’s renewed aggression against Ukraine in 2022 underscored the vital need for a self-sufficient and nimble defence industry, capable of responding to emerging threats without excessive reliance on foreign suppliers. This threat has further galvanised Latvia’s defence strategy, accelerating development across the sector.
The latest milestone in this ongoing growth was the opening of Patria’s Valmiera facility on 24 May 2024. This facility is dedicated to the full-cycle production of Patria 6×6 armoured personnel carriers (APCs), a key element in Latvia’s contribution to the Common Armoured Vehicle System (CAVS) programme. This programme, a joint initiative between Finland, Latvia, Germany, and Sweden, aims to bolster the defence capabilities of participating nations through the standardized production of these vehicles. With a production capacity of around 30 vehicles annually, the Valmiera facility is set to deliver the first batch of 25 vehicles to the Latvian National Armed Forces (NAF) by the year’s end
Tripled Defence Spending
The rapid expansion of Latvia’s defence industry can be traced back to 2014 when Russia’s annexation of Crimea and subsequent actions in Eastern Ukraine sent shockwaves through the region. For Latvia, a NATO member state bordering Russia, these events highlighted the urgent need to strengthen its defence capabilities. As a result, Latvia’s defence spending nearly tripled between 2014 and 2018, soaring from €223 million (0.94% of GDP) in 2014 to €590 million (2.02% of GDP) in 2018. This upward trend continued, with defence spending reaching €987 million (2.25% of GDP) by 2023, with plans to raise it to 3% of GDP by 2027.
This substantial increase in defence spending has laid the foundation for a robust domestic defence industry. Recognizing the importance of self-reliance in defence production, the Latvian government introduced a military-industrial strategy in 2016. This strategy emphasizes the involvement of domestic companies in defence planning and procurement, as well as the development of military or dual-use products with export potential.
As Latvia reinstates conscription – after abolishing it in 2006 – and expands its armed forces, the demand for locally produced military equipment and technology is expected to rise. The ongoing development of unmanned systems, cyber defence capabilities, and advanced communications technologies will be key areas of focus for Latvia’s defence industry. Companies like Atlas Aerospace, Edge Autonomy, and LMT are well-positioned to lead in these cutting-edge fields. Moreover, as Patria vehicle production ramps up in Latvia, further joint ventures and technological exchanges are anticipated.
Dragon Teeth at the Border
In January 2024, Latvia, Lithuania, and Estonia unveiled their joint plan to construct a defensive line along their borders with Russia and Belarus in response to Russia’s ongoing war of aggression in Ukraine. Latvia is turning to concrete—just as in World War II—to fortify its defences. The Latvian army is installing pyramidal obstacles, known as Dragon’s Teeth, in depots owned by municipalities or state institutions near the Russian and Belarusian borders. These Dragon’s Teeth are being manufactured locally in Daugavpils.
The Baltic defence line will not include coastal fortifications but will instead focus on land-based defences, including bunkers, counter-mobility parks, and supply lines. The project will also involve creating natural barriers, such as tree lines and drainage ditches, alongside reinforcing existing razor wire fences.
This defensive line proposal was born out of discussions at last year’s NATO Madrid Summit, where it was agreed that significant reinforcement would be necessary along Europe’s borders and those of NATO.
Ten Players in Latvia’s Defence Industry
Riga Shipyard
- Product: Skrunda Class Patrol Boats
- Riga Shipyard is one of the oldest and most established companies in Latvia’s defence sector. It gained prominence through the construction of Skrunda class patrol boats for the Latvian Armed Forces. These vessels play a crucial role in maritime security, reflecting Latvia’s commitment to protecting its territorial waters.
Brasa Defence Systems
- Products: Military Clothing and Unmanned Ground Vehicles
- Brasa Defence Systems is a notable player in military clothing and equipment. The company has also ventured into developing unmanned ground vehicles, including the Natrix system, which is designed to support military personnel in various operations. Although Natrix has not yet entered serial production, it represents a significant step forward in Latvia’s indigenous defence technology capabilities.
D Dupleks
- Products: Ammunition
- D Dupleks is a Latvian company specializing in the production of ammunition, including advanced shotgun slugs. The company’s products are known for their innovation and effectiveness, making them a valuable asset for both domestic use and export to other NATO countries.
Patria Latvia (Joint Venture)
- Products: Patria 6×6 Armored Personnel Carriers
- Perhaps the most high-profile project in recent years is the localization of production for the Finnish Patria 6×6 armored personnel carriers (APCs) in Latvia. The vehicles are assembled today at a new Valmiera facility, which opened in May 2024. This joint venture with Finland’s Patria strengthens Latvia’s military capabilities while also contributing to the local economy. The facility is equipped to produce APCs not only for Latvia but also for potential foreign clients, further enhancing the country’s defence export potential.
Atlas Aerospace
- Products: Industrial Drones for Military Use
- Atlas Aerospace is a leading manufacturer of drones in Latvia, with a focus on producing unmanned aerial vehicles (UAVs) for military applications. These drones are designed for a variety of tasks, including surveillance, reconnaissance, and potentially even combat operations. Atlas Aerospace’s success in this area positions Latvia as a significant player in the growing global market for military drones.
Edge Autonomy
- Products: Drones (Production and R&D)
- Edge Autonomy, a U.S.-based company, has established its European office and production line in Latvia. The company focuses on the development and manufacturing of advanced drones for both military and civilian applications. Edge Autonomy’s presence in Latvia underscores the country’s attractiveness as a hub for cutting-edge defence technology.
Mosphera
- Products: All-Terrain Electric Scooters for Military Use
- Mosphera is an innovative company specializing in the production of all-terrain electric scooters designed for military use. These scooters provide soldiers with a highly mobile and stealthy mode of transportation, ideal for reconnaissance missions and rapid deployment in challenging environments.
VR CARS
- Products: All-Terrain Four-Wheel Vehicles (VR FOX)
- VR CARS is another home-grown success story, producing all-terrain four-wheel vehicles specifically designed for military operations. The VR FOX vehicles are built to handle the most demanding terrains, making them a valuable asset for the Latvian Armed Forces and potential international customers.
LMT (Latvijas Mobilais Telefons)
- Products: 5G Military Test Sites, Communications Technology
- LMT, traditionally known as a mobile communications provider, has diversified its portfolio to become a key player in Latvia’s defence industry. The company was one of the first globally to establish a 5G military test site, showcasing its commitment to integrating cutting-edge communication technology into defence applications. LMT’s work in this area is vital for ensuring secure and reliable communication networks for military operations.
Exonicus
- Products: Trauma Simulator (Virtual Training System
- Exonicus is an innovative company that has developed the Trauma Simulator, a virtual training system designed for both civilian and military medical training. This technology allows medical professionals to simulate and prepare for battlefield injuries, improving their readiness and response times in real-world scenarios.
Read More:
- Carnegie: Europe’s Conscription Challenge: Lessons From Nordic and Baltic States
- Foreign Policy Research Institute: Latvia
- Airforce Technology: Latvia’s defence budget accelerating in growth
- Army Technology: Latvia’s industry takes step forward with locally produced Patria 6×6
- Janes: Latvia receives first domestically produced CAVS Patria 6×6 APC
- Defence Aerospace: The Defense Budget Reaches 2.25% of Latvia’s Gross Domestic Product
- Defense News: NATO to test 5G capabilities in Latvia with virtual reality, drones
- Defense News: Latvia-led drone coalition for Ukraine gains more funding, members
- Euronews: Baltic Defence Line in Latvia gets its ‘dragon’s teeth’
- Patria: Patria opens a new armoured vehicle production facility in Valmiera, Latvia
- Patria: Patria, Finland and Latvia sign Life Cycle Management contract within CAVS programme
