Norway - Country Commercial Guide
Defense and Aerospace Technologies
Last published date: 2022-09-12

Overview

The defense and aerospace sector is of great importance to Norway and benefits the country’s economy and competitiveness.  More than 120,000 people are employed in Norwegian aerospace, and one NOK created in the industry increases the GDP with 5.60 NOK.  The sector consists of three subsectors: defense, space, and aviation.

The Norwegian Government proposes an increase in defense spending that will reach 2% of GDP in 2028.  Estimates from NATO lists that Norway is expected to use 1.7% of the GDP on defense in 2022.  Norway spends about 31% of its defense budget on investments, which is above the NATO guideline of 20% (2021).  The proposed budget for the defense sector in 2022 is a total of USD 6.83 billion.  With 70% of defense equipment imported, U.S. suppliers are well positioned to capture a significant share of Norwegian imports in this sector.

The Norwegian space industry is rather modest on an international scale, but the space industry is a growth sector in Norway and has a turnover of nearly USD 1 billion.  The Norwegian market includes around 40 public and private actors located across the country. These develop everything from satellite communication terminals to flowerpots for space plant research.  The market leaders are Andøya Space Center (ASC), Telenor, Nammo, and the Kongsberg Group.  Norway has a competitive advantage on location and makes ground infrastructure optimal for satellites.  Svalbard is uniquely positioned geographically for reading data from polar orbiting satellites.

Avinor is the state-owned limited company that manages the Norwegian national airport network and maintains the air navigation system.  The total airport network consists of 61 airports, and Avinor operates 44 of these.  There are four airlines operating in the domestic market: SAS (Scandinavian Airlines), Norwegian (Norwegian Air Shuttle), FLYR and Widerøe.  For international flights the market is competitive and fragmented.  A study by Menon Economics found that air travel accounts for a total of 70% of all foreign commercial guest nights in Norway.  In February 2021 the new airline Norse Atlantic Airways was established, and company will focus on affordable long-haul routes between Europe and the United States.

Norway is a member of the International Civil Aviation Organization (ICAO); hence the country adopts and adjusts to regulations and technical standards provided by the ICAO.  Norway is not an EU member, but the country commits to most EU regulations through the European Economic Area (EEA), which also connects and commits Norway to European Aviation Safety Agency (EASA) standards.  

Opportunities

The defense industry in Norway is known for its niche product spectrum.  The Norwegian government has selected eight focus areas for cooperation between the defense industry and the Norwegian Armed Forces:

1. Command, control, Information Systems

2. System Integration

3. Autonomous Systems

4. Missile Technology

5. Underwater Sensors

6. Ammunition, Target Technology, Remote Controlled Weapon System and Military Explosives

7. Material Technology

8. Life Support for Military Land, Air and Naval Operations Systems

Larger systems, vessels and vehicles are usually purchased from foreign companies through industrial cooperation agreements. Most Norwegian defense companies are relatively small compared to international defense companies.  According to the EU definition of sizable companies, only two Norwegian defense companies can be considered large: Kongsberg Defence and Aerospace, and Nammo.

Investments in the Norwegian Army will include development of Brigade North with four maneuver battalions, with tactical and logistical support.  The maneuver battalions will be equipped with new main battle tanks, mobile air defense systems, and long-range precision fire.  In addition, the modernization of the Home Guard will continue.  Norway plans to strengthen the Navy with more personnel.  The frigates will undergo necessary upgrades.  The submarines will be replaced with a new platform in cooperation with Germany and with a completion date around 2030.  In addition, three new Coast Guard vessels will be introduced in the period 2021-2025.  To preserve the maritime operational capability after 2030, the Norwegian government will start the planning of replacement surface vessels.  A decision concerning type and number of vessels will be made at a later stage.  For the Norwegian Air Force, the introduction of new aircraft systems will have priority during the years leading up to 2025.  The implementation of the F-35 Lightning II continues.  P-8 Poseidon maritime patrol aircraft will replace the fleet of P-3 Orion and DA-20 Jet Falcons.  Delivery of P-8s to Norway started in spring 2022.  To improve air defense capability, the NASAMS II air defense system will be upgraded with modern sensors, as well as the introduction of complementary capacity with shorter range.  The Norwegian Special Forces will continue to contribute to both national and international operations and plan to increase personnel and one additional operations task group.  It has been announced that the Bell 412 transport helicopters will be replaced by a new capacity that is better suited for the Special Forces. In June 2022 the Norwegian Ministry of Defense announced that they are cancelling the contract with NH Industries on delivery of 14 NH-90 helicopters.  The Norwegian Armed Forces will continue developing modernizing the Total Defense Concept, seeking to enhance civil-military cooperation.

The Norwegian Space Agency (NSA) is considering an expansion of the space industry to include Jan Mayen, also due to its geographical advantages.  The NSA is further looking to expand the cooperation with the United States, focusing on utilization of Norwegian infrastructure on Svalbard and in the Arctic.  Satellite data received and read in these areas enable development within weather forecasting, climate, environmental monitoring, and research.  The projects initiated by Norwegian space companies are to a large extent developed through national membership in the European Space Agency (ESA).  Norway participates in the EU programs Galileo, Copernicus, and Horizon 2020, and works closely with the U.S. space industry, including NASA. The space industry is a growth sector in Norway. In 2021, Andøya Space received USD 36 million from the Norwegian Government to establish a launch base for small satellites at Andøya.

On the civil aviation side, the Norwegian Center for Transport Research (TØI) has estimated that by 2040 air travel will grow by more than 60%.  The increase is expected to be primarily due to an increased number of people visiting Norway from abroad.  Note that these estimates were published before Covid 19.

There has been high demand for commercial offshore helicopter service in Norway due to offshore activities.  The oil and gas industry accounts for just under 10% of all domestic flights in Norway. 

The Norwegian regulations for the unmanned aerial systems are mainly based on the regulatory framework done by the European Aviation Safety Agency (EASA) for unmanned vehicles and remotely piloted aircrafts (RPAS).  There has been a significant growth in the numbers of UAV operators in Norway the recent years, and the organization UAS Norway is now counting more than 500 members.

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