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Threod Systems: Estonia’s defence industry growth is limited by labor shortage

The Estonian defence industry has grown significantly in recent years, reaching a new level against the backdrop of global events. Arno Vaik, CEO of Threod Systems, a company developing observation drones and equipment, confirms this growth trend. “Demand for defence industry products has increased in almost all markets since the onset of full-scale war in Ukraine,” he says.

However, this rapid growth does not come without challenges. According to Vaik, one of the biggest challenges is the lack of qualified labour. “Growth requires people to execute it, and the greatest challenge has been attracting and training new team members.”

Established companies are expanding, new ones are emerging

Threod Systems, a manufacturer of crewless aerial vehicles whose sales revenue tripled last year, has capitalised on this demand growth by increasing its product sales volume and receiving direct feedback from the battlefield. “This has allowed our company to sell our products at a larger scale than before and develop them based on practical experiences,” Vaik adds.

According to Vaik, several factors have made record turnover figures in Estonia’s defence industry possible. “The primary factor is, of course, the global increase in demand, but it is also important that Estonian companies can offer high-quality products and services,” he explains. “New ambitious companies have emerged in Estonia, and existing players have expanded their product ranges, finding new unmet demand niches,” Vaik says.

He believes that years of work in international markets are beginning to bear fruit, as many countries have real needs and financial resources to purchase Estonian products.

Labour shortage is a the biggest problem

At the same time, Estonian defence industry companies face significant challenges. “The biggest challenge is the limited number of people with the necessary knowledge and experience,” he admits. “Additionally, the small size of Estonia and the limited demand in the domestic market make it more difficult to develop new products.”

He notes that larger countries significantly support their defence industries, but Estonia has fewer opportunities for such support. “Although the Estonian government supports the defence industry, our resources and market remain limited compared to larger countries,” he acknowledges.

However, the future ambitions are high—the Estonian defence industry’s goal is to achieve a billion-euro turnover by 2030, which requires determination and strategic thinking. “We need to continue everything we have done so far on an even larger scale—looking for opportunities, finding partners, and involving people,” Vaik outlines the future plans.

“The defence industry is not just business — it supports the security and sustainability of the entire country and society,” adds Threod Systems’ CEO, Arno Vaik.

GOOD TO KNOW:
Threod Systems

  • In 2022, Threod Systems, primarily developing observation drones and equipment, earned a revenue of 6.9 million euros with a business profit of over 150,000 euros.
  • In the previous year, 2023, sales reached 20.4 million euros, and profit was 4.5 million euros, according to the company’s annual report.
  • In 2023, Threod Systems had nearly one hundred employees on its payroll, and today that number has risen to 140, with growth continuing.

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