Wars have always taught one thing about factories, and teach it again each time. A factory is a target. Its address is known and its roof is wide, and it cannot run away. Ukraine has spent more than four years absorbing that lesson under Russian missiles and drones. Its arms industry has learned to make itself hard to find. Firms split their manufacturing across several sites and move often, and some of the work goes underground. It costs efficiency. It buys survival.

Now a company from inside NATO has decided to learn the method by going there.

Two countries, one production line

The Croatian drone technology firm ORQA and the Ukrainian drone maker General Cherry are jointly developing and manufacturing interceptor drones, components and other counter-drone systems in both countries, Sinéad Baker reported for Business Insider. Part of the work is an underground factory in Ukraine that will make components. The two companies signed a memorandum of cooperation in April, and the Kyiv Post reported at the time that the plant falls under Ukraine’s Build in Ukraine programme. Their joint stated aim is “full localization of component production in Ukraine.”

ORQA’s chief executive, Srđan Kovačević, presents the arrangement as an apprenticeship as well as a business deal. His company, he said, is “learning from Ukraine,” where industry is “under constant threat.”

They were also compelled to go underground, to go wide, to de-risk their assets in distribution. So I think that’s the way forward for any critical capabilities.

His argument is plain engineering. “Distributed systems are much more resilient to any disruption than concentrated systems, centralized systems,” he said. “It’s simply about not having a single point of failure.” Ukraine, in his words, has “this immensely valuable lived experience of building and scaling under fire” that Western companies have often “abstracted and neglected.” He believes that is changing, and that European thinking is “really shifting” towards seeing dispersal as a source of resilience “even though there are economic downsides to it.”

The concentrated West

Others in the region say the same. Latvia’s defence minister, Raivis Melnis, told Business Insider that NATO companies work in a far more concentrated way than Ukrainian ones, and that “the question is whether we are ready to produce the systems in different locations, dispersed, and how we organize that.” He wants the Latvian and Ukrainian defence industries to work together partly so Latvians can see how Ukrainian firms keep production going in wartime. He has made that case before.

Earlier this year Davyd Aloian, deputy secretary of Ukraine’s National Security and Defense Council, said that defence companies in parts of NATO should “definitely” start breaking up their production more. Karmo Saar, head of sales at the Estonian drone maker Krattworks, put it more bluntly. If European companies do not disperse more in a war with Russia, he said, “I think we’re going to be punished.”

Dispersal has its costs. Achi, chief executive of the Ukrainian-Estonian ground robot maker Ark Robotics, called such defensive steps “necessary” but “not ideal”. Everything would be easier in one place, and in peacetime that is how factories are built. But no ministry decides where the enemy aims.

Why build where the danger is

The traffic usually runs the other way. Some Ukrainian companies have opened production in NATO countries, partly to share what they know with partners and partly to work beyond the reach of Russian strikes. ORQA, which makes controllers, receivers, goggles, video equipment and flight simulators as well as drones, and which supplies 24 NATO allies, could have kept all its joint work with General Cherry in Croatia. It chose to split it between the two countries.

Kovačević’s reasons are partly about money. Making components in Europe and shipping them to Ukraine, he said, is “more inefficient than actually doing it in Ukraine,” and more expensive, and Ukraine has shown it can produce in large volumes. A local supply chain also lets the partners “exchange information more efficiently” about what is happening at the front and what is needed there. He said he understands why some Ukrainian firms build on NATO soil, but that General Cherry, one of the country’s largest drone makers, has “a high operational excellence in running their own manufacturing operations in a safe manner, even under constant threat.”

General Cherry is a young company. According to the Kyiv Post, it was founded in September 2023 and makes first-person-view drones, among them interceptor and fibre-optic models. Its 2024 revenue was Hr.657 million ($15.1 million), with about a third coming from state procurement, a figure the paper attributed to the Ukrainian outlet DOU.

Electronics below, interceptors abroad

The two halves of the work divide neatly. In Croatia, the partners are setting up a joint serial-production facility for co-developed interceptor drones and other counter-drone systems bound for NATO. In Ukraine, they plan to make components, including electronics and communications systems, which General Cherry says it will supply to “all our partners in Ukraine,” not only use itself. Ukrainska Pravda reported the components plant when the deal was announced.

Ukraine can already build the drones that will come off the Croatian line, Kovačević said. “What they lack is the capacity to build components that go into those systems.” He said the project will not disrupt Ukraine’s existing supply chains.

The bigger fight is over where the parts come from. One of ORQA’s priorities is to reduce reliance on Chinese products and to help Ukraine’s industry do the same. When the plant was announced, General Cherry described it, as Euromaidan Press reported, as aimed at removing Chinese components from drones. The company’s April statement said that “ORQA products are made without any Chinese parts.” For years Ukraine’s drones, the machines its analysts want by the hundreds of thousands, have relied heavily on Chinese flight stacks and electronics, and their supply has depended on a power that has stayed friendly with Moscow.

Kovačević said the West “has a very deep technology expertise” but lacks “this lived experience of taking that technology and applying it to the operational reality of the 21st-century warfare.” One side has the laboratories. The other has spent years working under bombardment.

“Now,” he said, “it’s time to merge the two and emerge better off on both sides of this partnership.”