Defence budgets across Europe and beyond are expanding at a pace not seen in decades. EU member states collectively spent an estimated €381 billion on defence in 2025, up from €218 billion in 2021, a 75% increase in just three years. Governments urgently need more armoured vehicles, naval vessels and heavy fabricated structures, and they need them now.
The problem: manufacturing capacity simply hasn't kept up.
Take the case of Germany: Since 2019, defence demand has more than doubled while production capacity has risen by only around a quarter: demand is growing five to six times faster than output. The same capacity pressure also exists wherever complex steel fabrication is involved: in commercial shipbuilding, industrial construction and heavy equipment.
The Catch-22 situation of European steel
This surge in demand meets a steel sector shaped by years of contraction. European steel consumption has been in recession since 2022, weighed down by weak automotive and construction demand, high energy costs and a flood of cheap imports. Defence, infrastructure and energy transition spending are now pulling the industry forward, but from a base that left little incentive to invest in excess capacity or advanced capabilities.
Fabricators are now expected to scale rapidly, meet exacting quality and traceability standards and absorb the costs of the new CBAM carbon pricing regime. Yet the capabilities this requires, from certified processes to skilled labor, digital traceability and surge capacity, are precisely those that a prolonged downturn made rational to defer.
Of all these areas, traceability is one of the domains where the rift between traditional practices and expectations is clearest.
When a steel plate arrives at a fabrication facility, it comes with a mill certificate detailing its grade, heat number and mechanical properties. In commercial work, that information may sit in a filing cabinet or a spreadsheet. In defence and naval contracts, it must form part of a continuous chain of documentation that follows every part cut from that plate through each operation to final assembly and beyond. This level of control is very impractical to maintain without digitization.
In defence programs, a missed delivery can translate into contractual penalties or program delays, rather than minor commercial friction. These contracts typically involve stringent audit regimes, formal traceability requirements and defined penalty clauses. Similar conditions exist in other safety-critical industries, but the combination of long program timelines, regulatory oversight and public accountability in defence tends to amplify their impact. And, in the recent period, tolerance for inefficiency has generally been shrinking.
Updating the classic MES model for steel fabrication
The category of software traditionally built to address these challenges is the Manufacturing Execution System, or MES: software that sits between the strategic planning layer of an enterprise, typically an ERP system, and the physical reality of the shop floor, tracking what is actually happening in something close to real time.
Classic MES implementations are, in essence, confirmation and data collection systems. They record that a task has been completed and feed that information back to the ERP so that inventory and scheduling can be updated.
What fabrication-specific platforms now do is considerably more ambitious. Octave OnSite Production, formerly Intergraph Smart Production and now part of the Octave suite, covers the full workflow from design import and quoting through work preparation, production planning, shop floor execution and final dispatch.
The platform is built around the reality that steel fabrication involves several distinct product types: plate parts, profile or beam processing, pipe spool fabrication and panel or module assemblies such as ship blocks. Each follows a different workflow and requires different data. A general-purpose MES tends to force fabricators to adapt their processes to the software’s assumptions. A fabrication-specific platform is built around the processes as they actually exist.
The power of task-based execution and real-time reporting
The distinction that matters most in practice is the shift from work-package scheduling to task-based scheduling.
Under the conventional approach, a planner assigns a block of work to a crew or a section of the shop floor. The sequencing of individual tasks is then left to the supervisor’s discretion. This works well with stable volumes and experienced supervisors who know intuitively how to sequence the work, but considerably less well when order volumes spike or new workers arrive without institutional knowledge. It also favors bottlenecks, wait times and black boxes.
Task-based scheduling resolves this by breaking every work package into its constituent operations and assigning each to a specific machine and time slot. The system models the entire production flow: where materials will be waiting, where machines will be idle and where a bottleneck is forming. Forward and backward scheduling allow production managers to work from a confirmed delivery date backward to determine when each upstream operation must begin and to balance workloads across machines and crews so that no single resource becomes a choke point.
What also changes is that it eliminates reliance on spreadsheets as tools or on task completion as the only metric. Real-time shop floor tracking in OnSite Production is delivered through a combination of PC workstations, mobile web applications and barcode or QR code scanning. Operators log in at their workplace and scan the parts they are working on. Starting a task, completing it, pausing for a disturbance or flagging a quality issue, all of these actions are captured in real time through whatever device is most practical in that environment, from a fixed terminal to a handheld scanner.
For steel fabricators, that is a strong case for working more efficiently, not just harder.
Thriving in an increasingly data-driven market
Today, this advanced digitization is not just a nice-to-have; it is what you need to compete in high-stakes production environments.
Industries like defence or shipbuilding are increasingly data-driven, and major players like Babcock have moved well beyond pure fabrication or shipbuilding to become integrators of complex subsystems such as propulsion, combat systems, sensors, communications, software and lifecycle support into a coherent whole.
Within these ecosystems, high-performing digital production management becomes a baseline expectation. Traceability is contractually required, schedules are tight and errors are expensive. Suppliers that still rely on informal knowledge, spreadsheets or conventional work-package scheduling rapidly find themselves left out.
How to avoid that fate? By realizing a technology leap that helps meet and exceed these expectations. Octave OnSite Production, built on more than four decades of development as Intergraph Smart Production, is designed specifically for such environments. It does not replace experienced people or the engineering judgment that fabrication demands. It provides the structure to operate at higher volumes and the visibility to do so without proportionally scaling error rates, compliance risk or dependence on individuals. And in a period defined by urgent demand and constrained capacity, these are the capabilities that matter most.