In February 2022, Finland signed a purchase agreement for 64 F-35 fighter aircrafts with the US in a deal valued at EUR 8.4 billion at the 2021 USD/EUR exchange rate. As a condition of the purchase, the fighter manufacturer Lockheed Martin and the engine manufacturer Pratt & Whitney committed to defense-related industrial participation with Finnish parties that covers at least 30% of the actual contract price.
These industrial cooperation projects are expected to be worth at least EUR 3 billion, and the Finnish Ministry of Defence estimates that they will generate a significant employment effect both directly (4,500 person-years) and indirectly (1,500 person-years). Borenius has assisted Lockheed Martin with the F-35 industrial participation in Finland.
In addition to the F-35 fighter acquisition, which was the result of a long process, Finland formally applied for membership in NATO a few months later in May as a response to Russia’s invasion of Ukraine. On August 3, the US Congress overwhelmingly approved Finland’s membership application.
With the large-scale fighter acquisition and the upcoming intense defense cooperation on the table and as Russia continues to isolate and the risk of trade with China is reassessed, there will be an increasingly westbound shift in the focus of Finland’s foreign trade both in military and civilian industries.
New US-Finnish cooperation in civilian industries
The US defense industry will be increasingly interested in technology and innovations stemming from civilian activities, while the F-35 fighter purchase will also open up plenty of possibilities for industrial cooperation in civilian industries. This cooperation, which will occur outside of the Finnish government’s procurement processes, may relate to telecommunications, artificial intelligence, or environmental or spatial technology, or even infrastructure solutions – all areas in which the US has a keen interest.
Finland also aims to establish a cooperation model with the United States in which Finnish consultants will help introduce new partner candidates to Lockheed Martin. In addition to imports and investments, there will be new avenues for innovation and research with the US, which could potentially bring new research funding to Finland.
Finnish companies poised to enter the Silicon Valley of Defense
The US capital, Washington D.C., has been deemed the Silicon Valley of Defense by Kristiina Helenius, CEO of Miltton USA, because of the heightened level of innovation activity in the city.
Key American companies have been setting up headquarters in the Washington Metropolitan Area and are actively searching for project partners. Many of these opportunities require security clearances unavailable to non-NATO member states.
With Finland acceding to NATO, Finnish businesses will be able to take part in defense and security projects, which typically involve dual-use technology. This opportunity exists not only for defense industry players, but also Finnish companies focused on civilian applications.
Borenius has boots on the ground in the US
Many companies in Finland and in Europe are currently looking into the US markets in search of both investment and acquisition opportunities. As the world’s single largest economy, the US accounts for approximately 20% of global output and for a third of global stock market capitalization.
Borenius has extensive experience and a strong track record in assisting Finnish companies from startups to large publicly listed companies with their entry, expansion, and transactions in the US, both in military and civilian industries. During the decade that we have been present in New York, Borenius has also built a strong network of US law firms and other experts across the country.
Our senior associate Kenneth Kraszewski is relocating to Borenius’ New York office for the remainder of 2022, where he will be advising Finnish companies operating in the US and deepening our firm’s relationships with its American partners. We are very proud to be at the forefront of contributing to this new era of intensified military and civilian cooperation between Finland and the US.