• A NATO drone maker is partnering with a Ukrainian firm to manufacture drone parts underground.
• ORQA says the partnership offers lessons in keeping factories running during wartime.
• Western companies often overlook Ukraine's experience in manufacturing under attack, it says.

A NATO drone maker is teaming up with Ukraine's defense industry and building drone parts underground. The company's CEO said it's seeking to learn lessons in wartime production that could prove critical for Western defense companies in a crisis.

Croatian drone technology company ORQA and Ukrainian drone maker General Cherry are jointly developing and manufacturing interceptor drones, components, and other counter-drone systems in both countries. As part of the partnership, they are building an underground factory in Ukraine to make components.

Working amid Ukraine's wartime risks teaches the company valuable lessons in manufacturing while under attack, ORQA CEO Srđan Kovačević told Business Insider. Producing components in Ukraine is also more efficient than making them in NATO and shipping them to the Ukrainian military, he said.

Kovačević said his company 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," he said. "So I think that's the way forward for any critical capabilities."

Ukrainian defense firms are splitting their manufacturing across multiple sites, frequently relocating, and moving some work underground to avoid being targeted by Russian attacks. It's less efficient, but more resilient to attacks. Some Western officials and companies warn that it's time for European industry to learn these practices amid concerns about Russian aggression.

"Distributed systems are much more resilient to any disruption than concentrated systems, centralized systems," Kovačević said. "It's simply about not having a single point of failure."

Ukraine has "this immensely valuable lived experience of building and scaling under fire," the ORQA CEO said, "that's being often abstracted and neglected by Western companies." That, however, is starting to change, he said.

"I think the thinking is really shifting on the European side as well, that this distributed nature actually reinforces resilience even though there are economic downsides to it."

Raivis Melnis, the defense minister of Latvia, told Business Insider that NATO companies work in a far more concentrated way than Ukrainian ones do, and "the question is whether we are ready to produce the systems in different locations, dispersed, and how we organize that."

He wants Latvian and Ukrainian defense industries to work together in part so they can learn how Ukrainian companies maintain production during a war.

Davyd Aloian, the deputy secretary of Ukraine's National Security and Defense Council, told Business Insider earlier this year that defense companies within parts of NATO should "definitely" start breaking up their production more.

Some defense industry figures have voiced similar concerns about the state of production in the West. Karmo Saar, the head of sales for Estonian drone maker Krattworks, told Business Insider that in a war with Russia, if European companies don't disperse more, "I think we're going to be punished."

Dispersing production is not without trade-offs, though. Achi, CEO of the Ukrainian-Estonian defense technology company and ground robot maker Ark Robotics, told Business Insider that such defensive steps are "necessary," but "not ideal." Operations would be easier with everything in one place.

Choosing Ukraine despite the danger

Some Ukrainian companies have begun setting up production in NATO countries, both to better share their expertise with partner nations and to operate without the risk of Russian attacks.

But Kovačević, whose company makes drones as well as drone technology, including controllers, receivers, goggles, video equipment, and flight simulators, said that building in Ukraine comes with upsides.

The company, which supplies 24 NATO allies, could have done all of its work with General Cherry in Croatia, but instead, they are spreading their joint work across both countries.

Kovačević said building components in Europe and then importing them into Ukraine is "more inefficient than actually doing it in Ukraine." It's also more expensive, and Ukraine has shown its ability to produce in large volumes.

Localizing the supply chain also means that all parties can "exchange information more efficiently," including about what's happening and what's needed on the battlefield.

He said he understands why some Ukrainian companies are building gear on NATO soil, but he sees value in partnering with General Cherry in Ukraine. He said the Ukrainian company, 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."

The partnership also offers lessons beyond manufacturing. He said that while the West "has a very deep technology expertise," it lacks "this lived experience of taking that technology and applying it to the operational reality of the 21st-century warfare."

The goal is to both supply Ukraine and to equip NATO with weapons shaped by Ukraine's battlefield experience and expertise. In Croatia, the partners are establishing a joint serial-production facility for co-developed interceptor drones and other counter-drone systems destined for NATO, while in Ukraine, they intend to create drone components, including electronics and communications systems, which General Cherry says it will supply to "all our partners in Ukraine," not just use itself.

Ukraine is already able to make the drones that the partnership will produce in Croatia, but "what they lack is the capacity to build components that go into those systems," Kovačević said, explaining the focus of the Ukrainian facility. He said the project won't disrupt Ukraine's existing supply chains. One of ORQA's priorities is to reduce reliance on Chinese products, and it wants to help Ukraine's industry do the same.

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

• The arms race is so intense that Ukrainian companies can never stop updating their products.
• One firm said a weapon could become obsolete in just three months without updates.
• Ukrainian firms work directly with soldiers to improve weapons faster than Western manufacturers.

The fast-moving arms development race amid Russia's war against Ukraine means that the defense companies can't ever really consider a product finished or stop making regular updates, a leading Ukrainian drone maker told Business Insider.

Ukraine's defense companies gather constant feedback from soldiers using their products in combat and make frequent updates, sometimes daily. Many companies and soldiers say that without these updates, their gear could become irrelevant on the battlefield within weeks.

Oleg, an executive at major Ukrainian fiber-optic and interceptor drone maker TechEx, told Business Insider that "the most important thing is that you want this product to evolve over time. There will never be a moment when you just build a product, and it's just good."

If a defense company "just stays with one single product, I think within three months, it will be outdated, and nobody will use it," he said, speaking on the condition that only his first name be used for safety purposes.

TechEx's drones, he said, are updated weekly, sometimes with major modifications and other times with adjustments of just a few millimeters or grams.

In this war, he said, "when you build a good product, the enemy builds the countermeasure." To stay in the fight, weapons makers must keep adapting. "You need to work constantly."

Ukraine's Frontline Robotics, for example, told Business Insider that it gets feedback from soldiers 24/7 and makes small changes to its products up to 20 times a month, with major updates coming roughly every six months.

Ark Robotics, another Ukrainian company, said it may make about half a dozen different changes to a product over a few weeks.

Companies are baking the ability for fast and regular updates into their design from the very beginning, making them modular and software-first so changes can be made remotely, quickly, and without needing to redesign or rebuild the entire product from scratch.

The traditional model for Western weapons development is slower. A design is typically matured and tested before production, then is built in relatively stable batches for years, with changes made around scheduled upgrades rather than thinking about constant redesign.

An analysis published by RUSI in December wrote that Western weapons systems "are treated as indivisible wholes, with procurement cycles often stretching over 10 to 20 years and upgrades requiring entire programme restructurings. This legacy approach treats innovation as a rare event rather than a continuous process."

In Ukraine, companies and soldiers are allowed to directly communicate and innovate. Companies text, Whatsapp, and video call soldiers even when they are in the field to exchange constant feedback and requests. Ukraine's model is bottom-up and decentralized.

Oleg said that TechEx's technical support department works with over 100 units to constantly support them and get battlefield feedback. Ukrainian companies often have employees who visit soldiers near the front lines, gather feedback, and help them make repairs or upgrades that can then be integrated back into the products. Soldiers often surprise Ukrainian companies with how they use or modify their gear, which in turn influences what they build and what features they add.

Western companies have long operated differently. Feedback from typically comes through a slower, formal chain rather than straight from the soldier who is using it. But many Western companies are starting to change their processes, particularly those with products in use in Ukraine.

Earlier this year, US Air Force Gen. Alexus Grynkewich, who oversees NATO military operations as the Supreme Allied Commander Europe, told Business Insider that NATO wants to establish the same kind of battlefield feedback loop that Ukraine has, and that's something allies are working on.

The drawback to constantly changing or redesigning weapons is that it makes it much harder to produce at scale.

Achi, the CEO of the Ukrainian-Estonian robot, drone, and software company Ark Robotics, previously told Business Insider that when "talking about scale manufacturing, any change comes at a very high price," slowing down or even halting production.

But change is essential. "You cannot afford not to be able to make changes," he said. That forces manufacturers to anticipate changing battlefield needs while trying to maintain production.

Oleg said that European partners need to prepare for the reality of constant adaptation in weapons development, a warning echoed by other Ukrainian companies and officials. He cautioned that Russia is "really good at technology" and at developing countermeasures to even Ukraine's best weapons. "They're being underestimated by a lot of people."

For Ukrainian weapons makers, that means there may never be a point when a product is truly finished.

• A major Western drone firm says working in Ukraine is key to getting gear to the standard NATO needs.
• ORQA is partnering with Ukraine's industry to co-produce drone systems, including for the NATO market.
• Its CEO said Ukraine has battlefield experience and operational excellence that can shape gear for NATO.

A Western company developing drone technology for NATO militaries says that working in Ukraine is the best way to ensure its gear meets the alliance's needs for a future fight.

ORQA, a Croatian company that makes drones and drone technology, including controllers, receivers, goggles, video equipment, and flight simulators, already supplies parts and systems to two dozen NATO allies. But it wants to draw on Ukraine's battlefield experience to improve its products.

Working in Ukraine "creates an opportunity to really channel this sort of operational expertise to shape these products. And then these products can be made to a standard that NATO demands," CEO Srđan Kovačević told Business Insider.

ORQA produces components used by Ukrainian defense tech company General Cherry and is partnering with the firm to jointly make drone systems and spread Ukraine's drone expertise.

The war in Ukraine is the most intense drone war ever fought, and getting feedback from the battlefield provides critical insight into what soldiers need most.

"If I'm being blunt, there are only a few parts of the world where you can actively shoot down these unmanned aerial threats in a real-world environment," Kovačević told Business Insider.

That same drive has prompted Western defense companies, ranging from small start-ups to major primes, to set up manufacturing facilities, repair hubs, and offices in Ukraine, seeking battlefield feedback to improve their technology faster.

ORQA is also seeking to better understand how Ukraine's defense industry scales, moves quickly, and works in wartime.

Ukrainian defense firms are producing drones and other weapons at a much faster rate than many of their Western counterparts.

Kovačević said that "the West has a tremendous amount to learn from Ukraine," saying that the "operational excellence that Ukrainian defense forces have developed is unparalleled in the Western world."

He said that while the West "has a very deep technology expertise," it lacks "this lived experience of taking that technology and applying it to the operational reality of the 21st-century warfare."

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

General Cherry is one of Ukraine's biggest drone companies and has announced partnerships with other Western defense tech companies.

ORQA and General Cherry intend to manufacture in both countries, supplying NATO and its allies with Ukrainian-developed counter-drone technology while expanding domestic production of drone components in Ukraine.

Kovačević said Ukrainian companies like General Cherry have "immensely valuable lived experience of building and scaling under fire," something that is often "neglected by Western companies," but they can learn.

The significant "volumes that Ukrainian drone companies are able to produce really dwarf anything that's happening in the West right now," he added.

Western leaders are encouraging industrial collaboration, and NATO has launched programs to bring Ukrainian and allied defense companies together.

ORQA isn't alone in looking to Ukraine's extensive battlefield experience to develop better weapons for NATO. Latvia-based Origin Robotics, for example, makes BLAZE interceptor drones purchased by several NATO militaries and BEAK, a drone-launched precision-guided weapon used by Ukrainian forces.

Its CEO, Agris Kipurs, previously told Business Insider that the company takes lessons from its work in Ukraine, "but we adapt those weapons systems specifically to be used in a NATO country. And NATO countries and the armies of NATO countries are our customers. That is the user we build for."

Kovačević said Ukrainian technology can't simply be transplanted into NATO militaries. Ukraine has had to develop weapons at breakneck speed and make do with what's available.

NATO, however, has time to take operational knowledge, contextualize it for alliance forces, and build these products to the necessary standards using Western technology, he said.

Kovačević said the goal of these industrial partnerships is to supply NATO without undermining Ukraine's ability to meet its own wartime needs.

ORQA also aims to boost Ukraine's domestic production of drone components and reduce its reliance on foreign suppliers.

Ukraine is "relying heavily on non-Ukrainian and non-European supply chains," Kovačević said, adding that reducing that dependence is strategically important. ORQA says it manufactures key components in-house and avoids Chinese-made parts to strengthen its supply chain.