Ukraine’s Underground Drone Factories Are Becoming a Lesson for NATO Defense Firms

Croatian drone technology company ORQA and Ukrainian drone maker General Cherry are jointly developing and manufacturing interceptor drones, components, and counter-drone systems in both countries. As part of the partnership, they are building an underground factory in Ukraine to make components. ORQA CEO Srđan Kovačević told Business Insider the company is learning from Ukraine’s experience producing while under threat.

Ukrainian defense firms have split manufacturing across multiple sites, relocated often, and moved some work underground to reduce exposure to Russian attacks. Kovačević said distributed systems are more resilient because they avoid a single point of failure, even when they carry economic downsides. Latvian Defense Minister Raivis Melnis also told Business Insider that NATO companies are far more concentrated than Ukrainian ones, raising questions about how the alliance would organize dispersed production.

Kovačević said ORQA could have done all its work with General Cherry in Croatia, but building components in Ukraine can be more efficient than producing them elsewhere in Europe and importing them. Localizing the supply chain can also speed the exchange of battlefield information and production needs. The trade-off is clear: concentrated production is easier to manage, but Ukraine’s wartime model prioritizes resilience under attack.

The partners are establishing a joint serial-production facility in Croatia for co-developed interceptor drones and other counter-drone systems destined for NATO. In Ukraine, they intend to create drone components, including electronics and communications systems, which General Cherry says it will supply to its partners in Ukraine. ORQA also wants to reduce reliance on Chinese products and help Ukraine’s industry do the same.