26th July 2026
There was a time when military power was measured largely by the number of tanks, aircraft, warships and missiles a country possessed.
That calculation is changing rapidly.
The wars of the 2020s are demonstrating that a country may also need something rather less glamorous but potentially just as important: the ability to manufacture enormous numbers of relatively cheap drones, replace losses quickly and continually improve them.
Ukraine has become the clearest example. Its defence industry says it now has the capacity to produce more than 8 million FPV drones a year, with more than 160 companies involved.
And Ukraine is not alone.
Russia is expanding its production. China dominates much of the world's commercial drone and component supply chain. Britain and other European countries are rapidly increasing their own capabilities, while the United States is looking towards Ukrainian technology to help accelerate its drone industry.
This is beginning to look less like a conventional arms race and more like an industrial race.
From expensive weapons to mass production
The fundamental attraction of drones is simple.
A traditional precision weapon or sophisticated military aircraft can cost enormous sums of money. A relatively simple drone can potentially perform a useful military task at a tiny fraction of the cost.
That changes the economics of warfare.
Instead of asking:
"How many expensive weapons can we afford?"
military planners increasingly have to ask:
"How many drones can we manufacture, how quickly can we replace them and how cheaply can we make them?"
This is particularly important because drones are not necessarily expected to survive.
A cheap drone that destroys or disables a much more expensive target can represent a favourable exchange even if the drone itself is lost.
The Stockholm International Peace Research Institute (SIPRI) says the demand for armed UAVs is increasing and that production and exports are occurring at much higher rates than previously. It describes their affordability and versatility as a game-changing trend that is altering warfare.
Ukraine has effectively created a new defence industry
Ukraine's transformation is extraordinary.
Before Russia's full-scale invasion, drones were important but nowhere near the central feature of warfare that they have become.
The experience of the war has changed that.
Ukraine says its domestic defence industry can now produce more than 8 million FPV drones annually, while more than 160 companies are involved in production.
The Ukrainian government says FPV drones have become one of the principal components of its defence strategy and claims they accounted for more than 60% of Russian losses in 2025. That particular figure is a Ukrainian government assessment and should therefore be treated as such, rather than an independently verified battlefield statistic.
The important point is not whether every individual statistic is correct.
It is the scale of the industrial transformation.
Ukraine has moved from buying drones to creating an extensive domestic ecosystem of:
drone manufacturers;
electronics suppliers;
software developers;
artificial-intelligence specialists;
battery and motor suppliers;
repair and maintenance operations;
military units adapting drones at the front;
companies rapidly redesigning products in response to Russian countermeasures.
That last point is particularly important.
A drone that works today may be vulnerable tomorrow.
Electronic warfare changes. Communications are disrupted. Navigation systems are attacked. Counter-drone systems improve.
So the drone industry has had to behave more like the technology industry than the traditional defence industry.
Design, test, manufacture, deploy, learn and redesign.
Then do it again.
Russia is learning the same lesson
Russia has also moved towards large-scale drone production.
The Russian production system has benefited from cooperation and supply chains involving other countries. Research by the Center for Strategic and International Studies has identified China's role in supplying components, machinery and industrial infrastructure associated with Russia's drone production.
This illustrates another important feature of modern warfare.
A country's military production capacity cannot necessarily be judged simply by looking at its own factories.
The real question is:
How secure is its entire supply chain?
A drone might be assembled in Russia, Ukraine, Britain or America while containing components manufactured somewhere else.
That makes batteries, motors, processors, cameras, communications equipment and other electronics strategically important.
China holds an extraordinary position
This is where the drone race becomes much more complicated.
China is not simply another country producing military drones.
It has built an enormous commercial drone industry and dominates much of the supply chain for the components used in small drones.
The Center for Strategic and International Studies describes China as the dominant force in the low-cost drone market and says Chinese companies control a huge proportion of the world's commercial drone production and key components.
That creates an uncomfortable problem for Western countries.
They may want to build their own military drones, but building the drone itself is only part of the challenge.
If the batteries, motors, electronics or other components still come from China, then the supply chain remains vulnerable.
In other words, a country can have a domestic drone factory without necessarily having a completely domestic drone industry.
And that distinction could become increasingly important.
America is now looking towards Ukraine
Perhaps one of the most interesting developments is that the world's largest military power is increasingly interested in what Ukraine has learned.
Ukraine has had something that American defence laboratories cannot easily reproduce:
several years of real-world battlefield experimentation against a sophisticated opponent.
Its drone manufacturers have had to solve practical problems under extreme conditions.
Now the two countries are moving towards combining Ukrainian experience with American industrial capacity.
President Volodymyr Zelenskyy said on 24 July that Ukraine and the United States are advancing plans for joint drone production, including a factory in the United States using Ukrainian drone technology. Reuters reported that negotiations were continuing over the details.
Earlier in July, six Ukrainian companies were also reported to have received permission to export drones to the Pentagon's Drone Dominance programme.
This could become a very important partnership.
Ukraine has:
battlefield experience;
rapid development cycles;
practical knowledge of electronic warfare;
experience producing drones at enormous scale.
America has:
huge industrial capacity;
advanced electronics;
enormous financial resources;
sophisticated manufacturing;
a vast defence industry.
Put those together and the result could be much more significant than simply another weapons contract.
Europe is moving in the same direction
The European Union is also beginning to recognise that it needs industrial scale.
In July 2026, the EU and Ukraine finalised a major agreement intended to combine Ukrainian drone expertise with European industrial capacity and establish joint production projects. The European Commission described the objective as bringing together Ukrainian ingenuity and Europe's industrial scale.
Britain is taking a similar approach.
The UK announced in April that it would provide at least 120,000 drones to Ukraine during 2026, including long-range strike, intelligence, reconnaissance, logistics and maritime systems. The Government explicitly linked the programme to growth and jobs in the UK.
This is where the drone revolution becomes an economic story.
The new defence industry could create jobs
The old defence industry was dominated by enormous factories producing relatively small numbers of highly complex weapons.
The emerging drone industry is potentially different.
It can involve hundreds of smaller companies producing:
electronic components;
batteries;
motors;
cameras;
software;
communications equipment;
airframes;
sensors;
artificial-intelligence systems;
counter-drone technology.
That means the economic benefits can spread much further through an economy.
It also means that countries such as Britain do not necessarily have to compete with America or China by trying to build everything themselves.
They can specialise.
The opportunity could be particularly significant for companies involved in electronics, software, engineering, advanced materials and manufacturing.
And then comes the counter-drone industry
There is an obvious problem.
If everyone has drones, everyone also needs a way of stopping them.
This is creating an entirely new arms race.
SIPRI says the rapid proliferation of UAVs has already triggered a parallel race in countermeasures.
That means another growing market for:
radar;
electronic warfare;
jamming;
artificial intelligence;
detection systems;
interceptor drones;
directed-energy systems;
missiles;
command-and-control software.
NATO has now put an enormous amount of money behind this.
In July 2026, NATO members announced plans to invest more than US$40 billion in counter-drone capabilities over the next five years and to train five times as many drone operators by the end of 2027.
That is an extraordinary indication of how seriously the military establishment now regards the technology.
The drone race is therefore actually two races:
Build better drones.
and
Build better ways of destroying them.
The real weapon may be the factory
This may ultimately be the most important lesson from Ukraine.
A technologically superior drone is useful.
But if an opponent can manufacture ten times as many drones, replace losses more rapidly and modify them faster, the advantage can disappear.
That is why production capacity matters so much.
It is increasingly possible to think of modern military power as a combination of:
technology + manufacturing + supply chains + software + speed of innovation.
The country that can bring all five together may have a major advantage.
And that is why the drone arms race is becoming a battle of factories as much as armies.
What does this mean for Britain?
For Britain, the issue goes well beyond defence.
The country is now being pushed towards rebuilding some of the industrial capabilities that were allowed to decline over previous decades.
That means questions about:
advanced manufacturing;
semiconductor supply;
batteries;
engineering skills;
artificial intelligence;
research and development;
energy costs;
domestic supply chains;
university–industry cooperation;
and regional manufacturing.
The UK cannot simply order drones from abroad and assume the problem is solved.
The Ukraine war has demonstrated that industrial resilience itself can become a component of national security.
That could have implications well beyond the defence sector.
And what about Scotland?
For Scotland, there is an interesting regional dimension.
The drone industry does not necessarily require enormous traditional defence factories.
It requires engineering, software, electronics, communications, composite materials, testing, research and skilled workers.
That potentially creates opportunities for regions outside the traditional defence centres.
The question for Scotland is therefore not simply whether it wants to participate in a growing defence industry.
It is whether it can capture some of the high-value engineering, technology and manufacturing jobs being created by this change.
That is a very different proposition from simply building weapons.
The bigger economic lesson
There is a much bigger lesson here for governments and businesses.
For decades, efficiency often meant reducing inventories, outsourcing production and relying on international supply chains.
That can make economic sense during peaceful times.
But war has a habit of revealing the weaknesses hidden inside highly efficient systems.
If a country cannot obtain batteries, chips, motors, communications equipment or machine tools, it may discover that having the world's most advanced design is not enough.
The ability to make things quickly and at scale suddenly becomes strategically important.
That is why the drone revolution is about much more than drones.
It is about whether countries still possess the industrial capacity to turn technology into millions of physical products.
The next arms race may be even more remarkable
The drone of today is unlikely to be the drone of tomorrow.
SIPRI points towards increasingly autonomous and AI-integrated systems capable of performing multiple roles, including reconnaissance, strike and swarm operations.
And the technology is developing extraordinarily quickly.
The next generation could increasingly involve:
drones selecting targets with greater assistance from AI;
groups of drones working together;
autonomous reconnaissance;
cheap interceptor drones hunting other drones;
long-range drones operating hundreds or thousands of kilometres away;
maritime drones operating without crews;
rapid software updates based on battlefield experience.
This is where the boundary between a drone, a missile and a small autonomous aircraft begins to blur.
The factory floor may become as important as the battlefield
The great military-industrial races of the past were ultimately decided partly by production.
The Second World War demonstrated the extraordinary importance of industrial scale.
The Cold War demonstrated the importance of technological sophistication and industrial capacity.
The emerging drone age could combine the two.
A country may need to be able to design a new drone on Monday, test it on Tuesday, manufacture thousands of them on Wednesday and modify the design again by the following week.
That favours countries with flexible industries, strong technology sectors and resilient supply chains.
And it favours businesses capable of adapting quickly.
The conclusion
The drone revolution is therefore not simply about replacing soldiers with machines.
It represents a fundamental change in the economics of warfare.
Ukraine has shown what can happen when a country turns civilian technology, entrepreneurial companies and battlefield experience into a huge domestic production system.
Russia has responded by expanding its own industrial capacity.
China possesses enormous advantages in commercial drones and their components.
America is now seeking to combine its industrial strength with Ukrainian battlefield innovation.
Europe is trying to do something similar.
And Britain is already committing to large-scale procurement while trying to expand domestic production.
The question for the years ahead may therefore not be:
"Who has the best drone?"
It may be:
"Who can build the most effective drone, in the greatest numbers, at the lowest sustainable cost — and then build the next version before everyone else?"
That is why the modern arms race is increasingly becoming a battle of factories as much as armies.
And it is a lesson that could have consequences for Britain's industrial strategy, employment and regional economies long after the current wars have ended.