KAYO (Albania)
KAYO is a government-owned defense enterprise in Albania, founded in 2024 and based in the capital city, Tirana. Its creation aimed to rejuvenate the national military manufacturing sector by upgrading the capabilities of the Mjekës Explosives Factory, Gramsh Mechanical Workshop, and Poliçan Mechanical Facility.
History
Albania inherited a military industrial base that no longer aligns with contemporary production requirements. In May 2024, the Albanian Parliament proposed establishing this publicly owned company to restart domestic arms manufacturing. Prior to this, the Defence Minister had indicated intentions to restore this sector. The government's plan includes attracting international investors to modernize the dormant manufacturing plants located in Poliçan, Elbasan, and Gramsh.
Constructed in 1962, these factories primarily produced ammunition, artillery pieces, aerial bombs, and mortar rounds for the Albanian armed forces. However, following the military downsizing after 1990, demand drastically declined, leading to a cessation of production.
The push to revive arms manufacturing gained significant traction during a summit held in Tirana centered on Ukraine’s defense requirements, where President Volodymyr Zelensky underscored the critical role of domestic arms production.
In August 2024, the government designated an initial investment of 150 million lek (approximately €1.5 million) to KAYO, as part of a larger 440 million lek reorganization plan within the defense sector.
On 9 April 2025, KAYO entered into a memorandum of understanding with the Italian shipbuilding firm Fincantieri. This pact, signed in Durrës and attended by prominent defense officials from both nations, aims to advance cooperation in naval infrastructure development, ship construction, and personnel training programs.
International Collaboration
Strategic Alliance with Fincantieri
On April 8, 2025, KAYO formalized a Memorandum of Understanding (MoU) with the Italian shipbuilding firm Fincantieri to enhance Albania’s naval defense capabilities. The pact, ratified by Albanian Prime Minister Edi Rama and Italian Defense Minister Guido Crosetto, focuses on transforming the Pashaliman Naval Base into a center for naval vessel construction and maintenance. Objectives include building both military and civilian ships, establishing specialized shipbuilding training programs, and creating a sustainable shipbuilding industry within the Adriatic region. This collaboration supports KAYO’s strategic vision to establish Albania as a key naval manufacturing hub in the Mediterranean and to deepen industrial cooperation with Italy.
Engagement with Global Defense Investors
By March 2025, KAYO had received 21 investment proposals from international defense companies interested in Albania’s defense market. These proposals cover diverse areas such as ammunition and artillery manufacturing, military drone technology, and collaborative projects involving research, production, and exports. Ongoing negotiations with five of these firms highlight KAYO’s pivotal role in attracting foreign capital and broadening Albania’s footprint in the defense sector.
Partnership with Timak
In April 2025, KAYO joined forces with the Albanian private enterprise Timak to establish a manufacturing facility dedicated to military and emergency response vehicles. This plant will produce armored and non-armored vehicles for military and law enforcement use, firefighting equipment, and military apparel. The initiative aims to fulfill domestic defense requirements while pursuing international sales, prioritizing compliance with environmental and safety regulations.