defense industry
Rheinmetall expects major orders
A Bundeswehr armored personnel carrier of the Puma type during a demonstration. Photo: Philipp Schulze/dpa
© dpa-infocom GmbH
Against the background of Vladimir Putin’s war of aggression, the order books of Germany’s arms companies are likely to fill up soon. Rheinmetall’s executive floor is therefore raising its business forecast.
The largest German armaments company, Rheinmetall, wants to make a lot of money this year with military trucks and ammunition for the Bundeswehr.
With a view to the consequences of the Ukraine war, company boss Armin Papperger said in Düsseldorf that in 2022 compared to the previous year, sales of military goods were expected to increase by 20 percent. Before the war began, he had only expected 10 percent.
Germany’s arms industry is currently preparing for large orders: the federal government wants to provide 100 billion euros as an investment package and increase the current defense budget.
At the beginning of March, Rheinmetall positioned itself and offered the federal government a long-term product package worth 42 billion euros, which, in addition to ammunition and trucks, also contained tanks, anti-aircraft towers and high-tech for the infantry. There are already “significant inquiries” from Germany, said the manager, without going into detail. However, the armaments cannot be obtained at the push of a button: for ammunition, for example, it takes about six months before the first batches can be delivered, and for other products it takes even longer.
Ukraine war shows deficits in the Bundeswehr
Papperger made it clear that the Ukraine war surprised him too: “I couldn’t imagine that there would still be such a conflict.” He pointed out that the war in Eastern Europe had revealed deficits in the Bundeswehr. In an emergency, the German army currently only has ammunition for a few days or a few weeks, depending on the type of weapon. As an armaments industry, you are ready – you fight “shoulder to shoulder with the Bundeswehr so that it is properly equipped,” said the manager.
Rheinmetall wants to export some products to Ukraine as soon as possible. Papperger reported that, for example, helmets, protective plates for protective vests and a field hospital were offered.
The armaments group has strong years of growth behind it, in which foreign business was the engine. As examples of the importance of business with other countries, Papperger reported on an impending ammunition contract with Hungary, which should bring in 800 million euros, and on a 120 million euro armored personnel carrier order from Great Britain. In the coming days, Australia will also announce an order for the Lynx infantry fighting vehicle, said the manager, and estimated its business potential at four billion euros. “We have accelerated growth and we will see that relatively quickly now.”
Rheinmetall is planning 3,000 new hires
The examples make it clear that Rheinmetall’s business is booming anyway thanks to foreign demand – now the Ukraine effect is added as an additional boost in demand. With around 24,000 employees worldwide, will Rheinmetall even be able to meet the sharp rise in demand? The company is aiming for up to 3000 new hires, more than half of them in Germany – the large production sites in Unterlüß in Lower Saxony (2090 employees), in Bremen (1910), Kassel (1130) and Kiel (680) are likely to increase their staff significantly. Papperger was confident that suitable personnel would be found quickly.
The additional demand can be met – one can work in several shifts and increase capacities, emphasized the CEO. The group not only has new locations in England, Hungary and Australia, but also many German plants that were built during the Cold War and have not been downsized since then. “We don’t have to build any new factories and could actually cover more than what’s in the forecast today.” In Unterlüß, for example, between 20,000 and 50,000 pieces of tank ammunition are produced each year, but 240,000 are possible.
From an economic point of view, looking ahead is positive for Rheinmetall, and looking back is also positive: Papperger presented the annual report for 2021 on Thursday, according to which group sales rose by 4.7 percent to 5.7 billion last year. The operating result (EBIT) increased by about half to 608 million euros, the net profit even soared from one million euros to 332 million euros.