Before the war in Ukraine, Germany’s defence industry was unloved, but now Chancellor Olaf Scholz’s decision to inject €100 billion into the country’s armed forces has put it in the spotlight. What has changed for you?
Rheinmetall is now a lot more in the public eye than it used to be. There’s also a broad consensus in Germany among politicians and society at large that security, freedom and democracy can’t rely solely on dialogue and economic cooperation. You need to be able to project strength and resolve. This is something we’ve forgotten in Germany in recent decades, and it has caused us to neglect our security posture – especially our military security. I’m very glad that our chancellor has decided to make national security a centrepiece of government policy again. Security through military strength is now endorsed by 62% of German society from 38% in 1989. German public opinion, all in all, has changed during the war in Ukraine in 2022 in relation to security.
There are a lot of gaps at the Bundeswehr that need to be plugged: capabilities, structure, equipment, you name it. At Rheinmetall, the new era isn’t just limited to Germany. Lately, we’ve seen an enormous increase in demand from neighbouring countries and other partner nations. The strategy of internationalisation that we’ve been pursuing in recent years is paying off now, because we’re already present in a lot of these countries with projects and production facilities. That’s a big help.
How intense is the pressure for new artillery and vehicles? What sort of lead times are you facing?
In Europe, the increase in demand focuses on just a handful of manufacturers. The availability of material poses a growing challenge here: for example, when we order steel for tank guns today, it can take eight to 12 months to arrive. Tanks also need engines, tracks and electronics. All these things have long delivery times – I mean, sometimes there’s a 24-month wait for electronic components. Obviously, we do everything we can to speed up the process by stockpiling materials, for instance, and by placing orders with our suppliers as early as possible.
More broadly, now that EU defence spending is rising again, there is a concern that taxpayer money will be wasted in duplication. From your point of view, what are the obstacles to more EU defence collaboration?
This concern is entirely unfounded. On the contrary, the increasing Europeanisation of important areas of defence policy is already resulting in significantly greater cost efficiency. For example, in the context of the European Defence Fund, Europe’s defence industry is becoming more and more competitive and innovative through targeted cooperation. At the same time, the specific military capabilities the EU needs are also becoming clear. Can you give an example? Of course. Take the German defence minister’s declaration of intent to jointly procure 35% of future armaments at European level. What’s more, the European Commission has proposed a legal instrument to strengthen joint procurement through the European Defence Industry Reinforcement through common Procurement Act, or EDIRPA, for 2022-2024. Going forward, the volume of these programmes will increase significantly. We don’t expect to see a reversal of this trend. In fact, the opposite is true. Thanks to the European Union, duplications – with each Member State developing its own armament systems and each Member State separately procuring common requirements – can be avoided. In a further step, common arms export guidelines could be introduced in future. This will have a positive economic impact, too, which will benefit the taxpayer.