It is a sign of the times: the armament manufacturer Rheinmetall, Germany’s leading ammunition producer, is preparing to enter the DAX, the benchmark index of the Frankfurt Stock Exchange. The group officially entered the first league of German capitalism on March 20. Since the outbreak of war in Ukraine, Rheinmetall’s share price has jumped more than 120%. Turnover, which increased by 13.2% to 6.4 billion euros, should double in the next two to three years, said the group’s management.
This is the other part of the “Zeitenwende”This “change of time” announced by Chancellor Olaf Scholz in the aftermath of the Russian attack on Ukraine: German armaments specialists, once unloved by the industry, have regained a positive reputation as systemic defense players. One hundred billion euros, financed by a special fund, have been promised by the chancellor to re-equip the army.
Boris Pistorius, Minister of Defense since January, has made no secret of the fact that this sum will not be enough – he is asking for an additional 10 billion –, while Ukraine is demanding significant support, particularly in ammunition. Logically, the arms manufacturers should be the big winners of this historic turning point.
Tightness and slowness
However, things are moving slowly across the Rhine. Inflation entered the calculations and complicated the planning. The 100 billion are struggling to be spent, and orders for Ukraine’s urgent ammunition needs have not been placed by the state either. Add to this that it is very difficult to overcome decades of disinvestment in the military tool. Certain political leaders, in particular within the Social Democratic Party, do not hide their skepticism at seeing the State invest more in armaments than in education. The tensions and delays within the coalition, which imposed a return to debt limitation in 2024, are the sign of this painful cultural transition for the Federal Republic.
Armin Papperger, head of Rheinmetall, is one of those who most openly criticize Berlin’s procrastination. “I need orders. Without orders, I will produce nothing. If there is a lack of ammunition, it is not the fault of the defense industry”he decides in an interview with Bloomberg, March 14. Because of the delays, Rheinmetall will only produce shells at about two-thirds capacity this year, he said. Behind these words intended for politicians, heavy investments are still in preparation.
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