Budget and special funds too small
Rheinmetall: Germany must spend more on the military
01/28/2023, 7:06 p.m
The armaments group Rheinmetall is demanding fundamental decisions from the federal government on the future level of military spending. These are currently not enough. The company also wants state aid for a new plant. At the same time, it expects a significant increase in orders.
Rheinmetall boss Armin Papperger calls for an increase in the German defense budget before an industry meeting with Defense Minister Boris Pistorius. “We need decisions about the budget,” said the manager. “The 51 billion euros in the ‘Individual Plan 14’ will not be enough to be able to procure everything. And the 100 billion euros have already been planned and some of them have already been consumed by inflation.” “Individual plan 14” is the defense budget in the federal budget. Trucks and ammunition could not have been delivered last year because there was no more money in the budget. “If we want to be successful, and not just with the 100 billion package, we must have a sustainable ‘Individual Plan 14’ over the next ten years today,” said Papperger.
After taking office a few days ago, Pistorius announced very rapid talks with industry and admitted that the so-called Bundeswehr special fund of 100 billion euros was not enough – just like the regular budget of 51 billion euros.
Papperger said Rheinmetall had done its homework and expanded capacities. Around 2,000 employees were hired last year. Rheinmetall is considering operating another powder plant in Saxony to meet the growing need for ammunition and is calling for state investment in this area. “This is a specialty chemical plant that will have a price of between 700 and 800 million euros.” This is an investment that the industry cannot bear alone. “This is an investment for national security that you need. And of course you need the federal government here.”
Order record expected
Germany has the largest capacity in the world for 120mm tank ammunition. “We can produce 240,000 rounds of tank ammunition a year. That’s more than the whole world needs,” said Papperger. Production could be hampered by the powder bottleneck.
The group, which is traded as a DAX aspirant, has been on record course for a long time thanks to the armaments business. “We had a very good year in 2022, a record year. You know the results of the third quarter, things will look even better in the fourth quarter,” emphasized Papperger. When it comes to the order backlog, the group is heading towards 30 billion euros, after around 25 billion euros recently. “And I’m assuming we’ll have 40 billion in backlog next year. The company is growing very fast.”
In the armaments sector, he expects growth rates of between 15 and 20 percent in the coming years. There are many projects in the pipeline that will be wrapped up in the next six months. In civilian business, too, which now accounts for only around 20 percent of group sales, “we will have reasonable growth.” At the beginning of the year, Rheinmetall had already announced that in 2022 the operating result would have increased by more than a fifth.