Press
Defense company Rheinmetall has been on the up since the beginning of the Ukraine war. CEO Armin Papperger explains in an interview why this is not a dilemma for him.
Berlin – The contrast is great. On one side of the street: beige, plain workers’ houses from the 1920s. Opposite: lots of glass, steel look, modern architecture. Rheinmetall has its headquarters here in the Düsseldorf district of Derendorf, right on the B1. Just around the corner is Ulmenstraße, where the armaments company manufactured guns over 130 years ago.
Since the Ukraine war: arms company Rheinmetall on the rise
The history of this traditional company is long and varied. After the Second World War, there was a ban on weapons production, and for a few years the company produced typewriters and elevators in Düsseldorf. For decades, the focus has been very clearly on military technology again. Rheinmetall builds tanks with names like Marder and Puma and produces ammunition, but also mobile field hospitals.
Since the beginning of the Ukraine War Rheinmetall is on the up. It sees itself as Ukraine’s most important armaments industry partner. The industry’s moderately good image, which has been repeatedly criticized not least because of arms deliveries to crisis regions, is gradually changing. But that’s not all – Rheinmetall has also multiplied its value on the stock exchange. Armin Papperger has been CEO of the DAX group since 2013 and has driven the company’s internationalization. In an interview, he explains what plans the group has for the future in Ukraine and on NATO’s eastern flank.
Is it a dilemma if war is the reason why the business of potentially lethal weapons is doing well?
Since the Russian invasion, I have been to Ukraine several times and here I often meet political representatives from the country. Here and there, you can feel how valuable our help is for the Ukrainian defense struggle. And we are grateful that we are allowed to provide these services. We produce what is needed, and if more is needed, we produce more and of course generate higher sales. But even if peace finally returns to Ukraine, there is still a great need to catch up on equipment for the armed forces in many countries. A security policy decade has begun in which we at Rheinmetall will be needed for the long term with our services.
Can you also feel the change in times economically? Are investors investing more in defense companies?
We see that the topic of security and defense has also reached the capital market. The turning point and our rise to the DAX in March 2023 have contributed to more journalists, more analysts and more investors being interested in our company. Investors have adjusted their investment policy against the backdrop of the war. Banks that for years wanted nothing to do with armaments are now offering us financing. When I became CEO at the beginning of 2013, Rheinmetall’s market value was around one billion euros. Today it is 20 billion and I believe that 50 billion euros is realistic in the coming years.
Bundeswehr planner: NATO’s need for ammunition can hardly be met
German army planner Gert Nultsch says there are hardly any production capacities available that can be ramped up in the short term. In Germany, the arms industry has been transformed from a “volume industry into a manufacturing sector”. NATO’s needs can hardly be met in the foreseeable future. What is your assessment of this?
For companies to invest in large production facilities, they need planning security and the longest possible contracts. We have these today. But we have also taken risks before. We have massively increased our production capacities in many areas and we are continuing to increase them, for example in artillery from 70,000 rounds before the Ukraine war to 700,000 rounds by the end of the year. We have also increased our capacity for military trucks many times over and will hand over more than 1,500 vehicles to the German armed forces this year.
Rheinmetall is strengthening its cooperation with Ukraine and producing locally. Why do you think this is important?
With the strategic cooperation between Ukraine and Rheinmetall and with our joint ventures in the country, we want to help rebuild the once large and efficient defense industry there. Only with a strong industry and national manufacturing know-how will Ukraine be able to defend itself sustainably and protect itself in the long term.
Air defence is used in the Ukraine war
How does Rheinmetall help with protection?
Rheinmetall is one of the world’s leading suppliers of air defence systems, some of which are in use in Ukraine. We are also the only supplier of the 35mm medium-calibre ammunition required by the reactivated Gepard anti-aircraft gun tank. When we re-established the production line for this ammunition, the challenge was rather different: the know-how was no longer available on a broad scale and also had to be reactivated.
When it comes to drone defense technology, raw materials such as rare earths are used, most of which come from China. How can European production become independent?
We at Rheinmetall have secure supply chains and have spent a lot of money to have the required materials in sufficient quantities. The question of how the European Union can reduce its dependence on China for rare earths is a question that politicians must answer. With regard to large-caliber ammunition in particular, I see a bottleneck in the global market when it comes to linters. Here too, Europe is dependent on China. That is why we have built up a large stock of this so-called gun cotton in recent months.
Rheinmetall boss: “Our footprint on NATO’s eastern flank is already large”
Are Rheinmetall production sites also conceivable at other locations, for example towards NATO’s eastern flank?
Our footprint on NATO’s eastern flank is already large. In February, for example, we acquired a majority stake in a Romanian vehicle manufacturer as a strategic acquisition. The company has officially been part of our production network since May. We are also increasing our gunpowder production capacity in Romania. And we recently signed an agreement with the Lithuanian Minister of Economic Affairs to build an ammunition plant in the country.
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