Two locations in sight: Rheinmetall wants to produce ammunition in civilian factories

An aggressive Russia and demands from the USA are bringing enormous growth to the arms industry. The German Rheinmetall Group is planning to reshuffle its factories, which have so far produced civilian goods. Other military technology manufacturers are also securing workers from ailing sectors.

Rheinmetall could convert two of its plants, which currently manufacture civilian components, to production for the group's booming military division. "In the defense business, Rheinmetall is currently using all options to increase production volumes, particularly in the ammunition sector," the Düsseldorf-based group announced. Rheinmetall intends to manufacture mainly products or components for the "Weapon and Ammunition" division at two German locations that have previously belonged to the company's civilian division. The locations in question are in Berlin and Neuss. "However, final decisions on the design have not yet been made," it continued.

In order to ensure future capacity utilization and employment at the two sites, Rheinmetall management plans to transfer the plants to the Weapon and Ammunition division and turn them into "hybrid sites". This means that, in addition to activities in the civilian sector, components for military requirements will be produced in Neuss in the future. In addition to activities in fuel cell technology, the Berlin plant will in future mainly manufacture mechanical components for military requirements. A concept for this has already been presented to the workforce. It is now being coordinated with representatives of the workforce. Explosives will not be processed at the sites, Rheinmetall emphasized. The two plants will "in future benefit from the industrial strength that the Rheinmetall Group has as a major military equipment supplier."

The Power Systems division manufactures products for the automotive and energy industries. The business area is suffering from the crisis in the automotive industry. In contrast to Rheinmetall's other booming business areas, the civil business bundled in Power Systems recorded a slight decline in sales to EUR 1.543 billion in the first nine months of 2024. The operating result shrank by 3.8 percent to EUR 74 million. By comparison: in the Weapon and Ammunition division, for example, sales climbed by 64.3 percent to EUR 1.554 billion in the same period, and the operating result almost doubled to EUR 339 million. Overall, sales in the Rheinmetall Group rose to EUR 6.2 (4.6) billion.

Weakening industries switch to military equipment

Armaments companies are experiencing rapid growth in light of the rising defense spending of Western countries following the Russian attack on Ukraine. "We are experiencing growth like we have never seen before in the group," said Rheinmetall CEO Armin Papperger. The new US government's decoupling from Europe and its pressure on NATO countries to invest more in armaments could also ensure that order books remain full, even if there is a ceasefire in Ukraine. "I think that means for our company that we have to grow even more than previously thought," said Papperger. The German car industry, on the other hand, is having problems with the transition to electromobility, and sales in China are also sluggish. But factories in other ailing sectors are also being converted to armaments production.

The German-French tank manufacturer KNDS recently took over the railway technology group Alstom's plant in Görlitz, which is about to close, and wants to keep on employing a good half of the 700 employees. Rheinmetall had already offered 100 employees of Continental's loss-making brake plant in Gifhorn the opportunity to move to an ammunition factory. The defense electronics manufacturer Hensoldt also wants to take on employees from Continental and Bosch who are at risk of losing their jobs.