Germany’s largest defense contractor, Rheinmetall, is planning to launch a new production line in response to a surge in orders, driven by the conflict in Ukraine. According to data reported by Die Welt, the company received 18% more orders in 2022 compared to the previous year and is now looking to increase its production capacity.
The arms manufacturer is based in Dusseldorf and intends to establish a new munitions production line at its plant in Lower Saxony. To meet the growing demand, Rheinmetall plans to hire several hundred additional employees and increase its output capacity to 600,000 rounds of ammunition per year, a level of production not seen since the 1980s.
Currently, the facility is already operating at maximum capacity, with thousands of workers operating in three shifts. They are focused on fulfilling current orders, including maintenance and repairs of Marder infantry fighting vehicles, Leopard 2 tanks, Panzerhaubitze 2000 self-propelled artillery units, and ammunition for Ukraine.
Rheinmetall is optimistic about its future sales growth, expecting double-digit increases in the coming years. The company predicts that Germany alone will need to purchase €40 billion ($43.6 billion) worth of ammunition by 2031. Recently, the German Bundeswehr placed an order with Rheinmetall for 367 protected and unprotected logistic vehicles totaling approximately €285 million.
Germany has emerged as one of the leading global weapons exporters, ranking sixth in 2022. This has resulted in defense contractors experiencing order backlogs and soaring profits, largely driven by the increased demand for arms due to the conflict in Ukraine. Last year, Berlin approved arms exports worth over €8.35 billion, the second-highest figure in the country’s history, only surpassing the record-breaking €9.35 billion in 2021.
Rheinmetall’s financial performance reflects the booming arms business in Germany. The company reported record earnings of €6.4 billion in 2022, a 27% increase from the previous year. It also disclosed a record order backlog of €26.6 billion. In the first quarter of 2023, Rheinmetall’s consolidated sales rose by approximately €97 million, a year-on-year increase of 7.6%, reaching €1.4 billion. The backlog also grew by 8% to €28.2 billion.
In conclusion, Rheinmetall’s decision to launch a new production line and expand its workforce is a direct response to the escalating conflict in Ukraine, which has resulted in a surge in orders. With double-digit sales growth expected in the coming years, the company aims to meet the increasing demand for ammunition in Germany and solidify its position as a leading defense contractor.
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