Germany's rearmament is having an immense impact on the civilian industry, shows a new survey from the mechanical engineering sector. But there is one reason why there is no armaments boom in the industry.
Arms production at Rheinmetall: The boom in the defense industry is also an opportunity for mechanical engineering. Photo: IMAGO/
A study shows: 23 percent of the mechanical engineering companies surveyed are planning to enter the defense business, and another six percent have already specifically planned to do so.
Companies active in the defense sector see great growth opportunities in the coming year, with 92 percent able to expand their deliveries.
The companies complain about challenges such as regulatory requirements and a lack of contact with clients, which make business more difficult.
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Berlin. Automobile manufacturers are building armored vehicles, aviation companies are entering the drone business, and ammunition factories are being built. The turning point in defense policy is fundamentally changing the German economy; more and more production capacities are being built up in the areas of security and defense.
A survey has now shown that this development is also affecting German mechanical engineering. Civilian companies are supplying the defense industry with their machines and systems like never before.
The mechanical engineering association VDMA asked 330 of its member companies about their activities in this area. The results are available exclusively to Handelsblatt. They show: 23 percent of mechanical engineering companies are planning to enter the defense sector. Such an entry is already specifically planned for an additional six percent.
The companies that are already active in the defense sector report great growth opportunities. 92 percent of them see the possibility of expanding their deliveries within the next twelve months. One in six companies hires additional staff for this purpose, and another 14 percent relocate employees from other business areas there.
"The defense industry has been treated with pointed fingers for a long time. Now mechanical engineers in particular are taking an even more aggressive stance," Andreas Evertz told the Handelsblatt. He is CEO of the gearbox manufacturer Flender and heads the VDMA forum for the security and defense industry.
Flender's gearboxes are used in conveyor belts and cranes, the company's couplings are used in rail and shipping, and components for wind turbines are also an important business area. In the defense sector, Flender is active as a supplier in the areas of land vehicles and shipbuilding.
Mechanical engineers expect significant growth
Mechanical engineering, like the entire German industry, is in a difficult phase; US tariffs, strong competition from China and the difficult location conditions in Germany are causing problems.
The new defense business area comes at just the right time, even if Evertz initially dampens expectations: “The defense area alone cannot and will not become the core business of mechanical engineering.” According to VDMA estimates, the defense industry's overall share of sales for mechanical engineering is likely to be around two to three percent in the medium term.
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But he also makes it clear that without mechanical engineering there would be no defense industry: “Whether ball bearings, screws, painting systems, gearboxes for tanks or robot lines: without us it will not be possible for Germany to become capable of defending itself using its own resources.”
The companies surveyed rate the business prospects similarly positively. Almost every third mechanical engineering company that operates in the defense sector expects growth of at least 15 percent this year. And 43 percent of these companies expect to at least double their sales by 2030.
A lack of planning makes business complicated
But whether this dynamic will actually occur remains to be seen. In the VDMA survey, companies also complain about challenges that make it difficult for them to ramp up in the defense sector. 61 percent of companies mention regulatory and security-related requirements, while a lack of contact with potential customers and clients has a negative impact on 60 percent.
The state can change this, speed up procedures and reduce bureaucratic requirements. But companies also have to commit themselves a little more strongly to this business area in order to reduce the hurdles. Because it is also clear: a stronger commitment to defense means that mechanical engineers have to deliver less to other industries.
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For Evertz, this is the core problem. “Of course we are calling on politicians to become faster and less bureaucratic. But the most important point in my view is the ability to plan,” says the Flender boss.
With every progress in the peace process, the entrepreneur faces the question of whether he can maintain the priority on the defense sector. “It is clear, of course, that even if the war in Ukraine ends, the German economy must not fall back into its old mode,” says Evertz.
It's about the question of how to ensure that production capacity is available when needed: "Mechanical engineering is predestined for this because we are more flexible than many other industries; we already deliver to so many different areas."
Create independence from the USA
Politics and business must use this opportunity together. “And we therefore want to talk more closely with politicians about how this can be achieved, especially through long-term orders and financing vehicles,” says the manager.
Related topics
USAGermanyMechanical engineeringRheinmetallArmaments industry
According to VDMA expert Roland Papesch, mechanical engineering can also become a vehicle to make Germany's rearmament more independent. A significant portion of the current record government arms orders still go to the USA.
"The government money must also reach the civilian industry. Ordering here, not in the USA, that must be the long-term goal," explains Papesch.
