German Arms Maker Claims Lack of Strategic Vision for Defense Industry by Government

Susanne Wiegand, CEO of a German tank-parts manufacturer, has warned that American defense contractors are likely to receive a significant portion, potentially up to half, of Berlin's €100 billion ($109 billion) military modernization fund. Wiegand also accused the German government of lacking a strategic vision for the domestic defense industry.

Speaking to reporters in Munich, Wiegand expressed doubts about the amount of funding that would remain for the German industry. She criticized Germany's political compass regarding the defense industry, stating, "Germany has no political compass for the defense industry."

The German modernization fund was established in May of the previous year after extensive negotiations within the ruling coalition. Chancellor Olaf Scholz hailed the investment as an unprecedented response to modern challenges, emphasizing that it would enable Germany to contribute to European security commensurate with its status as the largest economy in the bloc. However, Germany has consistently fallen short of NATO's recommended defense spending benchmark of 2% of GDP.

Wiegand highlighted a shift in Germany's attitude toward the defense industry, particularly in terms of visibility. She noted that past issues were often kept out of the public eye, with top management encouraged to maintain a low profile. However, challenges persist in areas such as military procurement policy, where progress is slow.

Certain German arms producers, including Rheinmetall, Wiegand's former employer, are benefiting from the ongoing Ukraine conflict and the subsequent increase in orders. Rheinmetall, known for producing Leopard 2 tanks and other weapon systems, reported a 27% increase in earnings in 2022 and expects double-digit growth in the coming years.

Wiegand's company, Renk, supplies transmissions for various European-made tanks, including Leopard, Ajax, and Leclerc. She revealed that Renk has secured orders worth a total of €3.9 billion ($4.2 billion), with approximately 70% of their products going to the military.