Centre for Eastern Studies NUMBER 180 | 26.08.2015 www.osw.waw.pl

Controlled ‘Europeanisation’? The KMW–Nexter merger and the ’s new strategy for the arms industry

Justyna Gotkowska

On 29 July a deal was signed in Paris concerning a merger between Krauss-Maffei Wegmann (KMW), Germany’s largest manufacturer of tanks, infantry fighting vehicles and artillery sys- tems, and its French counterpart Nexter. The new holding formed as a result of the merger will be Europe’s largest producer of arms systems for land forces, comparable to the Group in the aerospace industry. While work on finalising the merger was underway, the German gov- ernment was developing a new strategy for Germany’s arms industry, which was published on 9 June 2015. The strategy’s provisions show that German politicians, despite holding negative opinions on previous mergers between German arms companies and foreign businesses, have concluded that consolidation at the European level is nonetheless the only way to go. Howe- ver, the strategy also states that the German government should exercise more influence than previously on the terms and conditions of any such consolidation. To this end, it identified key national technologies which will be supported and protected through various instruments, in- cluding also the conclusion of intergovernmental agreements on strategic defence co-operation. Such agreements may regulate questions such as the ownership structures of the new compa- nies, the locations for developing technologies and for manufacturing products, subcontractors and exports of jointly developed arms and military equipment. In relation to the KMW–Nexter merger, such a deal between and Germany is expected to be signed this autumn.

The lie of the land turers and exporters of systems for land forces and navies. Duopolies of large companies oper- Germany has a strong, state-of-the-art arms ate in these two sectors. Krauss-Maffei Weg- sector: according to SIPRI figures, in the years mann (KMW) and Defence man- 2010–2014 the country ranked as the third-larg- ufacture tanks, infantry fighting vehicles, - ar est exporter of arms and military equipment moured personnel carriers and artillery for land globally, along with France and (and after troops, while ThyssenKrupp Industrial Solutions the and ), which each have (TKIS with the ThyssenKrupp Marine Systems/ a five-percent market share)1. TKMS industry cluster) and Lürssen Defence Most defence contractors in Germany are private manufacture boats and warships for the navy. companies that are exclusively German-owned. Germany’s medium-sized arms companies in- They hold well-established positions as manufac- clude Heckler&Koch (small arms), (guided and air defence systems), MTU Aero Engines and MTU Friedrichshafen (engines 1 Siemon T. Wezeman, Pieter D. Wezeman, ‘Trends in inter- national arms transfers’, SIPRI Fact Sheet, March 2014, and propulsion systems), and there are also http://www.sipri.org/research/armaments/transfers/ many small- and medium-sized subcontract- measuring/recent-trends-in-arms-transfers

OSW COMMENTARY NUMBER 180 1 ing companies that occupy leading positions culties in managing the ‘European’ company and in their respective niche military technology in the decentralisation of production (in addition fields, manufacturing subassemblies for the to the diversified and changing national speci- aerospace and sectors as well as fications). Moreover, both the company’s head- land systems (OHB, Rhode-Schwarz, Plath, ESG, quarters and its technology competence centres ). have been moved from Germany to France in So far, ’European’ mergers have taken place recent years. The German government, which in Germany’s aerospace industry and, partly, holds 12% of shares in the company (as does in the systems sector. Opinions in Ger- France) refused to authorise its further ‘Europe- many of the European consolidation projects anisation’ in 2012, i.e. the planned merger with undertaken so far are negative. The wave of consolidations in the Western European arms industry in the beginning of the XXI century Hitherto the ‘Europisation’ of the arms in- led to the creation of the EADS concern (2000), dustry in Germany mainly took place in the which manufactures aircraft and helicopters air and space sectors. for the civilian and military markets (formed as a result of a merger of companies from France, Germany and Spain; the company was renamed the UK’s BAE Systems4. It feared that the merger Airbus Group in 2014) and the establishment would have brought a further marginalisation of of the MBDA group (through a merger of com- the German production plants within EADS/Air- panies from France, the UK, Italy and Spain in bus Group and a weakening of the market posi- 2001, joined by German LFK in 2005). Both con- tion of other German defence companies (KMW cerns are present in Germany through the man- and Rheinmetall Defence) due to possible bet- ufacturing plants of the Airbus Group divisions ter access of BAE Systems products to European (Airbus, Airbus Defence & Space, Airbus Helicop- markets. The German government could prevent ters)2 and an MBDA subsidiary (MBDA Deutsch- the merger because of its stake in EADS/Airbus land) which manufactures gudied missiles and Group, but Germany also has other instruments air defence systems. However, opinions of these to control the ownership structures of the coun- mergers, especially in the case of Airbus Group, try’s private arms-producing companies. In par- are negative, as German politicians openly ad- ticular, these include the requirement, provided mit3. One problem concerns the fact that major for in the law on foreign businesses, to obtain ’s procurement projects implement- the consent of the Federal Ministry for Economic ed by EADS/Airbus Group (the A400M transport Affairs and Energy before any takeover of some aircraft, the NH90 and Tiger helicopters) have or all shares in a German defence company by been delayed by several years as a result of diffi- a foreign business5. It was probably on this basis that the German government blocked the sale of

2 Airbus (manufacture of civilian aircraft: Hamburg, Bre- the ‘military’ assets of the ThyssenKrupp Marine men), Airbus Defence & Space (military production: Systems (TKMS) to the UAE’s Abu Dhabi MAR Ottobrunn, satellite subassemblies; Friedrichshafen, probes and satellites; Manching, the Eurofighter; Ulm, fund in 2011, only allowing the fund to acquire radars; , the A400M), Airbus Helicopters (manu- the company’s ‘civilian’ and foreign assets. facture of helicopters: Donauwörth,the H135 and H145, the Tiger and the NH90). 3 (spokesman on the defence policy of the 4 Airbus Group is the only arms company in which the the SPD Parliamentary Group), ‘Ausverkauf deutscher German government holds stakes through KfW, the Ger- Panzer an Frankreich verhindern!’, Frankfurter Allge- man government-owned banking group. meine Zeitung, 8 July 2015, http://www.faz.net/aktuell/ 5 See Aussenwirtschaftsgesetz (AWG), Par. 5, Abs. (3), politik/inland/ruestungsindustrie-keine-deutschen-pan- http://www.gesetze-im-internet.de/bundesrecht/ zer-an-frankreich-13690282.html awg_2013/gesamt.pdf

OSW COMMENTARY NUMBER 180 2 The agreement on the merger of Germany’s ter will replace Rheinmetall Defence as KMW’s KMW and France’s Nexter, signed on 29 July, main partner). As a result, Rheinmetall Defence which established Newco, a holding in which will lose an important co-operation partner, each side holds 50% of shares, means that Ger- and may be forced to seek a merger with a for- many has now overcome its aversion to the eign partner or with a German business (one of consolidation of German defence businesses at those that are currently up for sale) and expand the European level. The Newco holding will be its range of products. Some of German assets Europe’s largest manufacturer of systems for of Airbus Defence & Space have been offered land forces, comparable to the Airbus Group for sale (the manufacturing plants in Ulm, Frie- in the aerospace industry. KWM and Nexter drichshafen and Unterschleißheim, as well as shares in the Atlas Elektronik company)6. Airbus Defence & Space announced in autumn 2014 The merger of KWM and Nexter will lead that it intended to focus on the manufacture to the creation of the largest producer of of military aircraft, missiles, satellites and their systems for land forces in Europe, compa- launch vehicles. It was reported at that same rable with the Airbus Group. time that ThyssenKrupp could sell its shipyards building submarines and vessels, which are part of ThyssenKrupp Marine Systems (TKMS, ship- specialise in the production of systems for yards in , Hamburg and Emden)7. land troops (tanks, infantry fighting vehicles, armoured personnel carriers, artillery); their Industry and ranges partly overlap and are partly comple- mentary. The merger has been approved by German arms companies, which used to sell their the German government. Already in May this products mainly to the German armed forces and year the German Secretary of State for Defence other EU and NATO states before the economic announced that France and Germany plan to crisis in Europe, have recently been struggling conduct joint capability studies for a new-gen- under the new conditions on the European mar- eration main battle tank that would succeed ket. The crisis has brought about stagnation and the in use by the Bundeswehr. The reduced defence budgets in Europe, with less joint project will be most likely conducted by spending on new arms and military equipment the new holding. Moreover, the KMW-Nexter in NATO and the EU, which until recently were agreement was signed in Paris, in the presence the main buyers of German exports. Germany’s of the French Defence Minister and the German internal market also shrank as the Bundeswehr Defence State Secretary. The merger spells the reduced the volume of its contracts in the wake end of Germany’s specialisation in an import- of the reforms started in 2011 with a view to re- ant branch of the arms industry, i.e. the manu- ducing the size of the armed forces and strength- facture of systems for land forces, with such re- ening their expeditionary character, combined nowned products as the Leopard tanks and the with the new policy on the management and PzH 2000 armoured howitzers. In the longer procurement of arms and military equipment. term it may also have an adverse effect on the position of Rheinmetall Defence, KMW’s long- 6 ‘Airbus-Umbau betrifft Tausende Jobs’, ARD, 26.02.2015, time partner. The pending joint projects will be https://www.tagesschau.de/wirtschaft/airbus-155.html 7 continued (Leopard 2, , Boxer, PzH 2000), ‘Rheinmetall will Marinesparte von Thyssen- kaufen’, Handelsblatt, 12 September 2014, http://www. but the two companies are unlikely to be able to handelsblatt.com/unternehmen/industrie/ruestung- continue jointly developing new products (Nex- skonzern-ruestet-auf-rheinmetall-will-marinespar- te-von-thyssen-krupp-kaufen/10691754.html

OSW COMMENTARY NUMBER 180 3 German companies tried to cope with the situa- to third countries, especially to regions experi- tion by actively looking for new markets in third encing or threatened by crises and conflicts (the countries, i.e. beyond NATO and the EU – with Gulf countries, North ). Minister Gabriel’s the approval of the German government, mean- stance is largely determined by internal political ing especially the CDU/CSU-FDP coalition in the considerations. The production and exports of years 2009–2013. The Christian Democrats and arms has been criticised by -wing elites the Liberals were quite generous in issuing ex- and public opinion. The SPD fears that the issue port licences, despite the restrictive formal politi- cal guidelines according to which German-made arms and military equipment may only be ex- Since the start of his term, the German ported to third countries in exceptional cases minister (SPD) justified by the special security policy interests of has favoured a more restrictive policy of Germany. The volume of government-authorised exports to third countries. exports of German arms and military equipment increased systematically,8 and the proportions between arms exports to NATO and the EU and can be exploited by the post-communist Die exports to third countries became reversed: Linke party, eroding the social democrats’ elec- from 60% (to NATO and UE countries) and 40% torate should they continue with their predeces- (to third countries) before the crisis, to 40% and sors’ export policy. As a result, the volume of 60% respectively in 2013. exports of arms and military equipment autho- When the new CDU/CSU-SPD coalition came rised by the ministry fell in 2014 to €3.9 billion, to power in the aftermath of the compared to €5.8 billion in 2013 and €4.7 bil- elections in the autumn of 2013, the change lion in 20129. On the other hand the aim of Ur- of government had an impact on the the Ger- sula von der Leyen, the Defence Minister and man defence sector. The new leaders of the a candidate to succeed as the two ministries of key importance for the sec- CDU leader, is to prove to her party and German tor (economy and defence) were high-rank- public opinion that she is capable of dealing with ing politicians from parties that cooperate but the defence sector’s ‘Augean stables’. Problems also compete with one another within the co- with the procurement projects at the German alition (the SPD and the CDU). This resulted in MoD had seriously tainted the reputation of her a change of the government’s policy toward predecessor, Thomas de Maizière. After a series the arms industry that negatively affected the of scandals10 Minister von der Leyen has been arms manufacturers. On the one hand, Sigmar seeking to introduce new rules for co-operation Gabriel, the SPD leader in charge of the Minis- with German defence companies, with a view to try for Economic Affairs, which plays a key role 9 in issuing the licences for the export of arms According to figures from the Ministry for Economic Af- fairs, in the first half of 2015 the value of licences was and military equipment, has started to advo- higher than in the comparable periods in previous years. cate a more restrictive policy of arms exports However, a larger proportion of the licences issued in the first half of 2015 concerned arms and military equip- ment exports to EU and NATO countries; a full picture will only emerge from the figures to be published in ear- 8 The value of (individual) licences issued was (in billions of ly 2016. See Reply of the Ministry for EconomicAffairs ): 4.2 (2005), 4.1 (2006), 3.6 (2007), 5.7 (2008), 5.0 and Energy to questions No 134 and 135, 3 August 2015, (2009), 4.7 (2010), 5.4 (2011), 4.7 (2012), 5.8 (2013). See http://www.spiegel.de/media/media-37306.pdf Justyna Gotkowska, ‘New market conditions and “exit 10 Justyna Gotkowska, ‘Defence procurement – a minefield strategies“ for the German arms industry’, OSW Com- for Germany’s new defence minister’, OSW Analysis, mentary, March 2014, http://www.osw.waw.pl/en/pub- 26 February 2014, http://www.osw.waw.pl/en/publikac- likacje/osw-commentary/2014-03-12/new-market-condi- je/analyses/2014-02-26/defence-procurement-a-mine- tions-and-exit-strategies-german-arms-industry field-germanys-new-defence-minister

OSW COMMENTARY NUMBER 180 4 making the Bundeswehr’s procurement projects defence, who presented different visions of the more market-oriented. The toughened policy of sector’s future development and tried to make the two ministries affects those German defence the other ministry responsible for supporting it. companies which produce mainly for the mili- The Ministry of Defence presented its vision in tary market, i.e. the manufacturers of systems the autumn of 2014 in a non-paper on support- for land forces and their German subcontractors, ing key technologies in the arms industry13. The and to a lesser extent, the producers of warships document stated that purchases of arms and for the navy. The aerospace companies such as military equipment should be guided primarily Airbus Group combine their military operations by the needs of the Bundeswehr, and not by with larger civilian business activity, while com- what the German defence companies have on panies such as KMW have been forced to seek offer. It also stated that because of the limit- new solutions to keep and develop their busi- ed resources and instruments at hand, the list ness11. In the wake of the merger, KMW expects of key national technologies supported by the to gain access to new markets and to be able to government in this sector should be limited. export the Franco-German holding’s products to Moreover, from the Ministry’s point of view, third countries more easily, since exports of arms the question of market access, which can be and military equipment by a ‘European’ compa- gained through mergers, was more important ny will be less controversial internally in Germa- in the context of the need to keep technologies ny and will be possibly subject to different rules and know-how in Germany than disputes over agreed with the French government (probably ‘national’, ‘European’ or ‘international’ consol- based in part on the 1972 Schmidt-Debré deal)12. idation. Co-operation and consolidation at the European and international levels should be re- garded as complementary actions for the pres- The defence minister ervation of national technologies in Germany. (CDU) favours the increased marketisation According to the MoD, it was also necessary of procurement for the Bundeswehr. for the government (including the Ministry for Economic Affairs) to support the export of arms and military equipment as a way to keep the In 2014, under pressure from the German com- key technologies in Germany. panies, and in view of the fact that talks on the Sigmar Gabriel, the minister for economy, pre- merger of KMW and Nexter were advancing, sented quite different proposals concerning the the CDU/CSU-SPD coalition started working on shape of the German arms industry and gov- a new strategy for the government’s policy to- ernment support in October 201414. He stuck wards the arms industry. The tone of the de- to his restrictive stance on arms and military bate, widely publicised by the German media, equipment exports to third countries, called for was set by the ministers of the economy and a broader definition of key national competences in the defence industry, and suggested that the 11 Ursula Schwarzer, ‘Umsatz des Panzer-Herstellers Ministry of Defence should define in advance its Krauss-Maffei Wegmann bricht um fast die Halfte ein’, 19 June 2014, Manager magazin, http://www.manag- er-magazin.de/finanzen/artikel/a-976180.html 12 The Schmidt-Debré agreement concluded in 1972 con- 13 Bundesministerium der Verteidigung, Zusammenfass- cerns bilateral intergovernmental defence co-operation ende Überlegungen des BMVg zur Festlegung von Schlüs- between Germany and France. Under the agreement, the seltechnologien, autumn 2014, https://www.tagesschau. governments may not hinder exports to third countries de/inland/diskussionpapier-bmvg-101.pdf of jointly produced arms and military equipment. An ex- 14 Sigmar Gabriel, ‘Rede von Bundesminister Gabriel zu port licence may only be refused in exceptional cases. The den Grundsätzen deutscher Rüstungsexportpolitik’, Schmidt-Debré deal has been applied to such joint proj- 8 September 2014, http://www.bmwi.de/DE/Presse/re- ects as MILAN, HOT, ROLAND, RATAC, C 160 Transall. den,did=661856.html

OSW COMMENTARY NUMBER 180 5 procurement plans and declare what projects in- hand with co-operation in the arms industry. volving German companies it intends to support In line with the Framework Nation Concept in the long term (i.e. after the completion of the which Berlin has been promoting within NATO current ones). The minister also called for a con- in recent years, Germany wishes to undertake solidation of arms-producing companies within strategic military co-operation with certain Germany as a solution that should take prece- states, buttressed by industrial co-operation17. dence before mergers with foreign companies. The document mentions better co-ordination SPD deputies have backed this position while vo- of defence planning, the implementation of cally criticising the KMW-Nexter merger15. joint research and development projects, and joint procurement. Those measures should be The government’s strategy: ‘Europeani- based on unified specifications for arms and sation’ with key national technologies military equipment and an adequate division of industrial tasks between the co-operating In early June 2015 the consultations between countries. (3) The government has also pledged the two ministries, which also involved the Fed- more support for European co-operation and eral Foreign Office and the Chancellery, resulted mergers in the arms industry, on the condi- in the formulation of the German government’s tion that national interests are safeguarded. comprehensive strategy for the arms industry, the first such document in several years16. The strategy underlines the issue of the ‘Eu- In its first complex strategy for its arms ropeanisation’ of Germany’s arms industry. industry in years, Germany has fore- (1) The German government advocates sup- grounded the question of ‘Europeanising’ port measures for the arms sector to be taken this sector. on the EU level (e.g. support for research and innovation, standardisation and certification, the introduction of European standards for Defining the key national technologies is meant the licencing of arms and military equipment to be the instrument that will safeguard Ger- exports, and the development of the Com- man national interests, i.e. keep certain techno- mon Security and Defence Policy). (2) It also logical and production capabilities in Germany calls for more European co-operation and in- while the German arms industry ‘Europeanises’. tegration in terms of the development of mil- It is meant to ensure the security of supplies itary capabilities, which should go hand in for the Bundeswehr in certain areas, but also to preserve Germany’s position as NATO’s im- 15 Rainer Arnold, ‘Ausverkauf deutscher Panzer an Frankreich portant member state in terms of military-tech- verhindern!’, Frankfurter Allgemeine Zeitung, 8 July 2015, http://www.faz.net/aktuell/politik/inland/ruestungsindus- nological capabilities and to secure Germany’s trie-keine-deutschen-panzer-an-frankreich-13690282.html place in the European and global technology 16 Bundesregierung, Strategiepapier der Bundesregierung and production chains. The government has zur Stärkung der Verteidigungsindustrie in Deutschland, 9 June 2015, http://www.bmwi.de/BMWi/Redaktion/PD- identified key technologies in the following F/S-T/strategiepapier-bundesregierung-staerkung-vertei- fields: command (mainly encription), reconnais- digungsindustrie-deutschland,property=pdf,bereich=b- mwi2012,sprache=de,rwb=true.pdf. The last government sance (mainly sensor technology), impact/ef- document concerning the sector was the list of key na- fect (mainly armoured vehicles and underwater tional technological and production competencies agreed between the Ministry of Defence and the Federation of German industries (BDI) in 2007. See ‘Bundesverteidigung- sministerium and BDI, Gemeinsame Erklärung zu Natio- 17 Justyna Gotkowska, ‘Germany’s idea of a European nalen Wehrtechnischen Kernfähigkeiten, 20 November army’, OSW Analysis, 25 March 2015, http://www.osw. 2007, http://www.bdsv.eu/de/Taetigkeitsfelder/Themen/ waw.pl/en/publikacje/analyses/2015-03-25/germa- Technologien.htm nys-idea-a-european-army

OSW COMMENTARY NUMBER 180 6 units), and support (mainly protection). Main- government. The KMW-Nexter merger is an ex- taining these technologies in Germany need ample of an increasingly clear trend for private not be contradictory to the ‘Europeanisation’ German defence companies to merge with for- of the German industry; this may be assured eign partners. However, because of the nega- through bilateral or multilateral agreements tive experiences with such mergers in previous with the partners. years, the German government wishes to have In the strategy, the government also listed the more control of the process, so that consolida- instruments it will use to support the German tion with (for instance) French companies does arms industry, with special focus on key technol- ogies. (1) These include arrangements and joint priority setting between ministries with regard Defining the key technologies is intended to the allocation of research and development as an instrument for guaranteeing nation- funding for defence companies (including for al interests in the German arms industry the development of dual-use products). (2) The as it ‘Europeanises’ itself. government has also pledged to support the arms exports to NATO and EU countries, and also to third countries (if congruent with the not take place at the expense of German tech- political guidelines discussed above) through nology clusters, production plants or subcon- instruments of Ministry for Economic Affairs tractors. To this end, key national technologies and the Ministry of Defence (e.g. training in use were identified, which will be supported and of arms and military equipment provided by the protected, also through the conclusion of inter- Bundeswehr). The government also intends to governmental agreements on strategic defence conclude inter-ministerial or intergovernmental co-operation issues18. Those deals may regulate agreements to boost the chances of German such issues as the ownership structure of joint companies in large foreign procurement pro- companies, the locations for the development grammes. (3) The maintenance and develop- of technologies and production, subcontrac- ment of key technologies are to be supported tors and exports of the jointly developed arms through preferences in the purchases of arms and military equipment19. In relation to the and military equipment by the German MoD KMW-Nexter merger, such an agreement be- and through an appropriate industrial policy. tween Germany and France is expected to be Finally, the government has called for a broader concluded in the autumn of 2015. public debate on the role of the arms industry and its exports for the German economy and the German and European security policy, in or- der to make public discourse on the issue more factual and less one-sided. 18 Minor parliamentary question concerning the merger of Krauss-Maffei Wegmann and Nexter, BT-Drucksache Germany’s strategy for its arms industry is 18/5511, 30 July 2015, www.bmwi.de/BMWi/Redaktion/ founded on the belief that there is no alterna- PDF/P-R/Parlamentarische-Anfragen/2015/18-5511,proper- ty=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf tive to European consolidation of that industry, 19 Martin Greive, Thorsten Jungholt, Gesche Wüpper, ‘Wie but the terms and conditions of consolidation Deutschland die Rüstungskompetenz verscherbelt’, Die should be shaped, to a much greater extent Welt, 2 August 2015, http://www.welt.de/wirtschaft/ar- ticle144714023/Wie-Deutschland-die-Ruestungskompe- than they have been hitherto, by the German tenz-verscherbelt.html

OSW COMMENTARY NUMBER 180 7 APPENDIX

List of Germany’s largest arms manufacturers Name Main products Plants in Germany Number of employ- Revenue ees in Germany Airbus Defence satellite subassemblies, probes Ottobrunn/, around 20,000 in €12.7 billion & Space and satellites, Eurofighter aircraft, Friedrichshafen/ Germany (of a total (2014) for the Airbus Group unmanned aircraft, radar technol- Baden-Württemberg, of 45,000) entire compa- division ogies, A400M military transport Manching/Bavaria, ny, not just in aircraft; servicing of Bundeswehr Ulm/Baden-Württem- Germany aircraft berg, Bremen Rheinmetall Combat Systems division: wheeled Headquarters in around 8000-9000 around €2.2 Defence armoured personnel carriers Düsseldorf, manufac- in Germany billion (2014) part of the (Fuchs, Boxer; co-operation with turing plants in various (of a total of (the revenue Rheinmetall AG KMW), infantry fighting vehicles locations including 10,000) of the entire concern; differ- (Marder, Puma; in co-operation , North Rheinmetall AG ent subsidiaries with KMW), tanks (Leopard 2; Rhine-Westphalia, concern is €4.6 (also foreign) co-operation with KMW), self- Baden-Württemberg, billion ) operate within propelled howitzers (PzH 2000; Bavaria, Schleswig three divisions co-operation with -Holstein z KMW), turrets, cannons and ammunition; Electronic Solutions Division: air defence system (Mantis), ‘soldier of the future’ system, command and reconnaissance systems, sensors, simulators and trainers; Wheeled Vehicles Division: military trucks Airbus Helicop- Helicopters: H135, H145, Tiger, Donauwörth/Bavaria, around 7000 in €5.9 billion ters marine version of NH90; helicop- Kassel/Hesse Germany (of a total (2014) for the Airbus Group ter servicing of 20,000) entire compa- division ny, not just in Germany ThyssenKrupp submarines (class 209, 210, 212A, Kiel/Schleswig around 3200 around Marine Sys- 214, 216); -Holstein, in Germany (of €1.7 billion tems (TKMS) naval surface vessels: frigates Hamburg, Emden/Low- a total of 18,000 (2013/2014) – business area (124 and 125, MEKO A-200, MEKO er Saxony TKIS employees and (the revenue within Thyssen- 600, MEKO CSL; corvettes (MEKO 157,000 employees of TKIS is €6.2 Krupp Industrial 80, 90, A-100, 130), patrol boats of the ThyssenKrupp billion euro) Solutions (TKIS) (MEKO OPV), Berlin-class combat concern) at the Thyssen support ship) Krupp concern Diehl Defence guided missiles: Sidewinder family Überlingen/ around 2800 in around €500 part of the Diehl (in co-operation with Raytheon), Baden-Württemberg, Germany million (2014) concern which IRIS-T family of missiles, LFK NG Nonnweiler/Saarland, includes: missiles (in co-operation with Röthenbach/Bavaria, Diehl BGT De- MBDA Deutschland), IDAS missiles Troisdorf/North fence and sub- (in co-operation with TKMS), Rhine-Westphalia sidiaries (AIM, RBS15 Mk3 missiles (in co-oper- Schrobenhausen/ JUNGHANS ation with Saab Dynamics), the Bavaria, Ottobrunn/ Defence) and the RAM system (in co-operation with Bavaria, joint ventures MBDA Deutschland and Raythe- Dunningen/ (Diehl Raytheon on), PARS 3 LR missiles (co-oper- Baden-Württemberg Missile Systeme, ation with MBDA Deutschland), Diehl&Eagle LR missiles (in co-operation Picher, Euro with z Rheinmetall and Rafael) Spike, PARSYS, Air defence system: IRIS-T SLM RAM-Systeme) Ammunition: hand grenades, ammunition for artillery and boat cannons SIMONE surveillance and recon- naissance systems for warships and civilian vessels

OSW COMMENTARY NUMBER 180 8 Name Main products Plants in Germany Number of employ- Revenue ees in Germany Kraus-Maffei combat systems: Leopard 1 Munich/Bavaria, around 2600 in Ger- around €1 billion Wegmann (KMW) and 2 main battle tanks (in Kassel/Hesse, Ham- many (of a total of (2014) co-operation with Rheinmetall burg, Konstanz/ around 3200 KMW Defence), Puma infantry fight- Baden Württem- employees) ing vehicles (in co-operation berg, Kölleda/ with Rheinmetall Defence), air Thuringen, Meinz/ defence systems (Fennek armed Rheinland-Palati- with Stinger missiles), artillery nate, Inglostadt/ (AGM, DONAR, MARS II, PzH Bavaria, Freisen/ 2000 – in co-operation with Saarland Rheinmetall Defence), command systems support systems: Dingo 2, Fen- nek, Mungo multitask armoured vehicles (reconnaissance, command post, NBC recon- naissance, transport), engineer equipment (combat bridges, ferries) armament systems: mechanical gun mounts, remote controlled weapon stations training and simulations: civilian and military, battlefield simu- lators Lürssen Defence fast patrol boats, offshore Bremen, Hamburg, around 1600 around €400 one of the two patrol vessels, corvettes and Lemwerder/Lower in Germany million (2013) Fr. Lürssen Werft frigates (in co-operation with Saxony, Wilhelm- (the revenue of business areas TKMS), minesweepers & mine- shaven/Lower Fr. Lürssen Werft hunters, fleet support vessels Saxony, Berne/Low- is €829 million) er Saxony, Wolgast/ Mecklemburg-Vor- pommern, Rends- burg/Schleswig-Hol- stein MBDA Deutschland co-operation in the manufac- Schrobenhausen/ around 1300 around €400 daughter company ture of air defence systems: Bavaria, Aschau am in Germany million of MBDA PATRIOT, MEADS, LFK NG; Inn/Bavaria, Ulm/ manufacture of guided missiles: Baden-Württem- Taurus KEPD 350, PARS 3 LR, berg RIM ESSM, MILAN Heckler & Koch pistols, submachine guns, Oberndorf/ around 730 around €220 assault rifles, machine guns, Baden-Württem- in Germany million (2013) precision rifles, 40-mm systems berg

Author’s own research

EDITORS: Adam Eberhardt, Anna Kwiatkowska-Drożdż, Centre for Eastern Studies Katarzyna Kazimierska, Anna Łabuszewska Koszykowa 6a, 00-564 Warsaw TRANSLATION: OSW phone: +48 | 22 | 525 80 00 CO-OPERATION: Jim Todd e-mail: [email protected] DTP: Bohdan Wędrychowski The views expressed by the authors of the papers do not Visit our website: www.osw.waw.pl necessarily reflect the opinion of Polish authorities

OSW COMMENTARY NUMBER 180 9