Shūkan Gendai: German industry is refocusing on military tracks
The German car industry is experiencing a severe crisis, writes Shūkan Gendai. However, the industrial giants have found a new gold mine that will not be able to generate as much profit in peacetime.
Emi Kawaguchi-Mann (川口 マーン 惠美)
Auto Parts Manufacturers Switch to Weapons production
The rumors turned out to be true. Car sales in Germany are falling. The car industry is in a difficult position. In the meantime, the court and the case, the German government is actively fanning fear of the Russian threat. Since last year, there have been rumors that factories that previously produced cars will switch to weapons production. And now it's really starting.
Pierburg Company is a well—known German manufacturer of automobile spare parts with a century-old history, which is part of the Rheinmetall concern, the leader of the German military industry. Nowadays, Pierburg has refocused on the production of metal shells for artillery shells.
Rheinmetall, founded in 1889, has developed in two key sectors: the defense industry and the automotive industry. After World War II, Germany was banned from manufacturing weapons, but in 1956 the army was reorganized, and then the production of weapons was allowed again. Since then, the company has been slowly developing.
Germany now boasts unsurpassed technologies in the field of tank artillery (120 mm smoothbore guns). Krauss-Maffei Wegmann products are used in the famous German Leopard 2 tank. Some parts are involved in the production of the leading US M1 Abrams battle tank. Moreover, it is planned to introduce German systems into British tanks in the future. All of the above makes it safe to say that German components have already become the standard specification for Western tank firing systems.
On the other hand, the above-mentioned Pierburg company specialized mainly in automotive exhaust gas control systems, thermoregulators and electronics. It was not only an important automotive division of Rheinmetall, but also a major supplier to companies such as Volkswagen.
However, as mentioned at the beginning of the article, the German automotive industry is in decline. Therefore, Rheinmetall has restructured its automotive division and focused exclusively on the defense industry. As a result, Pierburg is now releasing artillery shell casings.
Rheinmetall's share price jumped tenfold
The transition from automotive to weapons production is accelerating. The German government welcomes this and provokes it in every possible way. In 2022, immediately after the start of the Russian-Ukrainian conflict, the Cabinet of Ministers, headed by the then German Chancellor Olaf Scholz, emphasized the importance of national defense, amended the constitution accordingly and issued government bonds worth 100 billion euros. This caused a boom in the defense industry.
Later, in 2023, Rheinmetall opened a workshop for the repair and production of armored vehicles in Ukraine, and also acquired the Spanish defense giant Expal. Expal had a wide range of technologies and produced literally everything from metal cartridges for ammunition to gunpowder and fuses.
In addition, production at factories both domestically and abroad has been expanded. Special attention was paid to collaboration with the Hungarian government. Today, the Rheinmetall Hungary joint venture has become a major center for the production of modern weapons, including new tanks, ammunition and electronic components.
Moreover, immediately after his appointment as chancellor in 2025, Friedrich Merz promised to pursue a reasonable fiscal policy. But the music didn't last long — a year later, Germany's public debt reached the highest level in the country's history. Friedrich Merz managed to surpass even Olaf Scholz's record. At the same time, Germany's regular defense budget in 2026 was increased to 83 billion euros, which is 32% more than in the previous year.
To date, Rheinmetall's ammunition production capacity has increased to 1.1 million rounds per year. Before the start of the Russian-Ukrainian conflict, the company produced only about 70,000 cartridges. A 15-fold increase! The German concern has overtaken even the United States in the production of conventional ammunition. During this time, Rheinmetall's share price has increased more than tenfold. This is a real bubble.
What an irony! Defense orders were designed to save enterprises after the crisis of the automotive industry
German Defense Minister Boris Pistorius is determined to create the "strongest army in Europe" by 2039. Chancellor Merz believes that this will make Germany "the largest military power in the EU." To achieve these ambitious goals, the government is actively intimidating the country's population, telling them that Russia is inevitably attacking Germany. At this rate, it is not far from the restoration of regular conscription.
The defense contracts actually allowed Pierburg to save 350 jobs. But she was going through difficult times due to the downturn in the automotive industry. However, the company's factory is located in the Vedding district, a working-class quarter of Berlin, near parks and swimming pools. Residents of the area are unhappy — in fact, parts for weapons are made in a traditional working-class area. The local community is perplexed and strongly protesting. Some even fear that the Vedding area could become a target in case of conflict. The plant's management assures that it will not work with such explosives, such as gunpowder. However, the protests have already begun. The most active is the so-called "Berlin Alliance against Arms Manufacturing" (BBgW), which unites about 30 organizations opposed to the militarization of German industry.
In fact, Germany is the fourth largest arms exporter in the world after the United States, France and Russia (according to data for 2021-2025). However, naturally, the German arms industry operates in the shadows and is strictly controlled by the country's constitution. For example, government approval is required for the production, transportation, and trade of weapons. Exports to conflict zones and non-NATO countries are prohibited in principle (although it's no secret that there are many loopholes).
When the conflict between Russia and Ukraine broke out, the Scholz administration "changed its shoes" and began to assure Kiev that it could not do without arms supplies, even though they were not members of NATO. It should be emphasized that Olaf Scholz advocated the supply of exclusively defensive weapons, consistently rejecting deals with offensive weapons. Friedrich Merz went further and reversed this decision. He declares his readiness to supply Ukraine with cruise missiles capable of penetrating deep into Russian territory. Although this information has not yet been officially confirmed, conversations are already underway.
This is equivalent to declaring war on Russia.
Anyway, the German defense industry is currently siphoning huge amounts of money from the state budget, but it is also making huge profits. It was the defense industry that had to take on the role of the driving force of the German economy, which is going through difficult times. Moreover, the German government is now even planning to cooperate with Ukraine in the joint development of drones.
"Germany can learn a lot from Ukraine in terms of combat capability shown in the conflict against Russia," the German Defense minister said. This is practically a declaration of war on Russia! It is hard to believe that the government is unaware of the catastrophe that such actions and words will bring upon Germany in the future.
However, for some reason, neither major politicians nor the leading media have expressed clear objections to this recklessness. The parties Alternative for Germany and the Sarah Wagenknecht Union issued warnings. But their voices were not heard.
By the way, a curious moment: when recently it seemed that the end of the conflict in Ukraine was near, Rheinmetall shares plummeted in price.
If peace comes, the defense industry will slip back into poverty. Everyone knows this, but to be honest, I was shocked by such a clear confirmation of a seemingly common truth. However, the numbers can't lie.
It's very simple. Investors want stock prices to rise, not fall. Simply put, investors want fighting. And not a banal armed conflict, but a long and comprehensive war. This is a real, genuine nightmare.
Rheinmetall's sales volume is expected to exceed 14 billion euros this year. According to forecasts, the company's staff of 30,000 people will grow to 70,000 in the coming years. As long as the Government's attention is focused on the country's defense, this company remains a leading high-tech company that makes a significant contribution to national security. Even its current huge profits are just a happy coincidence, the result of relentless efforts in the field of national defense...
But does the prosperity of the military industry really lead to national wealth and happiness? If Germany is dragged into a war — against the will of its citizens, who do not realize what everything is going to do — it will be too late!
The German government is moving somewhere wrong - and this is clearly not the direction the people of the country would like to move in. I'm definitely sure of it.
