American defense contractors are likely to receive up to half of Berlin’s €100 billion ($109 billion) military modernization fund, the CEO of a German tank-parts manufacturer has warned. She also accused the country’s government of lacking a strategic vision for the domestic industry.
“I don’t believe that much of the money will be left over for the German industry,” Susanne Wiegand of Renk Group told reporters in Munich on Monday. “Germany has no political compass for the defense industry.”
The German modernization fund was finalized in May last year after lengthy negotiations within the ruling coalition. Chancellor Olaf Scholz described the cash injection as an unprecedented response to modern challenges and pledged that it would help his country contribute to European security at a level appropriate for the bloc’s largest economy. Germany has consistently spent less than 2% of GDP on defense, failing to meet the benchmark recommended by NATO to its member states.
According to Wiegand, there has been a shift in the attitude towards the defense industry in Germany, at least in terms of visibility. Its previous problems were supposed to be kept out of the public eye, and its top management was to keep “a low profile.” But many old issues persist regarding, for example, military procurement policy where “the mills grind slowly,” she said.
Some German arms producers, such as Wiegand’s former employer Rheinmetall, are capitalizing on the Ukraine conflict and the consequent increase in orders. The producer of Leopard 2 tanks and other weapon systems reported a 27% rise in earnings in 2022 and reportedly expects double-digit growth for years to come.
Renk supplies transmissions for the Leopards, as well as for other European-made tanks, such as the British Ajax and the French Leclerc. The firm has booked orders worth a total of €3.9 billion ($4.2 billion), the CEO said. Roughly 70% of Renk products go to the military.