Daily Management Review

German Defense Firms are Benefiting from the Ukrainian Crisis


08/26/2015


German arms manufacturers may benefit from an increase in the number of international crisis regions.

- First of all, we register a particular interest in the acquisition of military equipment or its modernization in Eastern Europe and in some NATO countries, - says Frank Haun, head of the firm Krauss-Maffei Wegmann, engaged in the production of weapons.



dpa
dpa
He does not mention the amount of military equipment, which may be involved in the alleged orders from these regions. However, experts in the field of arms are basing on the fact that demand in the Ukrainian, Lithuanian and Croatian armies for the western military equipment will increase. According to reports, the Polish army is currently investigating the possibility of upgrading 130 of their tanks "Leopard". As for Lithuania, its armed forces are more interested in buying German-made self-propelled howitzers.

In both these cases, benefit from new deals could get the company Krauss-Maffei Wegmann, or its German competitor Rheinmetall. Krauss-Maffei Wegmann few weeks ago signed a corresponding agreement and completed the process of a planned merger with a French company Nexter. On Monday, the Office of the Federal Chancellor has approved the merger. And even after the deal, the two companies will have a sufficiently large number of competitors with a similar offer, both within these countries and beyond, representatives of the federal agencies stressed on Monday in Bonn.

Krauss-Maffei Wegmann and Nexter's merger

As a result of the merger, Krauss-Maffei Wegmann and Nexter will become the leading European manufacturer of weapons with almost 6 thousand employees and a turnover of around two billion euro. Given the shrinking national defense budgets, both of these companies are going to improve their position in the global competition. Both of them have aired their plans for a merger of the principal facilities for the production of weapons back in 2014, and the merger agreement was finally signed at the end of July in Paris. Krauss-Maffei Wegmann produces, in particular, combat "Leopard" tanks, and Nexter - "Leclerc" tanks.

The driving force behind this Franco-German merger is Haun - CEO of Krauss-Maffei Wegmann. This 56-year-old manager has headed the German company since 2006, and now is actively engaged in the creation of Europe's largest manufacturer of battle tanks and artillery.

Krauss-Maffei Wegmann and Nexter will work together under the roof of the new holding company, that will be managed from the Netherlands. As a result of this transaction, a new association with 6 thousand employees and a turnover of 2 billion euros per year will emerge.

For Haun, who has been in preparation for this project for more than two years, his entrepreneurial dream almost came true. Ultimately, the deal represents a milestone in the field of armaments policy, where representation, specific to individual nations, previously dominated. "If there is no impulse from the policy with respect to the internationalization of our industry and, ultimately, the harmonization of standards and regulations, then our industry must take the first step in this case " - Haun formulates the dilemma existing in this industry.

If a new alliance with the firm Nexter begin its work in 2016 according to the plan, then in the medium term we can even imagine that the new duo will be joined by other tanks manufacturers from Italy or the UK. The door is open to the German competitor Rheinmetall too, which is tied with Krauss-Maffei Wegmann by working together on various projects, including the production of light wheeled armored personnel carriers and armored Boxer Puma, emphasizes Haun.

Original by Ulrich Friese, Frankfurter Allgemeine
 






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