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Further Reading

Germany - Military Industry

Whereas the underlying justification for both France and Britain to activly support an ambitious armaments program is their position as sovereign and accepted world players, the justification for a national arms industry in the Federal Republic of Germany is much less clear. Nowhere as in the area of security has West Germany had to tread more carefully due to Germany's history as a belligerent, expansionist nation.

Germany's capacity to produce its own arms and military equipment grew simultaneously with the development of the Bundeswehr. As a matter of policy, arms production is confined to the private sector. There are no government-operated defense plants, and most companies involved in arms manufacture are predominantly engaged in civilian industrial production. Private industry accounts for 85 percent of all military research and development, procurement, and maintenance. Nevertheless, defense production represents no more than 3.4 percent of the total value of output by the country's processing industries. Although some 225,000 persons work on defense contracts, this group constitutes less than 1 percent of the workforce.

Some of the firms are corporations (AG), some are limited-liability companies (GmbH). "AG" is a corporation whose shares are, or can be, traded publicly whereas, a "GmbH" is a privately- owned firm whose shares cannot be offered on the public market. From the perspective of corporate operations, there is little orno difference between these two types of firms both of which can, in U.S. terms, be regarded as corporate entities, i.e.,"artificial persons."

The Armaments Division of the Ministry of Defense has responsibility for planning, controlling, and supervising the armaments sector. Under it the Federal Office for Military Technology and Procurement (Bundesamt für Wehrtechnik und Beschaffung--BWB) in Koblenz procures all defense matériel. The BWB is a civilian agency staffed by some 18,300 persons, about one-third of whom work at seven armaments research and testing centers, each responsible for a particular category of systems. Certain major joint projects, such the Tornado and the European Fighter Aircraft (EFA), are independent of the BWB's supervision.

The Bundeswehr estimates that about 70 percent of its major procurement items are produced as part of international projects. These have included the EFA and Tornado aircraft (both developed in cooperation with Britain, Italy, and Spain); the Alpha Jet, the Roland short-range air defense system, and the Tiger PAH-2 antitank helicopter (all joint projects with France); and the multiple-launch rocket and NATO identification systems, developed in cooperation with several NATO countries.

Only in the aerospace and munitions industries did defense account for 50 percent or more of sales. Among the largest firms were Deutsche Aerospace (DASA), founded in 1989 to incorporate the aerospace and other defense activities of the Daimler-Benz group. DASA had a controlling interest in Messerschmitt-Bölkow-Blohm (MBB), located at Ottobrunn near Munich, which produces combat aircraft, helicopters, and HOT, Milan, and Exocet missiles. It also controlled Dornier, which produces various equipment and aircraft and which has been a major contractor in the EFA program. Motoren und Turbinen Union (MTU), another unit of DASA, is a large producer of parts for aircraft, ships, and tanks.

Other German arms-producing firms which did not merge with other companies dropped significantly in rank; e.g., firms such as Siemens, Diehl, Rheinmetall, Krupp and Thyssen Industrie. All in all, there were only seven German firms among the top 100 arms-producing firms in 1990. New entries on the list in 1990 were the shipbuilding companies Bremer Vulkan and Lürssen. Mannesmann was not a true new entry because, it simply took over Krauss-Maffei. Not included in the top-100 list in 1990 was Krupp MaK Maschinenbau GmbH, Kiel, a firm engaged heavily in tank production. Given the size of its military sales, this firm should have been ranked somewhere between 50 and 60 in defense sales in 1990. Some of the top-10 German arms-producing firms depend heavily on defense contracts. Blohm and Voss, Wegmann and Howaldtswerke are three such examples. As a matter of fact, these smaller firms were more dependent on arms production than some of the large firms; i.e., Daimler Benz, Siemens, Mannesmann, Krupp and Thyssen. It is interesting to note that of the top-100 arms-producing companies in 1990, 47 were U.S. companies and 7 were German companies.

Although the individual firms contracting with the German Ministry of Defense exhibited relatively low shares of arms production in total sales, the opposite held true for another kind of concentration index. The ten largest arms-producing firms in Germany received about 68 percent of all acquisition contracts in 1988. The comparable figure for the U.S. was 35 percent.

German Arms Exports

According to ACDA, known German exports of arms were valued at an estimated US$1.1 billion in 1993 and constituted 0.3 percent of total German exports; arms imports had a value of US$250 million and amounted to 0.1 percent of total imports. During the 1991-93 period, nearly half of Germany's arms transfers were made to other NATO countries, notably Portugal, Greece, the United States, Turkey, and Norway. Switzerland, the Republic of Korea (South Korea), and Finland were also substantial clients, while smaller quantities were shipped to Singapore and Colombia. In the Middle East, arms valued at US$820 million were exported to five countries during this period, Saudi Arabia taking US$525 million and Israel US$200 million.

West Germany's grant-type military assistance to other NATO countries focused on Turkey, Greece, and Portugal. The major recipient was Turkey, a beneficiary of German military aid since 1964. Arms transfers included Leopard tanks, Milan antitank missiles, and retrofit kits for M-48 tanks. West Germany also assisted Turkey with infrastructure and defense manufacturing facilities.

Although West Germany imposed controls on weapons exports, repeated charges have been made that arms shipments by private West German suppliers were not carefully monitored. In the 1980s, evidence mounted that West German firms were instrumental in assisting Iraq and Libya in developing weapons of mass destruction. In 1988, based on information supplied by the United States implicating West German firms in the construction of a poison gas plant at Rabka, Libya, the owner of one company was sentenced to prison for illegal exports and tax evasion. In early 1993, the German government announced that German firms were being investigated for delivering equipment for a second chemical weapons factory in Libya. In a report issued in 1991 by the International Atomic Energy Agency, thirteen Western companies, more than half of them German, were identified as having contributed to the Iraqi nuclear program.

In 1992, after extensive international publicity over the inadequate enforcement of arms controls, the Bundestag approved legislation to create a new government monitoring agency. The new law authorized screening of mail and use of wiretaps to facilitate investigations of suspected violators. Harsher punishments could be imposed, including confiscation of profits from illicit arms sales and imprisonment of company officers.

Under German arms policy, export permits are denied for the sale of weapons to areas of tension. This policy has applied in particular to the Middle East, where Germany felt a moral obligation to avoid actions that could endanger Israel. In 1992, despite a ban imposed by the Bundestag, at least fifteen Leopard tanks were shipped to Turkey, where they were apparently used by the Turkish army to attack strongholds of the rebel Kurdish Workers' Party. The minister of defense, Gerhard Stoltenberg, claimed that the shipment had been approved without his knowledge. Nevertheless, Stoltenberg was forced to resign from the government in the ensuing uproar.

In early 1993, the Bundestag disapproved the delivery of submarines and frigates to the Taiwan government, although SAM systems produced in conjunction with the United States were approved for sale under the rationale that they were purely defensive weapons. Diesel engines for a large quantity of French tanks sold to the United Arab Emirates were also approved for export.

Domestic critics of Germany's arms export practices assert that German firms have easily circumvented controls through coproduction schemes or deliveries of key parts to other countries; through licensed production in other countries of arms that reach prohibited users; through the sale of technology and whole weapons plants, of which Germany is the world's foremost exporter; and through sales of items improperly labeled civilian goods. Critics claim that the UN embargo on arms sales to South Africa was violated by false labeling of troop transport vehicles, helicopters, and minesweepers.

VJ101C-X2

The VJ 101 C featured tilting engines for increased thrust, reheat for takeoff, simple translation, triangular decentralization of the engines for thrust modulation, and moderate ground effects. Two experimental aircraft were built, with and without reheat, capable of Mach 2 and Mach 1.04, respectively. The mechanical flight control system and tests were conducted both for hover rig and flight configurations. Ground suction, acoustic and thermal loading, sodium silicate coatings to avoid ground corrosion, and recirculation were considered. Results of the follow-on project to the VJ 101 C, the AVS, which was developed by NASA, suggested that trends toward thrust-to-weight ratios exceeding one, in concert with low wing loading, favor the development of V/STOL aircraft.

Experimental application equipment for the preparation of remote landing and take-off sites for turbo-jet VTOL aircraft was designed, fabricated and demonstrated. Three full scale remote sites were prepared in England and the Federal Republic of Germany. Evaluation of these sites was accomplished with the P.1127 and the VJ101C-X2 aircraft respectively. These remote sites were prepared by spraying a modified chlorinated polyester resin and fiberglass roving over essentially unprepared ground. Modifications to the application equipment, further development of materials and fabrication techniques were made as a result of the experience gained in the preparation and evaluation of these remote sites. Preliminary remote site design criteria were developed for determining site thickness, site size and shape. Experimental pads were prepared over various soil types and tested using typical wheels and tires to obtain data for determining site strength requirements. A methodology for determining site size and shape was further refined by conducting downwash flow field studies using models of the P.1127, VJ101, XC-142 and DO-31 aircraft.

The artificial stabilization of an aircraft requires a fully electrical control system. Such control systems were used in VTOL combat aircraft (VJ 101, VAK 191), although only for short-term use. In conventional aircraft design, the size and position of wings and control surfaces and the arrangement of these surfaces with respect to the aircraft's center of gravity are selected in such a manner that the aircraft exhibits satisfactory maneuverability in all degrees of freedom in any possible flight situation and that the various modes of elastic and flight-mechanics oscillation have an adequate natural stability. It is selfevident that the performance and costs-effectiveness of an aircraft are considerably impaired by the necessity of satisfying these requirements. If the requirement for inherent stability is eliminated, new possibilities for aircraft design arise which promise further performance enhancement.

Control of VTOL aircraft in hover and low-speed flight has been an important item in pacing the development of this type of aircraft. The required reaction forces for attitude control during hover have commonly been achieved by the use of engine compressor bleed air method, used on early jet lift VTOL aircraft such as the Shorts SC-1, Bell X-14A, and Lockheed XV-4, has been successful whenever a sufficient quantity of bleed air was available. Subsequently, particularly forlarger VTOL aircraft such as the EWR VJ-101 and Dornier DO-31, engine thrust was used directly for control. Advantages of improved efficiency and lighter weight, but when it is used, certain items should be considered carefully to insure satisfactory handling qualities.

Krauss-Maffei

Krauss-Maffei, a corporation with 5,000 employees and annual sales of 1.4 billion DM in 1990, is the prime contractor for the Leopard-2 tank. The majority ownership position in Krauss-Maffei was held by Mannesmann AG, one of the largest corporations in Germany (125,000 employees and 24 billion DM sales). Minority ownership positions were held by the State of Bavaria and Diehl GmbH, one of the Leopard-2s' sub-system manufacturers.

The company underwent substantial change in the late 1980s. In 1985, for example, the firm had annual sales of 2 billion DM and employed 5,200 people. However, whereas 75 percent of sales were due to defense production, only 25 percent of the labor force worked in the defense division. This was explained by the high share of inputs for tank production bought from other firms with Krauss-Maffei doing the final assembly only. This latter outcome is the result of the German MoD's desire to avoid the development of a highly specialized tank industry or tank manufacturer. As such, it had been the policy of the German Ministry of Defense to keep the value-added component allocated to the prime contractor at as low a level as is technically possible.

However, for Krauss-Maffei, profits were very large in the defense area and, in fact, covered heavy losses in the civilian section, making overall results in 1985 and 1986 slightly positive with 0.1 million DM in profits earned in both years. Between 1985 and 1990, defense sales dropped from 1,537 billion DM, on average, or by 15 percent annually, to 669 million DM, or a drop of 57 percent within five years. However, employment effects were by far not that large in the defense section due to the low-value added content of tank production. Because of this, employment decreased only slightly, from 1,250 to 1,100 employees, and to approximately 900 at the end of 1992. Total company sales declined by only 25 percent during this period in as much as civilian production (plastics processing and general-processing technology) increased. Dependency on defense declined from a 75 percent sales share in 1985 to only 46.4 percent in 1991. From 1988 to 1991, the share of exports in defense sales increased steadily from 23 percent to 40 percent.

The company claimed to be pursu-ing a threefold conversion-oriented strategy by cutting costs in the civilian sector, enhancing civilian areas of business (in part with new products) and restructuring its organization, i.e., purchasing of companies in related civilian fields of business. But the military industrial experience gained by the firm in the defense area was expected to be only of a very limited use. Parts of the "know-how" acquired can be used for civilian application, e.g., in the area of simulation technology. The production sites, in particular for tank assembly, however, cannot be converted into civilian production, and only one of the firms's products, transportable road beds, appeared to have a dual-use potential.

Wegmann

Wegmann AG, the manufacturer of the turret for the Leopard-2, was pursuing a strategy of rapid diversification into civilian fields in the early 1990s. This program included the expansionof existing civilian product lines, in particular in the field of control and measurement devices, general systems electronics, and automotive-related products. In keeping with its diversification policies, Wegmann purchased a number of smaller firms in related business areas.

As far as its defense markets were concerned, the company was seeking to improve its market position and to respond to potential military requirements. As operating costs were becoming increasingly relevant to the military forces, experienced management "know-how" had become critical. Here, Wegmann was seeking to apply for new defense projects as prime contractor using the administrative know-how acquired in managing a critical system for the Leopard-2. Since economizing on fuel requires an expansion of simulation equipment, one of the technological strengths of the firm, the firm was moving aggressively into this market. Finally, since asmaller Army implied less personnel available for in-house maintenance activities, the firm wanted to largely take over maintenance services for the Bundeswehr.

As a result of these early 1990s programs, the firm managed to keep employment fairly constant at 1,800 employees during the 5 years from 1985 to 1990, although total sales decreased by about 5-10 percent per year, from 780 million DM in 1987 to 610 million DM in 1990.

Rheinmetall and MaK

In the early 1990s Rheinmetall and MaK, two subsystem manufacturers, followed different lines of development. Rather than diversifying out of the defense area, they purchased stakes in other large defense-oriented corporations. One bought a majority stake inone of the most important other subsystem manufacturers in the fall of 1990, claiming that defense technology "has been and will be" its core field of business. Since total procurement volumes were shrinking, the corporation sought to exploit synergy effects, mainly in the area of armored vehicles,simulation technology, and unmanned vehicles which have dual applications in both defense and environmental protection. Hence, the share of defense sales for these firms kept constant at about 40 percent. For 1992, sharp cuts in the defense-oriented labor force, approxi-mately 1,000 out of 2,800 employees, were anticipated.

The Diehl Company

The Diehl Company, a systems manufacturer for the Leopard-2, bought not only a 25 percent stake of the second-source prime contractor but also purchased two large tank factories in Eastern Germany. In doing this, it was responding to a new defense industry requirement, that is, the destruction of superfluous military equipment, in particular tanks and ammunitions. As a result of this, the share of defense out of total sales (2.38 billion DM, 2.58 billion DM and 2.9 billion DM from 1988-90) remained constant at 45 percent in 1988 and 1989 and even increased to 48 percent in 1990. Employment increased from 14,000 to 15,000 from 1988-90 and declined by only 600 in 1992, a recession year in Germany. Since 1991, and especially in 1992, this firm pursued a definitive conversion strategy by moving aggressively into commercial markets and definitely strove to cut its high dependency on defense sales as rapidly as is possible.

Atlas Elektronik AG

Atlas Elektronik AG was a company with 3,300 employees in 1992, 1,600 of whom worked in the defense area. Since 1986, the company had been pursuing an active strategy of enhancing its commercial product lines. Management saw the main prerequisites for a successful conversion as a well-specified and credible political planning process for future defense procurement. Given such planning, combined with general political support for conversion, the company claimed in 1992 that conversion will take 4-6 years. In the absence of political planning, the company believed that full conversion would take 8-12 years. The firm responded to cuts in the defense budget by enlarging its existing environmental protection markets, e.g., the detection of sea and ground pollution with the help of radar and sonar technology, and electronic guidance systems for traffic flows. The defense divisions planned to focus their efforts on electronic simulation technologies and applications for robots.

The short-run response to conversion implemented by this company consisted of cutting the costs off its commercial products through reductions of overhead and adapting the organizational structure of the firm to its predicted future needs. Long-run consequences were a new direction for its basic research activities as well as a change in the training of the labor force. Executives called for a public-task "environmental protection" program supported and financed by the federal government and claimed that the restrictive changes in export legislation were a main obstacle to a successful conversion.

http://werften.fischtown.de/archiv/deschimag.html http://werften.fischtown.de/archiv/agweser1.html http://www.man.de/MAN/ http://www.250-years-man.eu/en/

1758 - Hüttengewerkschaft

Münster canon Franz Ferdinand von Wenge had to use all his powers of persuasion on his sovereign, Archbishop Clemens of Cologne. But not until after making the Archbishop’s administrators all manners of promises, giving them money – and finally, six excellent Westphalian hams – did he get permission to start up the first charcoal blast furnace and foundry in the St. Antony Ironworks on October 18, 1758. At this moment, the industrial age of iron processing began in the Vest Recklinghausen area of Germany’s Ruhr region. Where the name “St. Antony” comes from, however, still remains unclear. St. Antony – the saint held responsible for recovery of all types of lost objects – and theoretically, of an iron mine as well – might be an appropriate patron just as much as the ironworks’ builder Jean Antony von Graes. Admittedly, progress at St. Antony was very slow at first. The high phosphorus content of the local ore made it resistant to forging. Then there was the cumbrous administrative red tape, difficulties in obtaining raw materials, a lack of know-how by workmen and last but not least, an underdeveloped market. In the first years, von Wenge operated the St. Antony Ironworks with an employed master craftsman at his own risk. The hammer mill established in 1766 enabled iron bars and shotgun barrels to be forged. One year later, a second blast furnace and ore washing facility had to be set up due to great demand for the ironworks’ products. Unfortunately, attempts in 1771 to fire the blast furnaces with hard coal instead of charcoal – supplies of which were dwindling – failed. Miners did not yet know that to do this, hard coal must first be converted to coke. In the 1790s, not only the St. Antony Ironworks, but also the later established, neighboring ironworks “Gute Hoffnung” (1782) and “Neu Essen” (1791) were fighting to stay afloat. Franz Ferdinand von Wenge died on September 5, 1788 at the age of 81. The grandson of his sister Johanna Robertine von Hövel inherited St. Anton, but let the lease run out and finally sold the ironworks. When Gottlob Jacobi – hardly 20 years old – took over the Neu Essen Ironworks in 1791, the young mining industry experienced a new type of entrepreneurial leadership. Wherever he could, Jacobi sought after technological progress and kept his eye on developments in foreign countries – including England, Belgium and Upper Silesia. This is how he found his like-minded partners: the brothers Franz and Gerhard Haniel and their brother-in-law Heinrich Huyssen. They too had recognized the great potential in mining and the iron and steel industry. In 1805, the four partners bought the St. Antony and the Neu Essen Ironworks. Three years later, they also bought the Gutehoffnungshütte in Sterkrade. In April 1810 they signed a deed of partnership: the “Hüttengewerkschaft und Handlung Jacobi, Haniel & Huyssen” was born. Each of the partners, Gottlob Jacobi, Franz Haniel, Gerhard Haniel as well as Heinrich Huyssen obtained one-quarter interest in all ironworks. The so-called JHH became the legal predecessor of the later Gutehoffnungshütte. For the first time, both production and processing of iron and iron goods were in one hand. The first ironworks company of the Ruhr region was born. The business success of the Hüttengewerkschaft (united ironworks) brought about a dramatic increase in the number of workers it employed. In 1813, all three ironworks together had employed 162 people. In 1836 they employed 710 people, but by 1864, the workforce had skyrocketed to 5,000. The employees came from the Rhineland, Westphalia and Sauerland. In addition, however, workers from Hessia, Pomerania and East and West Prussia had come to settle in the area as well. This presented the Hüttengewerkschaft with increasingly pressing social problems, which demanded answers by the company’s leaders. Franz Haniel and his Director Wilhelm Lueg set milestones in social history. In 1818 they established a “bread and dining institution” to supply workers with healthy foodstuffs. In 1832, long before the national health insurance law of 1883 regulated Germany’s healthcare system, the Hüttengewerkschaft set up one of the first “Support Funds for Local Workers”. It created the first elements of a social security scheme, which was above all important for supporting widows and invalids or other emergency cases. In 1844, the company constructed the first housing development for workers in the Ruhr region: “Eisenheim” in Osterfeld. Lueg and Haniel even supplied the workforce with fresh beer – instead of with the customary but unhealthy brandy. They also helped employees save money by setting up the first company savings and loan, which opened its doors on August 15, 1842. Once again, the Hüttengewerkschaft had recognized the signs of the times and set the pace of progress in the burgeoning industrial age.

1857 - Maschinenfabrik Augsburg AG

On October 4, 1840, Augsburg was in a fit of enthusiasm. With the inauguration of a railroad line between Augsburg and Munich, the future had also reached this city. After all, the railroad – as no other technical achievement – was considered to be the symbol of a new era. It stood for technological progress and new industrial production methods. At almost the same time, the Sander’sche Maschinenfabrik was founded. Ludwig Sander was a businessman who had set himself the goal of supplying Augsburg cotton and weaving mills with textile machines. But he understood his company as a type of “general company” that – in keeping with the times – offered its customers “all types” of machines, including steam engines, water wheels, turbines, gears, rolling and hammer mills, steam boilers, gas and heating apparatuses as well as printing machines. In 1844, Sander handed over leadership of his factory to mechanic Carl Reichenbach and businessman Carl Buz, who renamed it the C. Reichenbach’sche Maschinenfabrik. Both turned out to be exceptionally effective, above all, in the development of printing machines. The high-speed presses constructed by Reichenbach achieved international significance. Buz concentrated on steam engines. This “double specialization” had the advantage of making the company less dependent on the whims of a single market segment, as was the case with many other mechanical engineering companies. Between 1844 and 1860, the number of employees climbed from 44 to 340, an increase of seven times over. Due to their company’s rapidly growing sales, however, Buz and Reichenbach’s capital resources soon could not cover the necessary investments. They thus decided to convert the Reichenbach’sche Maschinenfabrik into a stock corporation. On November 10, 1857, the Maschinenfabrik Augsburg AG was born. Under the leadership of Franz Haniel in the 19th century, the Hüttengewerkschaft und Handlung Jacobi, Haniel & Huyssen grew in many areas. Haniel had given concrete form to a vision: for the first time, both production and processing of iron and iron goods were in one hand. But Haniel wanted more: his company should control the entire value chain – from the natural resources of coal and iron ore all the way to the finished product. Advanced technology was the key to this. Early on, Franz Haniel had discovered the great industrial potential of the steam engine, particularly as it was used in England. He wanted to use this engine to secure his company’s coal production so that the raw materials needed for iron smelting would be ensured. Haniel and the Hüttengewerkschaft were also trendsetters in the steamship business of the age. When Franz Haniel died on April 24, 1868 at the age of 88, the Hüttengewerkschaft und Handlung Jacobi, Haniel & Huyssen had an impressive lineup of business activities in industry, mining, trade and shipping. To avoid inheritance disputes by the families of the founders, the company was turned into a stock company in 1873. This was called the “Gutehoffnungshütte, Actienverein für Bergbau und Hüttenbetrieb”. The shares were owned by the descendents of the four founders and the company continued to flourish. From 1880 on, the first “Hüttenzeche Oberhausen” (Oberhausen coal mine) was running at full throttle. It fulfilled yet one more of Haniel’s dreams: from natural resources of coal and iron ore to finished products, everything could finally be made by one company.

1898 - Maschinenfabrik Augsburg-Nürnberg AG

In the late 1890s, the Maschinenfabrik Augsburg and its Director Heinrich Buz focused completely on growth and new technology. Parallel to the development of the first German rotary press, Buz supported two ambitious young engineers, Carl von Linde and Rudolf Diesel, who would write technological history with their respective inventions. In 1873, von Linde built a first efficient refrigeration machine, which became a bestseller at breweries above all, and which soon accounted for over half of M.A.N. sales. But Diesel’s engine, with its new ignition process, and which with Buz’s support rang in a literally world-shaking new era of machine and engine construction, became even more important. Progress on the one side, economic difficulties on the other. At the end of the 1890s, the Klett’sche Maschinenfabrik in Nuremberg was in a quandary – both financially and technically, because it urgently needed access to the Augsburg Diesel technology. The company’s owner, Theodor von Cramer-Klett jr., had commissioned Anton Rieppel, the Director of the Nuremberg company, with its sale. In a confidential letter, Rieppel wrote to Buz on April 3, 1898 and suggested a fusion of the two companies. With this “Bavarian solution”, Rieppel wanted to ward off a takeover attempt by the Ruhr industry – and create an “industrial power in Southern Germany”. In 1898, the Maschinenfabrik Augsburg and the Eisengießerei und Maschinenfabrik Klett & Comp merged. In 1908, the company was finally renamed Maschinenfabrik Augsburg-Nürnberg AG, or M.A.N. As of that point, Buz and Rieppel led the company together. In recognition of their entrepreneurial achievements, both were raised to the nobility, Rieppel in 1906, Buz in 1907. Germany set the pace for submarine warfare in World War I as early as 1914, when Kaiser Wilhelm II proved unwilling to risk his High Seas Fleet in a direct engagement with the British Grand Fleet and unleashed the U-boat force. Operating alone, German U-boats usually displaced well over 800 tons, carried very reliable Maschinenfabrik Augsburg-Nürnberg (MAN) diesels, and successfully operated in the English Channel approaches and much of the Atlantic Ocean. The U-boat community, dubbed the Raiders of the Deep by American journalist Lowell Thomas, set the standard for that era’s submarine performance – technical, tactical, and strategic. In 1921, when the Southern German MAN was taken over by the Gutehoffnungshütte, the coal and steel company in the Ruhr region in the North.

1933 - M.A.N. Under the Nazis

As did other industrialists in the early 1930s, Paul Reusch, Head of the Gutehoffnungshütte (GHH), supported Chancellor of the Reich Franz von Papen and his political foster father, President of the Reich Paul von Hindenburg. The conservative was highly suspicious of Adolf Hitler and the social revolutionary and extremely anti-Semitic current of the Nazis. That Germany was increasingly shifting closer to the swastika did not reduce this skepticism. Still, the economy was blossoming, and M.A.N. and its parent group GHH had plenty of orders for ships and bridges as well as Diesel engines for the merchant fleet and Navy. In 1934/35, Adolf Hitler ordered Krupp and Rheinmetall-Borsig (and MAN) to develop BW (Begleitwagen) vehicle. Specifications required overall weight to be 18 ton, top speed of 35km/h and 75mm gun as main armament. All companies produced prototypes, which in 1935/36 were tested under various conditions. Rheinmetall-Borsig BW - VK2001(Rh) used Neubaufahrzeug's modified running gear, while Krupp's BW - VK2001(K) and Maschinenfabrik Augsburg-Nurnberg AG's VK2002(MAN) both used MAN's newly designed running gear. MAN designed new interleaved suspension system but it was not accepted. Krupp concentrated on the development of the turret while MAN worked on the running gear - VK 2001(MAN). All vehicles had similar characteristics but after extensive tests Krupp's design - VK 2001(K) was selected to enter full-scale production. In 1938, work began on the vehicles, which were to replace newly introduced Panzerkampfwagen III and Panzerkampfwagen IV. In 1939, Krupp was awarded contract for a new tank, which was to replace Panzerkampfwagen IV - VK 2001 (IV). MAN and Daimler-Benz began work on their designs - VK 2002(M) and later VK 2401(M). This resulted in VK 2301(K), which utilized the basic design by Krupp with mechanical components developed by MAN. The new series evolved into light VK 2001(K) and heavier VK 2002(K) and VK 2301(K). Work on all new vehicles was stopped in December of 1941 and all efforts were focused on the development of a heavier tank - Panther. The Panzerkampfwagen V Panther, next to the PzKpfw VI Tiger, is the best-known German tank of World War II. The Panther and the Soviet T-34 are considered to be the best tanks of World War II. When in June of 1941, Germany invaded Russia, Panzertruppe encountered KV series and T-34/76 tanks, which were far superior in firepower and armor protection to any Panzer at the time. It was then decided, because of the constant reports from the Eastern Front to design a new more powerful medium tank, which could be quickly put into production. On November 25th of 1941, Adolf Hitler ordered Wa Pruef start work on the new tank. In December of 1941, Wa Pruef ordered Daimler-Benz and MAN (Maschinenfabrik Augsburg Nuernberg) to design new 30-ton tank armed with 75mm KwK L/70 gun as a response to the Soviet T-34/76 tank. On May 14th of 1942, when extensive tests of both prototypes were completed, Hitler decided to put MAN's design into production. Overall, from 1943 to 1945, some 6000 Panthers were produced by Maschinenfabrik-Augsburg-Nuremberg (MAN) in Kassel and Maschinenfabrik Niedersachsen-Hannover (MNH) in Hannover, along with Daimler-Benz, Henschel and Demag. But even though business was good, Paul Reusch could never get friendly with the Nazi regime. The same was true for Otto Meyer, Reusch’s brilliant partner, who had taken over directorship of M.A.N. Otto Meyer had also put himself in danger by bringing his Jewish wife to safety in Switzerland. Although M.A.N. built standard Diesel trucks for the German armed forces, the company refused to use concentration camp prisoners for this work – to the anger of the Nazis. In 1942, the Nazis forced Paul Reusch to give up his Board position as well as his Supervisory Board posts in over 20 companies. Near the end of the war, there were even plans to arrest Meyer. But this would never come to be. When Germany capitulated in 1945, GHH and M.A.N. had sustained heavy war damage, the Nuremberg plant was almost completely destroyed and all foreign subsidiaries were lost. To examine his past during the Nazi era, Otto Meyer was marched into Allied solitary confinement for five months. In July 1946, he was reappointed by the US military government as M.A.N. Board Member, and as Head of the Board (CEO) and General Director, he could now set course towards a better future.

1945 - M.A.N. During the Cold War

The end of the war brought lasting changes to the foundations of Germany’s coal and steel industry. The Gutehoffnungshütte (GHH), as parent of M.A.N., was particularly hard-hit by these. The motto of the Allies in the so-called “Stunde Null” – the zero hour; the point of German capitulation – was demerger, i.e. trust-busting. With this goal in mind, they completely restructured the GHH. The company’s coal and steel-making sectors were hived off, the steel-processing activities renamed the “Gutehoffnungshütte Aktienverein”. In July 1946, after spending five months in internment, the US military government reappointed Otto Meyer as CEO and General Director of M.A.N. He brought the company on a successful course again. Meyer also managed to achieve a loosening up of the export restrictions with the American occupation powers, additionally negotiating a contract for the export of over 460 trucks valued at 1.8 million US dollars. He thus created a good start for M.A.N. in the following period called the “economic miracle” era. By 1953, the M.A.N. commercial vehicle sector sold 1,489 vehicles and earned sales of 70 million deutschmarks – its best results since after the war. Demand was so great that in 1954, the Nuremberg factory had reached the limits of its capacity. In 1955, another large truck manufacturing plant was built in Munich. Only one year later, 3,000 vehicles had already been produced there. In 1960, M.A.N. in Munich celebrated the final assembly of its 30,000th truck. Otto Meyer transferred into the Supervisory Board from 1955 to 1964. When he retired afterwards, he went into German economic history books as one of the country’s great men. MAN’s history is characterized by farsighted cooperation and strategic takeovers. This is how companions in technology and corporate history became partners for the future. Common goals drove these developments. Mobility for all: this was the automotive dream of the early 20th century. With the first Büssing bus from Heinrich Büssing’s (1843-1929) “Spezialfabrik für Motorwagen- und Omnibusse” in 1904, this dream began to come true. After World War II, the 10,000th truck to be built after the war left the assembly line of the Braunschweig company in September 1950. Simultaneously, the legendary Büssing 8000 S flat-bed truck went to market. Above all, however, the first series-ready underfloor engine, first installed in a truck in 1949, caused a sensation and became a particular specialty on the bus market. With takeover of the Büssing-Automobilwerke in Salzgitter in 1971, MAN could especially pursue activities in bus production. And because the mountain lion Büssing had roared so well on the market, it has been immortalized as a trademark in the logo of MAN trucks and buses. Like Büssing, Steyr-Daimler-Puch AG in Austria was also a historical companion of MAN. In 1991, MAN took over its truck sector. In 1922, Steyr had built its first truck, the Steyr Typ III; in 1941 its first four-wheel drive truck left the plant, resulting in worldwide recognition of Steyr’s competence in four-wheel drive technology. After World War II, the first Steyr Diesel truck also had a respectable success story. Some 36,000 trucks of this type were built by 1964. But also the new middle class series launched in 1986 – Europe’s first low-noise truck, with an environmentally friendly engine series as well – excited the automotive world. With this background of innovation, Steyr’s truck sector was the ideal match for the MAN family. After a capricious history of takeovers and restructurings, in 1986 M.A.N. and the Gutehoffnungshütte Aktienverein united to form MAN AG, which established itself as a modern “contractual group” with headquarters in Munich. The core of this conversion involved spinning off the corporate areas and transforming them into individual stock corporations. These companies were then responsible for their own results and balance sheets. The antecedent for the conversion was the GHH owning family Haniel’s sell-off of its shares in the mid-1980s. Due to the growing capital requirements, the company had to look for new major stockholders. Although the official version was that MAN had merged with the coal and steel company in the Ruhr region, for all intents and purposes it was the Southern German subsidiary that took over the former parent company in the North. This was the reverse of what had happened in 1921, when MAN had been taken over by the Gutehoffnungshütte. Of the former coal and steel producer, only MAN Turbo in Oberhausen remained a part of MAN AG. But as in 1921, the company in its entirety would profit again from the restructuring measures. The course for a future in increasingly globalized markets was set. The new organization was reflected by a new logo from 1986, in which a blue arch embraced the Group’s individual companies like a visual bracket. This image lasts until today – with the only difference being that now, a silver arch stands for the companies of the MAN Group.

German Land Combat Contractors

Rheinmetall Berlin, another major defense contractor, produces armored vehicles, artillery, and munitions. Rheinmetall is based in Berlin and Düsseldorf. In 1991 it assumed a controlling interest in Krupp Mak Maschinenbau, thereby adding tracked armored vehicles, such as the Marder, to its output. The Krupp industrial group's defense sector was thenceforth limited to naval weapons systems. AEG-Telefunken is a leading supplier of electronics and radar; Krauss-Maffei of Munich produces the Leopard tank.

The manufacturers of the Leopard-2 are subdivided into two groups, the prime contractor and sub-system manufacturers on the one hand, and the suppliers of components and important parts on the other hand. The share of total sales contributed by the Leopard-2 is significantly higher for the first group (30-70 percent of defense sales) than for the second group of firms (2-25 percent). The total annual sales in the early 1990s attributable to the Leopard-2 program differed greatly between these groups. In absolute terms they averaged DM 300,000 per tank for each of the first group and between DM 10,000 and DM 100,000 for each of the secondgroup, i.e., between about 4-10 percent ofthe price of one Leopard-2. Prospects and problems of conversion differed, too. Apart from the quantitative aspect, conversion in the first group included structural changes in the industry and organi-zational changes in the individual firms. Inthe second group, even though there arecases of severe changes, the firms are notaffected in any significant way structurally.

By the ealy 1990s some firms had practically "written off" all larger efforts in the defense area. The underlying belief was that there would be no more large procurement of armored vehicles or tanks and that the small projects that may become available fell below the minimum efficiency level of operations (economic scale). They believed that the defense market in Europe was not large enough to support three main tank-building firms and, hence, it was better to withdraw from defense as far as possible and to minimize all capacities and efforts in this area.

Some firms, in contrast, were trying to focus on the new needs of the armed forces. Their underlying belief was that the Army would undergo substantial qualitative changes, e.g., restructuring toward a rapid deployment force, that would make new equipment necessary. This will not consist of large main battle tanks, but of smaller armored vehicles that can be air-lifted. Furthermore, electronics was becoming more important and so was a standard chassis for armored vehicles. Here, international cooperation was sought. In addition, military operations will follow new directions. Reductions in manpower meant less combat personnel, e.g., smaller tank crews, making new technologies such as an autoloader necessary, as well as more maintenance in industry facilities. Even if the cake was shrinking, it would not vanish.

Five shipyards in East Germany underwent an in-depth restructuring in the 1990s, benefiting from substantial amounts of state aid of about €3 billion. The restructuring of these yards followed a pattern: the yards were privatised quickly after the political and economic changes following the reunification of Germany and then restructured between 1992 and 1997. Public support was used not only to support their operations, but also for a genuine modernisation of the yards. The restructuring was accompanied by a substantial capacity reduction of 40% on the overall level, including a closure of two shipyards. Krauss-Maffei Wegmann GmbH & Co.KG leads the European market for armored wheeled and tracked vehicles. At locations in Germany, Greece, theNetherlands, Singapore and the USA, some 3400 employees manufacture and support a product portfolio ranging from air-transportable, heavily armored wheeled vehicles (MUNGO, DINGO, GFF4 and BOXER) through reconnaissance, anti-aircraft and artillery systems (FENNEK, GEPARD, LeFLaSys, Armored Howitzer 2000, AGM and DO-NAR) to heavy battle tanks (LEOPARD 1 and 2), armored personnel carriers (PUMA) and bridge-laying systems (LEGUAN and PSB2). In addition, KMW has wide-ranging system competence in the area of civil and military simulation, as well as in command and information systems and remote-controlled gun-carriages with reconnaissance and observation equipment for day and night missions. The armed forces of more than 30 nations worldwide rely on the operational systems by KMW.