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German Aviation Industry

The aerospace consolidation involved a two-stage process, wherein smaller German companies were first absorbed into larger ones. Notably, Dornier and MBB were absorbed into DaimlerChrysler Aerospace AG (DASA), which in its turn divested most of its defense holdings to the European multinational European Aeronautic Defense and Space (EADS) Company formed in July 2000 by the merger of Aerospatiale Matra SA (France), CASA (Spain) and DaimlerChrysler Aerospace AG (Germany).

Since the formation of EADS, most of the remaining German aerospace companies have been absorbed by it or one of its subsidiaries. For instance, the missile company LFK GmbH was first acquired by EADS in 2000, then sold to the EADS missile subsidiary MBDA in 2006. Similarly, helicopter manufacturer MBB was acquired by DASA and then transferred to the DASA-Aerospatiale joint venture Eurocopter in 1992, which became part of EADS in 2000. Notably, in many of these cases, the former German companies remain largely autonomous within their multinational conglomerates. MBB still exists as Eurocopter Deutschland GmbH within the structure of EADS Eurocopter, while LFK GmbH is still a distinct entity under the name MBDA Deutschland. Though ostensibly "multinational," these companies function more in a "multidomestic" manner - autonomous German companies under foreign ownership and management. It is also important to note that EADS is not a "German" firm in ownership, but a multinational firm with shares held by the French State and Daimler directly and held by the French and Spanish states indirectly via holding companies.

Consolidation in naval shipbuilding took longer to accomplish, but was largely completed by 2004, when all of Germany's major shipyards (HDW, Nordseewerke, Blohm & Voss and Rheinstahl) were acquired by the ThyssenKrupp Group.

The consolidation in the land systems market has moved more slowly. In the early 1990s, there were seven distinct ground systems prime contractors in Germany. Today, there are just three: Rheinmetall Defense, Krauss-Maffai Wegmann (itself formed by the 1998 merger of Krauss-Maffei Wehrteknik and Wegmann & Co.); and Diehl-BGT Defense. Rheinmetall Defense, which absorbed MAK, KUKA, and Henschel Wehrteknik, specializes in light vehicles, small- to medium-caliber ordnance, and defense electronics, while Krauss-Maffei Wegmann builds main battle tanks and other heavy vehicles, large-caliber ordnance and air defense systems.301 Diehl-BGT Defense, in contrast, is focused on guided munitions, electronics, unmanned air vehicles and other advanced technologies. That these businesses are privately held by family interests has complicated further consolidation.

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Page last modified: 07-08-2012 19:00:37 ZULU