UNITED24 - Make a charitable donation in support of Ukraine!


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 was much less clear. Nowhere as in the area of security had West Germany to tread more carefully due to Germany's history as a belligerent, expansionist nation.

In accord with Protocol III of the October 1954 Paris Agreements, West Germany assumed an obligation not to produce on its territory nuclear, chemical and bacteriological weapons, long-range missiles and strategic aircraft. Article 2 of Protocol III of the Paris Agreements generally envisaged the listing of all restrictions for West Germany in the area of the production of weapons and military equipment in referring to the needs of NATO.

After 1958 the FRG purchased in the United States Matador, Nike-Hercules and Honest John missiles, Starfighter aircraft and other modern weapons systems for those times. The nation began licensed production of the F-104G Starfighter, Fiat and G-91 fighter bombers, the Noratlas military transports, the UH-1D Iroquois and CH-53G helicopters and Sidewinder missiles. West Germany gained access to modern military technology, scores of branches of American military firms were opened in the nation and Germany resumed its own military research.

Later years saw purchasing missile weapons for high-speed launches, and, finally, for acquiring nuclear artillery and the Pershing-IA operational-tactical missiles with a firing range of 740 km which could also be armed with a nuclear warhead.

Germany's capacity to produce its own arms and military equipment grew simultaneously with the development of the Bundeswehr. By the end of the 1960's, the production of military products for the Bundeswehr once and for all moved into the hands of national military corporations. While in 1957, the share of the imported deliveries of weapons and military equipment in the orders of the FRG Ministry of Defense exceeded 60 percent, by 1969, this had dropped to 20 percent. And this occurred simultaneously with an increase over the same period in the volume of military orders from 3.3 billion DM to 9.2 billion DM.

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 or no 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.

Join the GlobalSecurity.org mailing list

Page last modified: 15-05-2018 11:40:05 ZULU