MNI INTERVIEW: German Defence Employment To 'At Least' Double

Employment related to Germany’s defence industry will at least double to almost a million in the next few years thanks to government plans to exempt substantial defence outlays from the so-called debt brake and to create a EUR500 billion infrastructure fund, the CEO of the Association of the German Security and Defence Industry (BDSV) told MNI.

While it is not clear whether the Germany government intends to take up a share of Security Action for Europe (SAFE) loans worth EUR150 billion, more precise details of European aggregate demand for defence products will be defined by NATO requirements to be agreed during the upcoming summit in The Hague in June, Hans Christoph Atzpodien said in written responses to questions.

Atzpodien, whose group represents around 300 companies employing around 100,000 workers in Germany, roughly 80% of which are SMEs, expressed his hope that Germany would be given the role of lead buyer. (See MNI: EU Defence Bond Approval To Pave Way For Summer Issuance)

“Before the Ukraine war, a study conducted by the German government assessed that, including indirectly employed people, about 400,000 employees in Germany were working for security and defence industries – meaning companies which are suppliers for armed forces and governmental security branches –, a figure which will prospectively at least double in the process we are envisaging,” he said.

The BDSV wants 10 key regulatory reforms in Germany, as well as red-tape relaxations at the European level to increase industry capacity at pace. If implemented these should enable the continent’s defence firms to almost replace U.S. suppliers as the EU’s main armourer, Atzopodien said, noting that European armament cooperation has proved elusive for the last quarter-century.

UK KEY PARTNER

“If – maybe now – the mutual interest in cooperation would become stronger than the national industrial interests, then the picture may change for the first time,” he said. (See MNI: EU Defence Finance Not As Coordinated As Hoped - Official)

Still, it will still not be easy for defence manufacturers to maintain security of supply and production, Atzpodien said - with the UK an important partner in the EU’s strategic, research and development and procurement processes as part of a collective European Defence Mechanism.

“It will be challenging, but possible. This means that supplies have to be secured by setting up stockpiles, either from companies’ side or from governments’ side.”

The U.S. will still be needed as a NATO partner, and EU arms manufacturers cannot fully replicate the productive capacity and expertise of their American counterparts, Atzpodien said. But they can at least do so to a “high degree” given the political will to do so.

“The European defence industry is capable of providing a very broad variety of defence products. There are some very special products, like the F-35, for the German nuclear participation or some other products, which by their nature are relying on U.S. know-how, which cannot be replaced by European replicates. Timewise the European defence industry anyway faces a big challenge to scale-up their capacities for the European demand very rapidly. This will require bundling demands,” he said.