German Defense & Ammo Producer Rheinmetall on European Buildout

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

German ammunition and defense systems producer is underway with substantial project activity in Europe, where Industrial Info Resources is tracking more than US$2 billion worth of capital projects from the company.

A Strongly Reviving Sector

The European defense sector is stirring. After decades of reduced military spending and lowered production capacity, Europe is once again in high-gear for defense and weaponry spending. Statistics released from the European Defense Agency and European Parliament report €343 billion (US$382 billion) of defense spending in 2024, up 19% from 2023. Projected defense spending for 2025 ranges even higher at a minimum of €381 billion (US$424.6 billion) and up to more than €390 billion (US$434.7 billion). Russia's invasion of Ukraine and the loss of some U.S. military support seems to have kicked the continent into high gear to grow its defense sector, both inside and outside of the European Union.

This is leading to some big related construction projects, and rising to a leading position in a big way in this manufacturing buildout is German defense and ammunition manufacturer Rheinmetall, which is on quite a construction tear throughout Europe.

About Rheinmetall

So, what sort of defense materiel does Rheinmetall manufacture? Perhaps a better question would be, "What do they not manufacture?" [JB1.1]Rheinmetall's production lineup includes armored vehicles, air defense systems, a range electronics and command-and-control equipment, and at the core of its business, ammunition, including tank rounds, medium-caliber ammo, mortar rounds and more.

Around since 1889, this year has proved significant for the company as it has left behind a civilian automotive segment to shift its focus purely to defense. And it is delving deeper into its defense offerings, with 2026 bringing joint ventures and cooperative agreements targeting missile production and drone technology as the company makes other forays into the naval sector.

And this shift into high gear is bringing a large amount of construction investment from the company. Industrial Info Resources data show more than US$2 billion worth of Rheinmetall capital projects underway or on the planning table throughout Europe and a smattering of projects in North America. Well over half of this amount is accounted for by projects currently under construction.

Germany & Eastern Europe

The company's heaviest investment for current, on-the-ground construction is occurring in its home country Germany, with Lithuania and Hungary sporting significant investments of their own.

While the company is focusing on grassroot construction in Eastern Europe, one of its largest projects is actually a significant expansion of an existing plant, geared toward increasing production of the propellent powder used to propel artillery and large-caliber ammunition. Rheinmetall broke ground on the €350 million ($US389.9 million[JB2.1]) project in Aschau am Inn, Bavaria, this summer, targeting 2028 for full-capacity completion, although some limited manufacturing may begin before then.

And that 2028 date is expected to bring a more than doubling of the plant's powder production, rising from 1,700 tonnes per year to an anticipated 4,200 tonnes per year. Subscribers can access details of the plant expansion, including construction timelines, key contact details, and equipment and service needs, by clicking here, as well as a separate report on the construction of fifteen 20,000-square-foot explosives storage bunkers at the site.

Under construction near Baisogala, Lithuania, is a plant targeting production of at least 10,000 155-millimeter (mm) shells per year, expected to begin production next year.

In Hungary, Rheinmetall is targeting an integrated ammunition explosives complex. While Rheinmetall is underway with substantial construction at the site in Várpalota, it is not grassroot construction as the company has manufactured 30-mm ammunition at the site since 2024. The substantial expansion on the ammunition side of the campus will allow for the production of larger 120-mm and 155-mm shells.

Even bigger things are in store for a new explosives facility at the site, where Rheinmetall will develop its RDX (Research Department Explosive) used in artillery, tank and mortar ammunition, targeting a 2027 completion date alongside the ammunition expansion.

Further up the value chain from these plants producing the final product is an expansion of the company's plant in Wimmis, Switzerland, to boost its production of propellant-powder granules, which will be further processed into propellent powder at the plant in Bavaria. Multiple new production buildings are under construction at the site as is a new mixing building, where the raw ingredients are blended into a uniform material.

North American Construction

Rheinmetall has its eye on a handful of defense projects in the U.S., Canada and Mexico, with a project underway in Saint Marys, Ohio, that involves adding equipment to increase the plant's tank tread offerings, with a specific target coming in the form of the U.S Army's M1 Abrams main battle tank. Another project is getting ready to roll in Quebec that will expand the company's parts production for its uncrewed ground vehicles (think small, unmanned mini-tank with wheels) [JB4.1]used for battlefield operations.

Rheinmetall's End Markets

North American production aside, Rheinmetall's key end-markets are European countries, with Germany being its primary market as the country re-equips itself with stronger defense systems. Ukraine obviously has represented a key export market for the company, and Rheinmetall ammunitions shipments there have been high. Ukraine also has placed orders for the company's Lynx line of armored vehicles, which serve as both troop carriers and fighting vehicles.

The company has delivered military goods to most Western European countries, including the U.K., where it has a manufacturing facility, Norway, Sweden and the Netherlands, and even further afield to the likes of Australia, which accounted for a substantial portion of its vehicle sales a few years ago. Truly a global player, Rheinmetall is, of course, limited to where it can deliver its ammunition and weapons systems by German and EU regulations.

Key Takeaways

• German ammunition and defense systems producer has more than US$2 billion worth of capital construction underway or lined up in Europe.
• Europe has been shoring up its weapons systems since Russia's invasion of Ukraine in 2022 and a loss in some U.S. military support.
• Its home country of Germany is Rheinmetall's prime spending destination, with other large buildouts occurring in Hungary and Lithuania.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).