Germany’s Expanding Defense Industry: Employment, Economy, Strategic Directions
Germany's defense industry remains a major economic and strategic sector, employing between 200,000 and 250,000 people when including suppliers and related sectors, and generating approximately €47 billion in annual revenue.
The sector's direct employment is estimated at 105,000, with the broader security industry accounting for approximately 400,000 jobs as of 2024, according to recent estimates. According to a recent report by ARD - Die Tagesschau, the defense sector is concentrated in key regions like Baden-Württemberg and Rhineland-Palatinate, with major players including Rheinmetall, KNDS, TKMS, Diehl, and General Dynamics.
Employment and Economic Scale: €31bn Revenue Linked to Military Production and Services
The industry directly employs approximately 60,000 people, but when suppliers and related sectors are included, this number rises to between 200,000 and 250,000, according to defense expert Klaus-Heiner Röhl from the German Economic Institute (IW). The Federal Ministry for Economic Affairs provides a more conservative estimate, attributing around 105,000 jobs directly to the defense industry, while the broader security sector accounted for a total of 387,000 employees in 2022.
Financially, Germany’s defense sector generates an annual turnover of approximately €47 billion, with €31 billion specifically linked to military production and services. This underscores its role as a significant pillar of the national economy and a key component of Germany’s high-tech manufacturing base.
Global Standing and Key Players: KNDS, Rheinmetall, TKMS, Diehl, and more
Germany is home to five major defense companies that rank among the world’s top 100 defense manufacturers, alongside the Airbus consortium, which has a substantial defense division. These firms, including Rheinmetall, KNDS, TKMS, Diehl, and General Dynamics European Land Systems, supply cutting-edge military technologies across multiple domains.
Rheinmetall, for instance, plays a pivotal role in producing the Leopard 2 main battle tank, while KNDS develops advanced artillery systems such as the PzH 2000. TKMS is a leader in submarine technology, exporting Type 212A and Type 214 submarines globally. Diehl specializes in precision-guided munitions and air defense systems, whereas General Dynamics European Land Systems produces wheeled armored vehicles like the Boxer and Eagle. Collectively, these companies contribute to Germany’s strategic defense capabilities and bolster its position as a key supplier in NATO and international markets.
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Thales Sees a Shift in Public Sentiment Regarding Defense and Security Sectors
Historically, Germany’s defense sector has faced societal and political scrutiny due to the country’s post-war pacifist stance. However, recent geopolitical developments, including Russia’s invasion of Ukraine, have led to a reassessment of defense policies and industry perception. Pitt Marx, spokesperson for Thales Germany, noted that the stigma surrounding the defense industry is diminishing, as security concerns drive increased investment and public acceptance.
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Emerging Defense Innovations and Outlook: Independent Drone Technology
Germany's defense modernization has created opportunities for new companies to supply the Bundeswehr. In Berlin, companies like Quantum Systems are preparing to fulfill major Bundeswehr contracts. Quantum Systems, a German reconnaissance drone manufacturer, has been operational in Ukraine since May 2022 and opened a production facility there in April 2024. Its founder and CEO, Florian Seibel, aims to standardize its drones as part of Germany’s evolving defense strategy. Additionally, Quantum Systems shares its Berlin office with ARX Robotics, a Munich-based defense start-up specializing in autonomous mini-tanks. This reflects Germany’s effort to develop domestic military technology and reduce dependence on foreign suppliers. Susanne Wiegand, an advisor to Quantum Systems, has emphasized the importance of maintaining European sovereignty in drone technology and production, reducing dependency on the United States. With a shift towards indigenous military solutions, Germany’s defense sector is poised for significant transformation.
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