Trump Arms Pressure on Europe Is Good, Rheinmetall CEO Says
(Bloomberg) -- Europe’s defense industry must consolidate to bolster production as the region faces Russian aggression and calls from Donald Trump to strengthen its military, Rheinmetall AG Chief Executive Officer Armin Papperger said.
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“The pressure Trump is creating at the moment is good for Europe,” the CEO said Tuesday on Bloomberg Television, referring to the US president elect’s comments that Europe should spend as much as 5% of gross domestic product on defense. Rheinmetall plans to engage “very early” with Trump’s administration, Papperger added.
Rheinmetall has seen orders surge since Russia’s initial invasion of Ukraine in 2022, which prompted Germany and other European countries to pick up military spending. The region needs a defense manufacturer that can handle about €40 billion ($41 billion) of sales annually, Papperger said, adding that Rheinmetall is pursuing acquisitions to increase its capacity.
“It’s possible and important to do it,” Papperger said about consolidation in the industry, adding that he believes Russian President Vladimir Putin will seek to invade more countries if he succeeds in Ukraine. The CEO is currently under the same level of security protection as the German chancellor after US authorities uncovered a Russian plot to assassinate him.
Rheinmetall, which makes a range of products from tanks to reconnaissance technology, signed a €277 million deal with Italy to provide as many as four Skynex air defense systems, it said Tuesday. The Italian Army has already placed a €73 million order for a first system, while the remaining three may be supplied optionally.
Rheinmetall’s stock traded less than 1% higher as of 4:28 p.m. on Tuesday. The shares have more than doubled in the past year as the company expanded production and built up a massive order book for its ammunition and military vehicles.
The German contractor is already present in Italy via a 50:50 joint venture with Leonardo SpA to build combat tanks for Italy and other nations.
Pressure on Europe is expected to increase when Trump returns to the White House next week. During his first term, he repeatedly derided Europe’s lagging military spending and threatened to disrupt the NATO alliance if member countries didn’t allocate more money to their armed forces.
Following elections scheduled for late February, Germany’s new government will likely pursue a security deal with Trump, Papperger said.
--With assistance from Lisa Abramowicz and Annmarie Hordern.
(Updates with additional details throughout.)
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