Glock, Steyr & Co. – War and crisis feed the domestic arms industry

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As a result of Putin’s Ukraine campaign, security and defense issues are back in focus. In an emergency, about 100 local arms companies not only serve as the necessary support for the military, but also generate considerable profits and taxes for the father state with their thriving business.

Imagine it’s war and no one delivers anymore. A problem that a strong domestic defense industry can solve quickly. But despite the actually great strategic advantages, companies in the security and defense sector often lead a shadowy existence in the public eye. The large domestic arms manufacturers such as Glock, Steyr Arms or Hirtenberger also participate in global rearmament without much fuss.

The needs of the European army have risen to a new high since the war in Ukraine at the latest, and the domestic army is also investing heavily again, as we know. It does not matter whether it is a system manufacturer – manufacturers of complete weapon systems such as the Pandur or Ulan armored vehicles – or red-white-red component manufacturers who only produce parts for further production processes: they all benefit from the bottlenecks.

The order books are sometimes full, various industry experts explain. Local stakeholders also see a very positive development: “The export of the internal security and defense industry is around 90 percent. Our companies mainly supply high-quality components to other European countries. The companies certainly do not want to profit from the war in Ukraine and there is also a very clear political opinion about this,” explains Reinhard Marak, head of the working group on security and economics in the Chamber of Commerce.

Domestic weapons and equipment for our soldiers
Particularly when it comes to investments by the armed forces, there is great potential for self-sufficiency across the industry. According to a 2019 study (see chart), 70 percent of investment needs could be met directly with domestic products or partly with components and technologies supplied to foreign manufacturers.

And according to experts, this stock has changed only marginally to this day. Defense buyers and planners must now maintain the last link in the chain of a national security system. About 100 domestic arms companies are ready for this.

Weapons “Made in Austria” are regarded worldwide as quality products
In an interview with the “Krone”, Steyr Arms manager Gerhard Unterganschnigg still sees great potential for the local arms manufacturers.

“crown”: Mr. Unterganschnigg, Steyr or the STG 77 are known to every weapon connoisseur in Austria, how are things?
Onderganschnigg: Thanks for asking, we can’t complain. From assault rifles to pistols, everything is in high demand. The STG 77 in particular has become a global icon and our flagship.

Does the current very tense security situation also affect your sales?
Naturally! The migration debate, various attacks and also the suffering sense of security made our products very interesting even before Corona. In the past year we have grown considerably and we have introduced new products to the market.

How help the military’s investments?
Depending on the order situation, our export share is between 50 and 90 percent. We hope that in the future we can do even better with our products here in Germany and that the export quota will decrease again. After all, our 230 employees generate a turnover of around 50 million euros per year, of which we are happy to pay tax in Austria.

What are the strengths or weaknesses of the armaments nation of Austria?
Our obvious strength is the great survival instinct of the domestic arms industry. Because despite the restrictive laws on foreign trade and war material and their strict interpretation, there has been a fight for the necessary order volume so far. These export restrictions in competition with Germany, Italy & Co. however, will mean our downfall.

Do you also have a solution for this?
It all depends on whether domestic politics finally decides to actively tackle the issue of arms production and become more industry-friendly in general. After all, in a crisis, our sector becomes a necessity.

Source: Krone

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