Back to Prussia
More and more German engineering firms opt for defence industry orders, hoping to escape the sector’s collapse. The Hannover Messe features an arms section for the first time. Dedicated military trade fairs now scheduled in Germany.
HANOVER (own report) – The German engineering industry has been plunged into a deep crisis. More and more companies are seeking to save themselves from losses or even bankruptcy by turning to defence production. The trend can be seen at this year’s Hannover Messe, which finishes today, Friday. For the first time the fair featured a dedicated section for companies integrated in military production as suppliers of all types of weapons components. The problems of Germany’s engineering sector have become increasingly acute. Production levels are collapsing and the workforce is steadily shrinking. Switching to defence manufacturing offers a way out. For instance, a maker of machinery for producing spark plugs explains that its machines can be easily adapted to the manufacture of cartridge cases. One advantage of the move to defence production is that companies will avoid the often fierce Chinese competition. Chinese firms are not in the running for defence contracts. The share of the engineering sector accounted for by defence could easily double, according to industry sources. The militarisation of the economy is also impacting the daily working lives of people in engineering and beyond. An increasing number of families are becoming materially dependent on the country’s military build-up.
Engineering in crisis
Like Germany’s flagship industry, automotives, and its third-largest industry, chemicals, the Federal Republic’s second-largest sector, mechanical and plant engineering, is also facing a serious crisis. Most recent statistics show the engineering sector achieving an annual turnover of 280 billion euros and employing 933,000 people. This is around 22,000 workers fewer than in 2024 and 70,000 fewer than in 2019. The sector’s output fell by eight per cent in 2024 and by a further five per cent in 2025.[1] In the first two months of 2026, engineering shrank by a further two per cent on the same period in the previous year.[2] The capacity utilisation in engineering factories is currently reported at just 77 per cent. We are seeing a collapse in orders: between December 2025 and February 2026, orders slumped by eight per cent in real terms on the same period last year.[3] One key factor behind the most recent decline is US tariffs, which have weighed heavily on exports to the US – previously an extremely lucrative market. A key longer term factor is the rapid rise of Chinese competition. China can now supply machinery of comparable quality at significantly lower prices, and fulfil orders at a faster pace.[4] German exports to the People’s Republic are shrinking, whilst machinery imports from China are on the rise. Both trends are damaging the sales of German companies in the sector. The prospect of real improvements is, from a German perspective, nowhere in sight, despite the industry’s various appeals for a change of direction.
From spark plugs to cartridge cases
It is in this situation that numerous engineering firms are pinning their hopes on defence industry orders. The German Engineering Federation (VDMA) reports that the defence sector’s share of the engineering industry is currently estimated at a modest two to five per cent of turnover, but this share could “double within three to five years”, given the rapid expansion of German arms production.[5] VDMA President Bertram Kawlath concedes that this trend will not be enough to offset “the decline in orders from the automotive industry”.[6] Nevertheless, according to an internal survey by the association, 63 per cent of its member companies rate the defence sector as an “important” or even “very important” future customer. More than 40 per cent expect double-digit growth in their work for arms manufacturers in both 2026 and 2027. This is all the more significant because the normally tough Chinese competition is absent from the defence industry market. The new VDMA Security & Defence Forum reports strong interest. Responding to much greater interest, the German Machine Tool Builders’ Association (VDW) has only recently launched an ‘Arms Industry Monitor’ for its more specialised clientele. One example is the Cologne-based machine tool manufacturer Alfred H. Schütte, which produces machines for spark plug manufacturing. The company says it can easily convert the machines it makes to, for instance, the production of detonators or cartridge cases.[7]
‘A trend-setting exhibition format’
The shift towards defence production is affecting not only the companies gaining military contracts but also the overarching business structures. Take, for instance, the Hannover Messe, which ends today. It always features as strong engineering sector presence. This year it also has a dedicated area reserved for showcasing arms manufacturing. The fair’s organisers describes its Defence Production Area as “a new trend-setting exhibition format”.[8] A report in Handelsblatt notes that while “finished weapon systems” let alone battle tanks are “not on display” in Hanover, there were “around forty companies at the stands in the Defence section demonstrating, for example, how artillery shells are assembled automatically and how government data, including military data, are generated at highly secure IT workstations.[9] Amidst what the organisers claim is still the world’s biggest industrial trade fair we now find, alongside robots testing the quality of ammunition, robots designed to be mounted on armoured vehicles for military tasks. Alongside companies exhibiting steels for armour plating there are others offering all manner of IT for use in weapon systems. Others present special hardened devices in their product range, ones that function “even under extreme conditions”, such as in intense heat.
‘New paradigms’
The Hannover Messe organised its Defence Production Area in close collaboration with a newly founded organisation, DSEI Germany (Defence & Security Equipment International). The latter are defence trade fair specialists that will be running, for the first time, a standalone event from 9 to 12 March next year in Hanover. The aim is to bring together arms companies, suppliers and policymakers. The DSEI will set “new paradigms, both politically and industrially”, says Jochen Köckler, CEO of Deutsche Messe AG.[10] Companies that have already announced their participation include Rheinmetall, Hensoldt and Diehl Defence, the three leading defence industry groups in Germany. DSEI Germany says it attaches great importance to showcasing “next-generation weapon systems”.[11] That fair is not the only new war technology show in Germany capitalising on the dramatic expansion of the country’s defence sector. Another, called Euro Defence Expo (EUDEX), has been announced for this autumn, presenting military equipment in Essen from 22–25 September 2026. DSEI Germany is to be run every two years in close cooperation with DSEI UK, which has been presenting military wares in London since 2001. The British fair has been the target of repeated protests. London’s Mayor Sadiq Khan has been attempting to ban it from the city since 2019 – so far in vain.
The militarisation of everyday life
The growing importance of the arms industry for the crisis-hit engineering sector is just one example of how first individual companies, then major events such as the Hannover Messe, are drawn into the maelstrom of militarisation, until even dedicated arms fairs spring up. The consequences of German militarisation will reach far into everyday life. Companies that produce directly or indirectly for the Bundeswehr must comply with additional security regulations. Employees involved in arms production must, in many cases, undergo special security screening. They are often bound by strict confidentiality obligations.[12] A growing number of German families are materially dependent on arms production. All this applies to engineering as well as many other industries. For example, the medical technology company Dräger manufactures, in addition to the ventilators that became familiar in the COVID-19 pandemic, gas masks for war scenarios. It is also building field hospitals designed to be set up on naval frigates.[13] The penetration of previously civilian sectors of the economy and the labour market by the arms industry, coupled with the parallel and rapid rise in the significance and power of the Bundeswehr, is driving a shift in everyday consciousness that threatens to profoundly transform German society. Political and economic militarisation is accompanied by societal militarisation.
Also on this topic: Die „europäische Führungsrolle“ der Bundeswehr.
[1] Sven Astheimer, Uwe Marx: Rüstung soll zum Rettungsanker werden. Frankfurter Allgemeine Zeitung 20.04.2026.
[2] Isabelle Wermke: Industrie warnt vor Abwanderung – „Grenzen erreicht“. handelsblatt.com 20.04.2026.
[3] Bestellungen beim Maschinenbau eingebrochen. handelsblatt.com 01.04.2026.
[4] Isabelle Wermke: China-Speed im Maschinenbau sorgt für massiven Wettbewerbsdruck. handelsblatt.com 02.04.2026.
[5] Michelle Wienecke: Die Grenzen der Leidensfähigkeit sind im Maschinen- und Anlagenbau erreicht. vdma.eu 20.04.2026.
[6] Sven Astheimer, Uwe Marx: Rüstung soll zum Rettungsanker werden. Frankfurter Allgemeine Zeitung 20.04.2026.
[7] Uwe Marx: Kanonenrohre statt Kniegelenke. Frankfurter Allgemeine Zeitung 25.03.2026.
[8] Produktionstechnologie für Verteidigung. hannovermesse.de.
[9] Isabelle Wermke: Industrie richtet sich auf Rüstungsgeschäft aus. handelsblatt.com 22.04.2026.
[10] Hohe Nachfrage für neue Rüstungsmesse. hannover.t-online.de 12.03.2026.
[11] What is DSEI Germany? dsei-germany.com.
[12] Markus Fasse, Christof Kerkmann, Julian Olk: Rüstungsindustrie kritisiert langwierige Sicherheitsprüfungen. handelsblatt.com 30.12.2025.
[13] Verteidigung wird für Dräger zum guten Geschäft. Frankfurter Allgemeine Zeitung 25.03.2026.
