German industry is increasingly shifting its focus towards defence production, as highlighted by the German Chamber of Industry and Commerce (DIHK). A recent survey published by the business magazine Wirtschaftswoche revealed that nearly one-third of industrial companies identify opportunities within the security and defence market for their business models.
In a significant development, DIHK expert Rainer Kambeck noted that this trend reflects a positive industry outlook driven by ongoing geopolitical conflicts. Despite the overall economic environment remaining strained due to the Middle East conflict, with major institutes lowering their growth forecasts for Germany this year, the defence sector is expected to benefit from heightened geopolitical tensions. The German government has pledged substantial defence spending in the coming years, which is likely to support this growth.
The DIHK’s detailed analysis indicates that approximately one in six industrial firms in Germany is already part of the defence sector’s supply chain. The vehicle manufacturing industry stands out as the leader, with 36% of companies engaged directly or indirectly in defence-related activities. However, only 2.5% of all industrial firms explicitly produce military goods, while 6.9% manufacture products with dual civilian and military applications. Additionally, 7.6% of firms identify themselves as suppliers to the defence sector.
Looking ahead, 12.3% of industrial companies plan to enter the defence market, adding to the current 17% already involved. This signals a growing commitment within German industry to expand their role in defence production amid evolving global security challenges.
