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Acceleration Act Boosts Growth for German Defense Industry, Particularly Diehl Defence
The German defense sector is set to experience significant growth, thanks to the Bundeswehr Planning and Procurement Acceleration Act (BwPBBG). This law, designed to streamline and speed up procurement processes for the Bundeswehr, aims to equip Germany's armed forces more efficiently in the face of heightened security threats.
For companies like Diehl Defence, the BwPBBG is expected to drive substantial growth. The law's acceleration and de-bureaucratization will create a more predictable procurement environment, removing stop-work periods caused by legal challenges and enabling contracts to be initiated earlier. This is expected to lead to increased order volume and shorter lead times for defense suppliers.
Diehl Defence, a manufacturer of the internationally sought-after air defense system Iris-T, has already experienced a 60% growth last year. The company, which produces technologies ready for deployment, including drone countermeasure technology, has managed to ramp up production to meet the growing demand of the Bundeswehr.
The Iris-T SLM system, with its medium range, is part of the European Skyshield initiative and has recently been adopted by Switzerland and Denmark, joining eight European countries that have decided to equip their armies with this system.
Katherina Reiche, the Federal Minister of Economics, considers the BwPBBG important. She emphasized that the defense industry plays a crucial role in Europe's defense capability and that the industry must be enabled to meet the growing demand of the Bundeswehr. Reiche also acknowledged that the defense industry has been neglected in Germany for a long time.
The CEO of Diehl Defence, Helmut Rauch, welcomed the Acceleration Act for the German armed forces. He expects the growth trend to continue next year. Rauch also welcomed the law's promotion of innovative and startup companies, helping the broader German defense industrial base to expand and modernize rapidly, including established players like Diehl Defence.
In summary, the Acceleration Act acts as a catalyst for growth in the German defense sector. Companies like Diehl Defence are poised to benefit substantially due to faster procurement cycles, higher Bundeswehr demand, and a procurement environment more supportive of innovation and rapid delivery.
- In light of the Acceleration Act's positive impact on the German defense sector, various policy initiatives, such as community policy and employment policy, should be considered to further stimulate industry growth and finance the modernization of defense-related businesses, including aerospace and employment within the sector.
- As the aerospace industry increasingly collaborates with the defense sector to innovate and develop advanced technologies, businesses like Diehl Defence, with their commitment to R&D and production of cutting-edge defense systems like Iris-T, are well-positioned to capitalize on these opportunities and contribute significantly to the country's economic growth and national security.
