Overview

• Germany and the EU have earmarked billions to modernize the Bundeswehr, resulting in record defence procurement orders this year.
• Over 14,500 people are now employed in Baden-Württemberg’s defence industry as skilled auto and engineering workers transition to military manufacturing roles.
• Major firms including Diehl Defence saw a 60% revenue jump to €1.8 billion in 2024, while Heckler & Koch and Rolls-Royce Power Systems have ramped up hiring and infrastructure investment.
• Over 350 Mittelstand companies gathered at a recent Stuttgart Chamber of Commerce briefing to explore Bundeswehr and NATO contract opportunities.
• Economic analysts caution that without increased transparency and structural reform the rapid arms buildup may deliver limited macroeconomic benefits and heighten ethical concerns.