Germany is poised to significantly boost its defense investments, informed by lessons from the Ukraine conflict. Hensoldt’s CEO, Oliver Dörr, noted that the €100 billion special fund has increased revenue and provided planning security. He discussed the challenges of pricing under strict regulations and the industry’s need for large-scale manufacturing. As modern warfare evolves, Hensoldt is focused on enhancing air defense capabilities and maintaining ethical standards, ensuring human oversight in critical decisions.
Germany’s Defense Investment: A New Era
Germany is set to make significant investments in defense in the coming years. In a recent discussion, Oliver Dörr, the CEO of Hensoldt, a leading defense technology company, shared insights into the lessons learned from the Ukraine conflict and the rapid evolution of the defense sector compared to the Bundeswehr.
Understanding Market Dynamics and Pricing Challenges
Since the establishment of the special fund amounting to 100 billion euros, Hensoldt has experienced a remarkable surge in revenue. When asked about future expectations, Dörr emphasized that this new influx of funds provides essential planning security for the company. With these resources, Hensoldt is poised to enhance its military capabilities, particularly in air defense, reconnaissance systems, and space operations, although it remains too early to predict the specific financial benefits.
When questioned about the challenges of raising prices amidst increasing demand, Dörr explained that public contracts are bound by strict price laws in Germany. Each cost element, from hourly rates to material expenses, must be meticulously justified. This regulatory framework limits pricing flexibility and impacts competitiveness against foreign firms. As a responsible corporate entity, Hensoldt aims to maintain economic sustainability while prioritizing national security over profit margins.
Dörr highlighted the need for the arms industry to adapt after years of relative peace. The transition from producing small series to large-scale manufacturing is crucial, as demonstrated by Hensoldt’s substantial increase in air defense radar production capacity. The company is also navigating growing pains as it expands its capabilities. Crucially, collaboration between companies is becoming increasingly important in addressing the complex challenges faced by the industry.
Despite the criticisms surrounding the Bundeswehr’s procurement processes, Dörr prefers to adopt a positive outlook. He believes that both the defense industry and the military have made significant strides in learning and collaboration over the past three years. With financial conditions now clarified, there is an opportunity to further enhance cooperation between the procurement authority and defense companies.
Reflecting on the ongoing conflict in Ukraine, Dörr noted that the war has underscored the necessity for rapid and large-scale deliveries of defense technologies. The industry must continuously adapt its systems to combat scenarios, moving away from the traditional long-term design approach. This experience has validated the effectiveness of Hensoldt’s technologies in real-world situations, reinforcing the importance of their air defense systems within the broader European defense framework.
As modern warfare increasingly incorporates inexpensive drones, Dörr emphasized the need for Hensoldt to balance both quantity and quality in its offerings. The company is committed to providing classic sensors while simultaneously investing in innovative software solutions to achieve superiority in information and decision-making capabilities.
Addressing ethical considerations, Dörr confirmed that Hensoldt will maintain a ‘Man in the Loop’ approach in its operations, ensuring that human judgment remains central in decisions involving life and death. This stance aligns with the company’s focus on sensor technology rather than traditional weapon manufacturing.