Germany has moved ahead of the United States in conventional ammunition production capacity, according to Rheinmetall CEO Armin Papperger. The clearest shift is in output: annual 155mm shell production has climbed from 70,000 to 1.1 million rounds. Military truck output rose from 600 to 4,500 units a year, while medium-caliber ammunition increased from 800,000 to 4 million rounds.
Defense production is reshaping Germany’s industrial base
Rheinmetall currently employs 44,000 people and plans to raise that figure to 70,000 by 2030. Including suppliers, the number of jobs tied to its expansion could grow by another 210,000. Papperger said the company works with 11,500 German suppliers, and 4,500 of them also serve the automotive sector. That overlap points to a transfer of equipment, labor, and technical capacity from car manufacturing into defense production.
Germany’s auto industry has been under structural pressure in recent years, with layoffs continuing across the sector. Papperger said arms production could replace about one-third of the jobs lost by automakers. In 2025, Rheinmetall received 250,000 job applications in Germany alone and 350,000 in total, showing a sharp change in how defense employers are viewed by the labor market.
New Lower Saxony plant lifts shell targets again
In August 2025, Europe’s largest large-caliber shell plant opened in Unterlüß, Lower Saxony, pushing Germany’s rearmament effort from policy plans into industrial output. The target is to reach 1.5 million 155mm shells per year by 2027, above the US Department of Defense goal of 1.2 million annually.
The expansion lines up with a broader rise in German defense spending. The source says Germany’s 2026 defense budget will reach 108.2 billion euros, up from 86 billion euros in 2025, lifting the share of GDP to 2.6%. It also plans to take on an extra 400 billion euros of debt over the next five years for rearmament. The same material states that German military spending in 2025 rose 24% year over year to $114 billion, the first time since 1990 that it moved above 2% of GDP.
European rearmament is pushing orders and revenue higher
The EU’s “ReArm Europe” framework totals 800 billion euros, including 650 billion euros in fiscal flexibility and 150 billion euros in joint borrowing through SAFE bonds. NATO members also reached a record in 2025, with every member state meeting the 2% of GDP defense spending threshold, while the 2035 target was raised to 5% of GDP including security-related spending.
Rheinmetall’s business has accelerated with that spending cycle. The company forecasts 2026 sales of 14.5 billion euros, up 45% year over year. Its order backlog is expected to double to 135 billion euros, and its share price has gained more than 540% over three years. Output, hiring, and supplier shifts all point in the same direction: defense manufacturing is taking a larger share of Germany’s industrial system.