Europe’s defence giants brace for surge in orders as tanks enter the theatre in Ukraine
For the first time, Western tanks will soon face Russian forces in Europe - a deployment their designers originally envisaged when the models were developed during the Cold War.
Germany and the US have now joined Britain in agreeing to send combat vehicles to Ukraine: Challenger 2s from Britain, Abrams tanks from the US and German Leopard 2s will all end up on the front lines of the conflict.
For Kyiv, it is hoped that the extra force could help finally repel Russia's offensive.
For Europe’s arms manufacturers, success on the battlefield will be an advertisement to governments looking to bolster their own defences.
German's Rheinmetall, behind the Leopard 2, expects the real world test of its hardware will lead to a jump in sales as stocks are run down and the vehicles’ effectiveness is demonstrated.
Rheinmetall told its investors this week to expect an influx of sales, with chief executive Armin Papperger predicting his company’s sales could nearly double to €12bn within three years.
European countries will be restocking supplies after gifting armoury and weaponry to Kyiv. Stockpiles are also set to be expanded as geopolitical tensions ratchet up.
In Germany alone, German Chancellor Olaf Scholz has promised a vast €100bn spending spree to beef up his country's military.
Papperger has implored Scholz to iron out the details of these plans so that Rheinmetall can decide which production lines to expand. The company has already hired 2,000 workers in anticipation of a jump in orders.
"The entire German industry is ready. The resources are there, the people are there, we also have the know-how," Papperger said at an industry event.
Arms companies across Nato are adding capacity to make weapons and ammunition, in anticipation of future sales. BAE Systems is understood to have received orders from the UK to gear up shell production, while Sweden’s Saab has received orders from Britain and Sweden for its successful NLAW tank-buster. Germany put in an $8bn order in December for 35 F-35 stealth attack warplanes made by Lockheed Martin.
At Rheinmetall, about a third of the company’s sales come from tanks and armoured vehicles and over a quarter from guns and ammunition. The rest comes from car parts and other civilian products. The tanks cost about €13m-€15m apiece with a profit margin of about 10pc.
The company also owns 55pc of a joint venture with the UK’s BAE Systems, which is to supply Boxer armoured vehicles and upgrade 148 of Britain’s Challenger 2 main battle tanks.
Rheinmetall is also involved in a joint project between France and Germany to produce a new model, known as the Main Ground Combat System, to replace the Leopard 2 and the Leclerc. Production is hoped to start in 2035.
The Leopard 2 is an extraordinary success story, according to Yohann Michel, a research analyst at the International Institute for Strategic Studies.
While dwarfed in sheer number by the Russian T-72 and T-90, which were exported to India, it is still the most popular tank in Europe, he said.
Western made tanks offer a greater chance of getting off the all-important first shot in a tank battle, says Ed Arnold, a research fellow in European security at RUSI, thanks to their thermal sights.
Leopards, French Leclercs and other newer tanks have better armour and better designs than Russian alternatives, says Arnold, meaning they are more likely to avoid the ammunition explosions which plagued Russian models.
The Leopard is “the lion in your pack”, helping punch through in offensives against other tanks, says Arnold.
The Leopard 2 has seen action before, being deployed in Kosovo, in Afghanistan and Syria, but not in Europe against Russia, the task it was designed for.
The Leopard 2, Leclerc, Challenger 2 and M1 Abrams were all designed at various stages of the Cold War, when the Soviet Union was seen as the main enemy of Western allies. France is yet to offer the Leclerc but Macron is under pressure to do so.
Rheinmetall, which was approached for comment, said this week it could deliver 139 Leopard tanks to Ukraine if needed, including 51 of the newest versions in the next year and 88 older Mark-1 tanks.
Thousands of Leopard 2s are used throughout Europe, with customers including Austria, Denmark, Finland, Greece, Norway, Portugal, Switzerland and Spain.
Buyers also include former Warsaw Pact members such as Poland, the Czech Republic and Hungary. Germany, Turkey, Spain and Greece are the biggest owners, each with more than 300.
Germany’s automotive prowess, combined with the long borders and the nation’s military history has meant it has focused on tanks, says Arnold. Dusseldorf-based Rheinmetall has a 133-year-old history as an arms maker.
The Leopard is quite easy to maintain, especially compared to the Challenger 2, which uses both metric or imperial components, and the American Abrams, which is driven by a gas turbine engine.
Turbine engines, which have much in common with a jet engine, offer more power and can be operated from a range of fuels, but are much harder to fix than the diesel-powered Leopard.
The deal to send Leopard 2s to Ukraine has reportedly spurred Kyiv to request warplanes, such as the single-engine US F-16, to bolster its ageing fleet of Soviet-era jets.
Yuriy Sak, who advises Defence Minister Oleksiy Reznikov, told Reuters that the country wants fourth-generation fighters such as the Eurofighter Typhoon flown by the Royal Air Force and Luftwaffe and twin-engine F-18.
Western officials have been cautious about sending aircraft and weaponry that could be seen as offensive, and the move would require a shift in thinking from Nato members over the risk of escalating the conflict, with particular regard to the use of nuclear weapons.
Chancellor Scholz has ruled them out for the time being. Politicians are likely to gauge first how President Vladimir Putin responds to dozens of tanks heading his way before making a decision on jets.
The other industrial challenge is replacing any jets if they are sent to Ukraine: while Rheinmetall can build a Leopard per week, most aircraft take many months to build.
As the politicians watch Putin and chew over the question of jets, Rheinmetall will be watching how its tanks perform under fire, says Arnold.
“I'm pretty certain that people will be very keenly interested in the performance,” he says.