Europeans attending the Munich Security Conference last month were left stunned when a scathing speech by US Vice President J.D. Vance laid bare the dangerous state of transatlantic relations - but one man remained completely calm.
"It's good for business," said Armin Papeger, chief executive of German arms maker Rheinmetall, whose shares jumped after the new administration in Washington launched peace talks on Ukraine without Kiev and threatened to end a decades-long security guarantee for Europe.
Speaking to the Financial Times on the sidelines of a heated conference, the 62-year-old Bavarian said Europe had no choice but to drastically increase its defense capabilities - and that "this company is ready to make that possible."
Few companies have benefited from the war in Ukraine and rising tensions between the United States and Europe like Raimetal, a 136-year-old German company specializing in the production of ammunition and armored vehicles, which stands out as a rare success story in a stagnant German industry.
The company announced on Wednesday that it had sales of around 10 billion euros last year - almost double the 5,7 billion euros in 2021, before Russia launched a full-scale invasion of Ukraine. The company aims to generate revenue of up to 2030 billion euros by 40.
While many European officials have criticized Trump's approach to Ukraine and European security as unpredictable and unstable, Paperger described it as pragmatic and rational.
Rheinmetall shares have soared as European investors have set aside ethical reservations about investing in the arms industry and are now worth more than ten times what they were before the invasion - and have risen by almost 140% since Donald Trump won the US election in November.
"We've won more contracts in the last 12 months than in the previous 15 years," Papeger said.
Demand growth is expected to continue, following a seismic shift in German politics following Friedrich Meirz's election victory last month. The incoming chancellor announced plans earlier this month to lift borrowing limits to allow for virtually unlimited defense funding, vowing to do "whatever it takes" to protect freedom in Europe.
This approach is gradually spreading across the EU, and European Commission President Ursula von der Leyen has also announced a plan to mobilize €800 billion for defense.
The sharp increase in public spending on arms - and the companies that profit from it - may be unacceptable to some in Europe, where many countries, long enjoying "peace dividends", have cut back on military spending in favor of education and health.
However, defense experts warn that European states must succeed in a major effort to expand production if they are to meet the dual challenge of strengthening support for Ukraine and rearming their own militaries in light of a possible US withdrawal from the continent.
If production is successfully scaled up, it could help Europe, Germany and other countries get the defense equipment they desperately need, said Ben Schrir, director of the European Security and Defense Program at the London-based International Institute for Strategic Studies. Rheinmetall is "perfectly positioned to play a key role in the rearmament of Europe," he said.
Armin Papeger, an engineer by profession with combed-back gray hair and a penchant for silk scarves and hunting on the company's property, joined the arms manufacturer in 1990 and became CEO in 2013.
According to the latest available data, he earned 2023 million euros in 3,6, but he additionally profited from the company's incredible growth by buying its shares. Last month alone, he bought shares worth around 250.000 euros, which have already increased by 140.000 euros in the meantime.
While arms industry executives usually prefer to remain in the shadows, the Rheinmetall boss has taken a different approach since Vladimir Putin invaded Ukraine.
Just days after Chancellor Olaf Scholz declared a "turning point" in German defense policy and unveiled a 100 billion euro fund for the reconstruction of the Bundeswehr, Papeger publicly presented a list of Rheinmetall products on which, he suggested, 42 billion euros from the fund could be spent.
Since then, he has been constantly appearing on television screens and newspaper front pages, warning about European deception regarding Russia, the poor state of national weapons stockpiles, and the need to increase defense spending.
His rising public profile also carries personal risks: NATO diplomats revealed last year that US intelligence had uncovered an alleged Russian plot to assassinate him. Asked if he was still a target, Papeger told the FT: "Yes, it doesn't stop, but the government is looking out for me."
Rheinmetall is not the only European defense giant to benefit from the continent's rapid growth in military spending, which is set to reach $2024 billion in 457 - 50 percent more than in 2014, according to the International Institute for Strategic Studies.
Other companies have also seen a sales boom, including Britain's BAE Systems, Sweden's Saab and Italy's Leonardo, as well as several German private and more discreet companies such as missile and ammunition manufacturer Diehl Defence and Krauss-Maffei Wegmann, the company behind the Leopard 2 tank.
However, Rheinmetall has played a key role in European efforts to increase production of 155mm heavy artillery ammunition, which Ukrainian forces are using up in huge quantities in the grueling trench warfare along the 1.000-kilometer front line.
Over the last three years, the company has increased its production capacity for 155 mm shells tenfold, to 700.000 pieces per year, thanks to: the acquisition of Spanish competitor Expal worth 1,2 billion euros, the expansion of the main production site in Unterlisu, the opening of new plants in other countries.
While the EU missed its target of delivering one million 2023mm ammunition to Kiev by the end of 155, Rheinmetall plans to surpass that figure on its own by the end of next year. Papeger pointed out that the "huge scale effect" has enabled production costs to be reduced by up to 30 percent.
In addition to ammunition, the company also produces the "Marder" combat vehicle, as well as barrels for Leopard 2 tanks and Panzerhaubitze 2000 self-propelled howitzers, all of which have already been delivered to Ukraine.
Benjamin Hillan, an analyst at Bank of America, said Rheinmetall was unusually willing to invest its own capital in expanding production, even before governments had even ordered the equipment.
Papeger revealed that last year's decision to invest 300 million euros in Unterlis was based solely on "a handshake between the chancellor and me." The new factory at the site, which is due to open next month, will have an annual capacity of 200.000 shells.
"We currently have 10 factories being built simultaneously around the world," he added, referring to production facilities in countries such as Romania, Hungary and Lithuania.
Camille Grand, a former senior NATO official and now an analyst at the European Council on Foreign Relations, said Rheinmetall wisely chose not to get involved in the "blame game" between defense companies and politicians over Europe's slow rearmament. "They were very brave, they moved at a fast pace and they didn't get into those arguments."
Alexander Wall, an analyst at Stifel, said he knew of no other manufacturing company that had “grown so quickly in such a short time.” In the past two years, Rheinmetall has invested nearly 8 billion euros in capacity expansion.
The expansion also includes plans to build factories in Ukraine, relying on the assessment that European governments will continue to support the Ukrainian military.
Ukrainian President Volodymyr Zelensky, who has met with Papeger several times, most recently in Munich last month, praised the director-general's "dedicated and sincere" support for Kiev.
But the company wasn't always so staunchly anti-Putin. In 2011, it struck a notorious deal to help the Russian military develop a training center, which became the base for massive military exercises involving 200.000 troops, held months before the invasion of Ukraine.
Rheinmetall has not always been anti-Putin, and in 2011 it struck a notorious deal to help the Russian military develop a training center, which became the base for massive military exercises involving 200.000 soldiers, which were conducted months before the invasion of Ukraine.
That contract was suspended by the German government after Russia annexed Crimea in 2014, prompting the company to cut its profit forecasts and sue Berlin for 120 million euros.
But Paperger quickly realized how the Russian invasion of Ukraine would change not only the dynamics of European security, but also his industry. "He is adept at adapting to change," said a Rheinmetall source.
Paperger's frequent public appearances sometimes irritate officials at the German Defense Ministry, the source said, but he added that he has built close relationships with Defense Minister Boris Pistorius and with Merco.
Potential employees also have a positive view of the company, which last year ranked among the ten most attractive employers for young engineers, according to a survey.
In another sign of changes in German society - a country with deeply rooted pacifist views - Rheinmetall announced last year that it would become a sponsor of the Borussia Dortmund football club. Some fans expressed displeasure over the move, but the regional economy minister from the Greens, Mona Neubauer, came to the company's defense, saying that the Ukraine crisis had made it clear that "we need companies like Rheinmetall to be able to defend our democracy and freedom."
Rheinmetall has also adapted quickly to changes in Washington, positioning itself as a beneficiary of the new transactional order that is reshaping transatlantic defense relations. In December, it completed a $950 million acquisition of Michigan-based Loc Performance, which will allow it to compete for lucrative U.S. military contracts, making the U.S. a key market for future growth.
While many European officials have criticized Trump's approach to Ukraine and European security as unpredictable and unstable, Paperger described it as pragmatic and rational.
"I know the Trump administration is afraid that if they are not tough enough, the Europeans will again do nothing" to increase defense spending, he said in Munich, immediately after a meeting with NATO Secretary General Mark Rutte.
Paperger recalled that Angela Merkel, who was German Chancellor for 16 years until 2021, promised to allocate 2 percent of GDP to defense "and nothing happened."
Now, according to him, the world has entered a new era. "Americans no longer want to pay their bills."
Translation: NB
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