Hanwha Aerospace Co. plans to build a precision missile manufacturing plant in Germany – a pivotal shift in its global strategy that will place the leading South Korean defense company in direct competition with European defense champion Rheinmetall AG on its own turf.
The move comes as the defense affiliate of Korea’s chemicals-to-defense conglomerate Hanwha Group accelerates its push into Europe, capitalizing on the continent’s record defense spending and strategic shift toward domestically sourced armaments.
At a recent investor and stakeholder event in Berlin, Hanwha Aerospace’s European subsidiary revealed that it is scouting several cities in eastern Germany for its first plant in the country, people familiar with the matter said on Thursday.
This is the first time Hanwha has publicly confirmed its intention to set up a local production base in Germany, sources said.
More than 100 representatives from German government institutions and local defense partners attended the briefing.
FROM RELIANT TO RIVAL
Until just a few years ago, Hanwha Aerospace relied heavily on German technology to power its flagship K9 self-propelled howitzer.
Early models were equipped with 1,000-horsepower diesel engines made by MTU Aero Engines and transmissions from Renk Group AG – both German firms.
Such technological dependency even forced Hanwha to withdraw from a lucrative deal to export K9 systems to the United Arab Emirates in 2020, after Berlin blocked weapons sales to the Middle East.
But a breakthrough came in 2023 when Hanwha installed domestically produced engines made by Korea’s STX Engine Co., which helped it increase its exports.
The company now exports to both the Middle East and European countries with far fewer constraints.
In Germany, Hanwha’s envisioned plant is expected to serve as a production hub for advanced weapons systems, including the Chunmoo multiple launch rocket system (MLRS).
Hanwha Aerospace said that it has established partnerships with over 60 German defense companies, with plans for joint R&D, integrated supply chains and local talent development, sources said.
“We aim to build advanced defense capabilities in close cooperation with our German partners,” said Bae Jin-kyu, head of Hanwha Aerospace’s European operations.
HANWHA ALSO BUILDS PLANTS IN POLAND, ROMANIA
Germany is part of Hanwha’s wider European playbook. The company is also pursuing manufacturing projects in Poland and Romania.
In Poland, Hanwha has launched a joint venture with WB Group, the country’s top defense firm, to produce Chunmoo rocket launchers and guided missiles for domestic deployment.
In Romania, Hanwha has selected a site for local production of K9 howitzers and K10 ammunition resupply vehicles (ARVs), with construction expected to begin later this year and operations starting by 2027, sources said.
In July 2024, Hanwha signed a 1.4 trillion won ($1 billion) deal to export 54 units of the K9 self-propelled howitzers and 36 units of the K10 ARVs to Romania.
Hanwha’s expansion plan in Germany is in line with the European Union’s push for defense self-sufficiency.
Last month, the European Commission unveiled a European defense industry strategy, pledging to spend 800 billion euros ($903 billion) through 2030, with a strong emphasis on prioritizing European-made equipment.
To support its international buildout, Hanwha Aerospace plans to partly fund its overseas joint ventures and production lines with proceeds from a 2.3 trillion won rights offering announced in April.
Of the planned capital raise, some 1.6 trillion won will be used to finance its overseas defense projects, Hanwha said.
By Jin-Won Kim
jin1@hankyung.com
In-Soo Nam edited this article.
