Rheinmetall Boosts Defense Production Amid Record Orders and Artillery Expansion

Rheinmetall AG is accelerating its artillery ammunition production to meet surging NATO demand driven by the war in Ukraine, with plans to scale output at its Unterlüß facility in Lower Saxony, Germany, to 350,000 rounds per year—up from a previously planned 200,000—following a major announcement by CEO Armin Papperger on April 17, 2025, as reported in an interview with German newspaper Handelsblatt.

The Unterlüß site, now set to become Europe’s second-largest artillery manufacturing plant, reflects Rheinmetall’s strategic response to evolving security dynamics and its ambition to become a cornerstone of NATO’s artillery supply chain. The expansion is part of a broader continental push to increase defense production capacity amid heightened geopolitical tensions.

Rheinmetall’s production ramp-up is supported by a framework contract with the German Bundeswehr valued at up to €8.5 billion, including an initial call-off of €880 million to secure capacity during the build-out phase. This financial backing provides the company with planning visibility of six to eight years, underpinned by a current order backlog of €63.8 billion.

The company is executing a four-pronged pan-European network expansion, with the Unterlüß facility at its core. An investment of approximately €500 million has established what Rheinmetall describes as Europe’s largest artillery ammunition plant, with output projected to reach 140,000 shells in 2026 before scaling to 350,000 units annually from 2027 onward.

Additional strategic sites are being developed across Europe: a new plant in Lithuania, backed by up to €300 million in investment, is scheduled to commence operations in 2026. a €535 million powder production facility in Romania is slated for completion in 2029; and further investments are underway in Spain to strengthen the company’s continental footprint.

Rheinmetall’s expansion is occurring amid strong political and financial tailwinds, including the German federal budget for 2026, which allocates €8.9 billion specifically for ammunition procurement. The company cites Europe’s push for greater strategic autonomy—accelerated by uncertainties over long-term U.S. Security commitments—as a key driver of sustained demand for defense materiel.

Despite the scale of the undertaking, Rheinmetall maintains that the ramp-up is de-risked by long-term contracts and diversified production sites. CEO Armin Papperger has emphasized that production can be scaled quickly despite the ongoing order boom, asserting that the company’s infrastructure is designed for rapid expansion.

The broader defense sector is witnessing an unprecedented scale-up in manufacturing capacity, with Rheinmetall leading the charge. The Düsseldorf-based group is leveraging billions in committed investment and a bold revenue target of €14 to €14.5 billion by 2026 to execute what it describes as the largest capacity increase in its long history.