Are arms, not vehicles, the brand new financial engine? – DW – 05/13/2025 | EUROtoday

The Czech Republic has turn into the nation with the best per capita manufacturing of vehicles on this planet over the past thirty years. 2024 was a report 12 months with greater than 1.4 million manufactured autos within the nation of 10 million inhabitants. This is a rise of virtually 4% year-on-year.

However, manufacturing plummeted by 7.1% within the first quarter of 2025.

The essential cause for this was the drop in demand within the West, which was triggered by the issues within the European automotive trade, the gradual transition to electromobility, and US tariffs.

Meanwhile, the nation’s arms trade is booming.

“The defense industry can become a new engine of the Czech and European economy,” Danuse Nerudova, member of the European Parliament’s Committee on Budgets, advised DW.

“It can utilize the supply capacities and workforce freed up by the automotive sector, boost economic growth and strengthen our security at the same time.”

Arms as new financial engine?

Petr Zahradnik, a Czech economist and advisor to the European Economic and Social Committee in Brussels, is considerably extra skeptical. “Czech arms factories are experiencing golden times, that’s true,” he advised DW.

Yet, he provides that he does not imagine that arms will change the automotive sector as the brand new engine of the Czech economic system.

“I also don’t want to see weapons production replace commercial production,” he mentioned.

Even earlier than World War I, the territory of at the moment’s Czech Republic was generally known as heart of arms manufacturing. For a long time, then-Czechoslovakia was additionally one of many world’s main arms producers. For years, arms accounted for round 10% of all Czechoslovakian exports.

Also home demand was pushed by the nation’s closely armed military of a number of hundred thousand males till the late Eighties.

However, the tip of the Warsaw Pact — a protection treaty and navy alliance between the Soviet Union and 7 different Eastern Bloc socialist republics signed in 1955 — in addition to the final disarmament within the early Nineteen Nineties, which was accompanied by a major discount within the navy finances, hit Czech arms producers onerous.

Czechoslovakia’s final main armaments order was an export contract for 250 T72 tanks to Syria in 1991.

Then, in 1992, Czechoslovakia break up into two particular person states, the Czech Republic and Slovakia. This additionally led to a division of the protection trade. The manufacturing of tanks and heavy equipment was primarily in Slovakia, whereas the plane trade, the manufacturing of small arms, ammunition, radar programs and, above all, small arms was primarily situated within the Czech Republic.

Not fully profitable privatizations, the discount of Czech defence spending to 1% of the nation’s GDP, in addition to the professionalization and downsizing of the military to solely round 20,000 troopers significantly weakened the Czech defence trade within the years after the break up.

Growth issue Ukraine conflict

Following Russia’s invasion of Ukraine in February 2022, Czech arms factories massively elevated their output once more. In specific, the modernization of tanks, and the manufacturing of ammunition, navy autos, self-propelled artillery howitzers, drones, radar tools and machine weapons have been booming since.

40% of the Czech arms factories’ manufacturing goes to Ukraine, the place joint ventures have been established as properly.

In complete, as much as 90% of Czech-produced arms are exported. At the identical time, purchasesby the Czech military are additionally on the rise.

In 2024, Czech protection spending reached 2% of the nation’s GDP and Czech Prime Minister Petr Fiala introduced that in just a few years’ time, it should quantity to three%.

New jobs for automotive staff

The growth is about to proceed for the subsequent few years. This 12 months, ammunition producer STV Group will enhance its manufacturing of large-caliber artillery ammunition, which it primarily provides to Ukraine, from 100,000 models to 300,000. The Czech PBS Group additionally plans to double its manufacturing of engines for missiles and drones.

In flip, the variety of staff in these corporations can be rising. STV Group is planning to rent 1,000 extra staff within the close to future. According to its annual report, the Czechoslovak Group, the most important Czech arms producer, which incorporates the Tatra navy automotive plant in addition to ammunition manufacturing, already employs 14,000 folks.

By comparability, the most important automotive group Skoda-Auto employs round 20,000 folks at its essential plant in Mlada Boleslav. However, because the much less demanding manufacturing of electrical vehicles will result in a discount within the variety of staff sooner or later, Skoda Auto boss Klaus Zellmer advised the German print journal Automobilwoche in late February 2025 that his firm, which at the moment employs 41,000 folks, was planning to scale back its workforce by 15%.

Many of those staff are prone to discover new jobs within the protection enterprise. According to Czech recruitment businesses, they won’t require any main retraining once they swap industries.

This article was tailored from German.