Hanwha Aerospace to build defense plant in Germany as European base

Hanwha Aerospace Co. plans to build a precision missile manufacturing plant in Germany as part of its global strategy to expand its presence across Europe.

The move comes as the defense affiliate of Korea’s chemicals-to-defense conglomerate Hanwha Group accelerates its push into Europe, aligned with 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.

The K9 is 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 the Middle East with far fewer constraints.

In Germany, Hanwha’s envisioned plant is expected to serve as a production hub for advanced weapons systems, including guided missiles and ammunition.

Hanwha Aerospace said that it has established partnerships with over 60 German suppliers, 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 TO ALSO BUILD 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 the 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 self-sufficiency in defense.

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.

Write to Jin-Won Kim at jin1@hankyung.com

In-Soo Nam edited this article.