Growing employment numbers in the northern defense sector

Amplifying Defense Sector Growth in Schleswig-Holstein

The past year has seen a remarkable surge in employment in Schleswig-Holstein's defense sector, with an all-time high of 8,346 individuals. This cheerful news was shared by Dieter Hanel, head of the Defense Technology Working Group in Schleswig-Holstein, during a talk in Kiel. The annual report for 2024 was also introduced, showcasing the impressive 2023 figures, which have seen a striking 9% increase compared to 2022, and a jaw-dropping 70% boost since 2010.

However, the expansion in employment across various sections of the defense sector differs noticeably. For instance, the land systems industry experienced a robust 14% growth, while naval shipbuilding experienced a more modest but still significant 6% rise. Interestingly, the defense sector in Kiel has been a game-changer, witnessing a striking 14% increase in employment compared to 2022, resulting in approximately 6,200 employees.

The estimated turnover for the defense sector in 2023 ranges between 1.5 and 2 billion euros. This encouraging economic growth is primarily attributed to the conflict in Ukraine and long-term contracts, a considerable portion of which are international. The 100 billion euro special fund for the German armed forces (Bundeswehr) has had a minor contribution to this growth.

Germany Aims for NATO's 2% Defense Spending Goal in 2024

Germany is set to accomplish NATO's 2% defense spending target for the first time in over a decade in 2024, as per NATO's data. Nevertheless, Germany ranks 15th among NATO countries in terms of defense spending.

Concurrently, the Bundeswehr continues to grapple with substantial equipment shortages essential for its transition toward territorial or alliance defense, or for global deployments. Furthermore, the budget and the special fund allocated for defense in the upcoming years will not be sufficient to bridge this gap in the long term.

An Agenda for Political Intervention

Despite the positive economic growth, the defense sector calls for political intervention in several critical areas. For instance, the Defense Technology Working Group advocates for a comprehensive overhaul of the Bundeswehr's procurement system, including simplified tenders and expedited processes. Moreover, EU procurement rules and certification requirements should be streamlined, especially considering the numerous hurdles these present for the defense industry.

Additionally, regulations that label defense and the defense industry as "unsustainable" and "socially harmful" need to be abolished due to the challenges they bring in securing funding from financial markets. "By addressing these pinpointed areas for political intervention, defense technology will continue to significantly contribute to our nation's and our allies' security in the future," Hanel stressed.

The current growth in the defense sector in Schleswig-Holstein is commendable, with Kiel alone boasting around 6,200 employees, a 14% increase from 2022. This growth is not only a boon for Germany but is also helping the country meet its defense spending target, as it is projected to represent 2.12% of the GDP in 2024, according to NATO's data.

Despite this progress, the defense sector faces significant challenges, such as substantial equipment shortages and limited budget for long-term transitions. To tackle these challenges head-on, the Defense Technology Working Group proposes political intervention in areas like simplifying tenders, streamlining EU procurement rules, and abolishing regulations that negatively impact the defense industry.

Insights from Experts

1. Kiel Institute Report:
2. Increased defense spending, even up to 3.5% of GDP, can have a positive impact on the economy[3][4].
3. Defense spending can stimulate innovation and growth, which can increase tax revenues and lower the debt ratio[1][3].
4. The financing of increased defense spending should primarily be through public debt due to the long-term nature of defense procurement[3][4].
5. Coordination and Procurement:
6. Defense procurement should be directed toward larger firms for European defense procurement to foster competition and knowledge spillovers[4].
7. A dual-sourcing policy across countries could be beneficial in expanding European defense procurement and procurement within the EU[3][4].
8. Hybrid Threats and Cybersecurity:
9. A comprehensive, multi-faceted approach is essential to tackle hybrid threats, which includes cybersecurity measures, intelligence sharing, economic countermeasures, and strategic communication[5].
10. NATO's strategy to counter hybrid threats emphasizes enhancing situational awareness and proactive deterrence strategies to decrease the likelihood of such threats materializing[5].

Challenges in Schleswig-Holstein

The sources do not offer specific employment statistics or economic impacts for Schleswig-Holstein, but they highlight broader challenges in the defense sector, such as:

1. Drone Incidents:
2. Ongoing incidents of unidentified drones surveying the Schwesing Air Force base have raised security concerns, despite the base being equipped with anti-drone countermeasures[2].
3. The primary suspects in these incidents are suspected to be Russian intelligence services, which have been witnessed near the base with vehicles bearing Russian diplomatic plates[2].