Rheinmetall ATACMS production will take time to expand, the German defense group said Friday, highlighting the challenge the United States faces in rebuilding missile inventories depleted during the war with Iran.
According to reporting this week, the U.S. Army drew down much of its global stock of long-range precision missiles over the five-month conflict with Iran, prompting questions about readiness for future contingencies.
On Thursday, President Donald Trump sought to ease concerns about shortages, saying the United States had an almost unlimited supply of some munitions, while acknowledging that other categories were tighter. He added that U.S. defense manufacturers are increasing capacity.
Rheinmetall signed a memorandum of understanding with Lockheed Martin last month to jointly produce Army Tactical Missile Systems, or ATACMS, at Rheinmetall’s Unterlüß facility in northern Germany, with production infrastructure set to be established next year.
“Naturally, there will also be sufficient capacity to replenish the U.S. military arsenals depleted by the conflict involving Iran,” Chief Executive Armin Papperger said in an interview published Friday. “That will not happen in two years. It will take much longer.”
Defense contractors worldwide are racing to meet elevated demand as governments raise spending amid conflicts in Ukraine and the Middle East, along with U.S. calls for Europe to shoulder more of its own security burden.
Helping build Europe’s defenses
Rheinmetall has been one of the main beneficiaries of Europe’s defense-spending push.
Europe’s largest ammunition producer has pursued partnerships and acquisitions to scale output quickly in response to rising orders.
The ATACMS collaboration still requires approvals, but Papperger said the process is well advanced and supported by the U.S. government.
The partners plan to serve the global market for ATACMS missiles, he added, noting there would be sustained demand for the next 15 years.
Rheinmetall expects the joint venture to book its first revenue in 2028, according to the CEO.
Talks needed with new Leonardo CEO
Papperger said Rheinmetall remains interested in acquiring Iveco’s military truck business from Italy’s Leonardo, but future discussions will depend on new CEO Lorenzo Mariani.
He said he had a handshake understanding with Mariani’s predecessor. The new chief could set different terms, and Rheinmetall will assess whether they remain attractive. The deal is not in jeopardy, he added, saying he hopes to meet Mariani after the summer break.
Boxer contract expected by year-end
Rheinmetall, which on Thursday cut its sales outlook after Germany canceled its F126 frigate program, also expects a multibillion-euro order for Boxer armored vehicles for the German military to be finalized by year-end, Papperger said.
“There is absolutely nothing standing in the way,” he said.
Rheinmetall’s portion of the Boxer contract would be worth €12.4 billion, while the total value including partner KNDS is expected to be about €25 billion.
Rheinmetall ATACMS production outlook
The timeline to build Rheinmetall ATACMS production capacity reflects broader supply chain and regulatory hurdles as defense firms scale up for sustained demand. Company officials expect facilities in Unterlüß to be prepared next year, with market deliveries contributing to revenue from 2028.
The ATACMS expansion comes as other precision-strike programs, such as JDAM-LR production, move forward to address Pentagon stockpile concerns.