Failure at Moreni, success at Mediaş: Rheinmetall enters the Romanian defense industry market

English Section / 5 februarie

Photo source: twitter Rheinmetall

Photo source: twitter Rheinmetall

Versiunea în limba română

The German arms manufacturer Rheinmetall announced last Thursday that it has taken over 72.5% of the shares of the Romanian vehicle manufacturer Automecanica Mediaş, without specifying the value of the transaction. The announcement of the German giant, which produces - among other things - the cannon for the Leopard 2 tanks, used by several armies in Europe and which was also delivered to Ukraine, as well as the Panzerhaubitze 2000 howitzer, which is used on the battle front in the neighboring country, represents at first sight a success, taking into account that it is the second attempt of those from Rheinmetall to enter the defense industry market in our country, after the failure registered almost five years ago of the joint venture it had with Uzina Automecanica Moreni.

In Mediaş, the Germans will operate under the name of Rheinmetall Automecanica SRL, the company wanting to expand its production and maintenance capabilities by adding military vehicles to its current portfolio, knowing that Automecanica Mediaş is a manufacturer of special vehicles and trailers for the civil and military market , the plant will play, following this acquisition, an important role in the maintenance of Western combat vehicles delivered to Ukraine as well as in providing logistical support.

After the announcement made by the German company, the former Minister of Economy, Entrepreneurship and Tourism, Claudiu Năsui, wrote, on Friday, on the official Facebook page: "Rheinmetall's acquisition of Automecanica Mediaş is very good news. This should also happen with the so-called "defense industry" of the state. For those who don't know, despite its pompous name, the state defense industry is actually a museum of communism. Consisting of 17 state companies, the industry is a sample of what the communist economy looked like in Romania. Everything is fixed as in the state. It is stolen at every level, from management to guard. No one is interested in changing anything. And even if someone contradicted their self-interest and wanted to change something, it would be impossible. Every year the minister comes and brags that he is still pumping hundreds of millions of lei of your money into "investments". In fact, those "investments" are just covering the constant losses that these black holes make. In the last 30 years, I am the only minister who has refused to do this. And how not to make losses when the entire industry operates according to the main rule from the state: time passes, the leaf goes. The disaster is seen not only in the numbers, but also in the total inability of the "industry" to produce. Even with the war in Ukraine, when demand exploded for the type of Soviet weaponry that this "industry" theoretically manufactures, they still failed to do anything. Why? Because the purpose of state industry is not to produce. It's just to keep up appearances. Make it look like everything is going well. The solution exists. It was also applied in Romania and it worked. Rheinmetall's recent investment reminds us of that. Romania can have a functional and even performing defense industry (see the case of Aerostar Bacău and more). But for that it has to be private. It must operate on a profit and loss basis. It must be an owner whose interest is not to make a loss, but even to make a profit. These 17 companies must be privatized. Let owners come who have an interest in stopping the theft and even produce something. The culmination is that the Romanian army has ended up getting its supplies mainly from private companies. Except that not necessarily Romanians. Hundreds of millions of lei from the taxpayer's money without seeing any light at the end of the tunnel when the black hole will ever end. Because, in fact, it will never end until these companies are privatized".

Following this post, I asked the former Minister of Economy in the Cîţu government, why he claims that the announcement made by Rheinmetall is a success.

Deputy Claudiu Năsui told Ziarul BURSA: "There's no way it won't be a success, because, unlike the joint venture in Moreni - where the state only wanted to benefit from the know-how of the German company without investing anything or investing only very little -, at Mediaş we are talking about a purchase of the majority stake, that is, basically a purchase of the Automecanica company. Those at Rheinmetall show that they want to invest and stop messing with the state and all sorts of intractable discussions regarding the offset clause. (...) I say it is a very good thing, especially since we are talking about an important company from an EU and NATO member state, and this example must give thought to the Government that continues to allocate significant sums to the 17 black holes from Romarm instead of privatizing them. Privatization is the way forward, and this can be seen from the examples of Aerostar Bacău and Avioane Craiova. While Aerostar Bacău was privatized in "90-s and has now reached the point of making components for the F35 fighter jets, Avioane Craiova - a company that remained in the state's portfolio - struggled to complete the contracts granted by the Ministry of Defense regarding the planes on which the Romanian pilots will be trained to the sleeve of F16 fighter jets".

The former Minister of the Economy also told us that, during the eight months he was at the head of the ministry under which the Romarm company is located, he wanted to privatize the Bucharest Mechanical Plant, because in his lordship's opinion, this is the best method for the development of production capacities there.

Claudiu Năsui told us: "I am reserved about the success of the collaboration between General Dynamics and Uzina Mecanică Bucharest, especially since during the time when I was minister, things did not work so well. I wanted to privatize the plant and I suggested the Americans from General Dynamics to take over the entire activity there. I was not able to complete this project because the PSD and its allies in the Parliament voted at the beginning of 2020 for a law that prohibited the Government from selling state assets for two years".

I told Mr. Năsui that in other European countries the companies in which the state holds shares operate and are successful internationally, an example of this being the Naval Group, which comes from the DNSC company where the French state was the majority shareholder.

The former Minister of Economy replied: "Some things go to other countries because of the cultural capital behind them. Regarding the Naval Group I can tell you that it has recently lost fantastic contracts in terms of value because it no longer has cutting edge technology. That's why the French are losing purchases to important companies from the USA and Germany".

Regarding the unsuccessful experience of Rheinmetall at Uzina Automecanica Moreni, the union leader from the factory in Dâmboviţa county, Constantin Bucuroiu (who is also the president of the Alliance of Trade Unions in the Defense and Aeronautical Industry - ASIAA), told us that the termination of the joint- venture was not only the fault of the German company, but also the fault of the authorities in Bucharest, especially the Ministry of National Defense.

Constantin Bucuroiu told us: "We, as the state, had our share of the blame regarding the termination of the joint venture between Rheinmetall and Automecanica Moreni. In 2011 when the national TBT 8x8 program was launched, deadlines were given and milestones were set for the final realization of that transporter and its entry into the MApN endowment. Unfortunately, after the realization of the joint venture with Rheimetall, MApN was no longer interested in financing the program regarding the creation of this transporter and focused only on the purchase of Piranha 3 and Piranha 5 transporters. Thus, the only contribution of MApN for the national TBT program 8x8 was 500,000 euros for phase I, to which was added the contribution of 200,000 euros from Uzina Automecanica Moreni for phase II, after which no one from the Romanian state allocated any more money. The trickery of the government at the time, and in particular the MApN, to block the TBT 8x8 program, made Rheinmetall representatives suspicious of the continuation of this program and the joint venture with Automecanica Moreni".

Regarding the purchase of the company from Mediaş by Rheinmetall, the president of ASIAA shows that, unlike the geostrategic and political conditions at the time of the joint venture with Automecanica Moreni, now the situation is completely different in view of the war in Ukraine, and the German giant believes that by developing production capabilities it will increase its turnover and profit in light of the need for armaments for the Ukrainian armed forces and not only.

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