Rheinmetall and BAE Systems have announced that they have signed an agreement to create a joint UK based military vehicle design, manufacturing and support business.

Rheinmetall will purchase a 55% stake in the existing BAE Systems UK based combat vehicles business, with BAE Systems retaining 45%.

The firms say that the establishment of the new Joint Venture is subject to regulatory approvals which are anticipated to be completed in the first half of 2019.

“Once the approvals have been completed, the Joint Venture will be known as Rheinmetall BAE Systems Land (RBSL).

In addition to managing and growing the existing combat vehicle support business, the intent is for the new Joint Venture to play a major role in the delivery of the British Army’s new Mechanised Infantry Vehicle (MIV) and other strategic combat vehicles programmes.”

Jennifer Osbaldestin, Managing Director of BAE Systems Land UK business, said:
“We are committed to evolving our combat vehicles business so that we better serve our customers’ future interests. 
Joining forces with Rheinmetall in the UK provides renewed purpose for our vehicles business and allows us to deliver products, services and technology that help land forces excel in their vital roles.
We look forward to working together to ensure the Joint Venture is a trusted supplier to the British Army and our international customers.”
Ben Hudson, Global Head of Rheinmetall’s Vehicle Systems Division, said:
“We are excited about the potential the new Joint Venture holds for Rheinmetall, BAE Systems and ultimately our customers. The combined capabilities of our two great companies will offer our customers a comprehensive portfolio of military vehicles and associated technologies both now and into the future. 
We are proud to invest in the UK and expect to substantially grow the current business and the Telford manufacturing facility over the coming years.”
The new Joint Venture will be headquartered at BAE Systems’ facility in Telford, England.
George Allison
George Allison
George has a degree in Cyber Security from Glasgow Caledonian University and has a keen interest in naval and cyber security matters and has appeared on national radio and television to discuss current events. George is on Twitter at @geoallison
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40 COMMENTS

  1. Good and bad news as the majority vote will be German! Why do UK companies always give away majority shares? I have no issue with joint efforts, as long as it’s 50/50. BAE might be open to losing its grip on the military vehicle market, with this deal.
    I’m surprised why Germany appears not to want to give the departing UK from the EU much support at this critical time, yet is still investing in UK industry? Do they know something we don’t?

    • I have a feeling the joint venture will only cover the Boxer Vehicle since BAE has no other work going on in UK Land Systems that I’m aware of.

      I assume it will also cover the C2 upgrade, which will be interesting considering Reinmettal has not released their proposal yet. Could you imagine if it was a Leopard A7 (oe whatever version it is) that came in at a lower price than upgrading the C2.

      • I can perfectly believe that, there are still a large number of Leopard 2A4 stored in Germany. I would not be surprised if an upgrade of surplus 2A4 would come in under the price of upgrading the Challenger II. Rheinmetall has proposed the L55 smoothbore as an option but that raises questions, whilst the gun can fit into the mantlet the turret can only fit six or so single piece rounds. Even if the turret bustle was extended to give more space the bomb load would still be far smaller as there isn’t the hull space for spare rounds. Cutting the turret on CR2 to fit the ammor storage for a smoothbore or even a new turret might well cost as much or more than getting upgraded Leopard 2A7.

        It should also be noted that Rheinmetall has been making noises over buying KMW, both companies have a Leopard 2AX upgrade programme.

        • The cost of the C2 upgrade program seems to be off the scale considering the number of units being upgraded and it does not include improvements to power train or the main gun. While the C2 offers superior protection it loses on every other criteria, maybe a joint venture company could focus on BAE improving the armoured protection while Reinmettal provide the refurbished tanks with updated electronics and optics.

          • There in nothing wrong with the CH2 gun – the British interest in smouth bore guns cam from an effort to save money on amo not because the German gun is better.

            The Germans want to fit a new turet to the CH2 with a German gun….

            We should go with the CH2 Black Knight upgrade not the German offer.

            In my view CH2 should be given a 1500hp German motor I would not have a problem with that…

            Rob N

        • I don’t necessarily agree with a heavy dependence on the German tank is the best way forward. CH2 is too good to chuck away, and I would prefer a collaborative programme with America when they replace the M1. Britain’s defence policy will steadily become more global, even if it does not leave the EU. And that means the possibilities of increased operations with the US. Sharing development of an all-new MBT with the US could be a wise move. Being involved could place the UK in a more profitable position than having a lesser or no share in a European sourced tank? In the meantime, the BAE ‘Blacknight’ should be chosen for the ridiculously small CH2 fleet, and the possibility of procuring a modest fleet of reconditioned M1’s from the US, DOD to augment the British tank fleet, should be given serious consideration. Such a move could lubricate a pathway for the UK to co-produce the M1 replacement?

          • The Americans are not going to replace the Abrams anytime soon, it is so embedded into their system that I can’t see them doing anything but incremental upgrades for the next couple of decades.

          • Fedaykin, I’m basing my thoughts fifteen to twenty years from now, and should have made that clear. In the meantime, a 130 refurbished M1’s in addition to CH2 would allow for the UK to have enhanced MBT capability. We should not allow the nonsense of the MBT being a redundant battlefield weapon again, and place anyone who does into the Tower!

          • Fair enough, what I can say is the idea of the UK operating a mixed MBT fleet of CR2 and M1A2 is a non starter!

            It would massively increase costs operating a mixed fleet and there is no way that it would get past the treasury!

            As for the future, personally I think we are better off getting CR2 through LEP then waiting to see what happens with the Franco/German next generation MBT program. Considering Rheinmetall is looking into buying KMW that would open the door for RBSL to subcontract into that program.

            On another note I think the threat of the T14 Armata is highly over played and the major MBT threat is still warmed over T72 variants for the foreseeable future which imho CR2 is still over-match when it comes to suitability and firepower.

            I am far more concerned about the latest generation of man portable late generation ATGM and their proliferation.

        • Fedaykin – the pool of Leopard 2’s stored in Germany has gone,they were very competitively priced so they didn’t hang around for long.It has even got to the stage where KMW has bought surplus examples from users (Swiss Army).

        • I Would stay away from leopard 2. It has been knocked out plenty of times in combat andhas a glass jaw. C2 on the other hand is the toughest, most resilient tank in the world
          The UK would better served developing a C3 using even more modern materials science coupled to active defence suite.

          • No it hasn’t, the Leopard 2 comes in myriad variants bit the only ones to be knocked out in combat are the early 2A4 that Turkey deployed to Syria.

            The subsequent loss of those 2A4 in combat is entirely down to poor deployment by the Turkish Army, they were using them as pillboxes sitting them in open and clear ground on top of hills with no infantry support making them easy targets for late generation ATGM. Even worse the ammunition they sent with those tanks were penetrator rounds rather than more useful in this kind of combat explosive.

        • They have already trialled the Rheinmettal L55 120mm cannon on the CR2 original turret some time back. It fits just fine. Please see the link to the article below:

          http://tanknutdave.com/the-british-challenger-2-main-battle-tank/

          The issue (as the article above points out) is that the Challenger 2 was designed with 2 piece ammo in mind. The Rheinmettal gun uses one piece ammo. This creates a lot of problems with stowage of the one piece ammo. Right now, with the hull as is, there is room for stowage of about 15 rounds.

          The hull would require a major redesign, as would the turret to hold an adequate number of rounds. By that point you are looking at a practically new tank. This was one of the reasons why the smoothbore gun option was not pursued. Too expensive, considering the numbers. Plus, a cheap source of 2 piece ammo (HESH in particular) was found at the time.

          Rheinmettal solution of a new turret still does not solve the need for the stowage of additional rounds in the hull. This is the critical issue facing any attempts to change to the smoothbore gun.

          • My bad. Reread the Tank Nut Dave article. The old turret could only hold 6 rounds. A CR2 normally can carry up to 50 rounds of 2 piece ammo.

          • If the budget is £1bn and the army is only upgrading 250 that should be enough money to rebuild the entire tank. I don’t even think that £1bn includes the cost of upgrading the engine which is part of a separate program.

      • The Rheinmettal proposal is out,New welded turret with 120 smothbore,it will be built in the UK.Its obviously beter than the BAE option so they have decided 45 percent is better than nothing.How much it costs compared to the warmed over design BAE were offering is another matter.

    • You mustn’t confuse the German government with the German peoples and German industry. The latter two are sensible and wonderful…….. Real economics and a genuine sense of European-ness trump the monster that is the EU.

  3. Looks very impressive and yes this combination of events isn’t I think coincidence. If history is any guide BAE goes into minority stakes as part of a cushioned decommissioning of its interest in such activities, missiles comes to mind, and eventual selling out altogether. What role do they have now Britains market is too small to support such a BAE division especially with orders going against them of late and Considering its substantial American military vehical interests which after this decision there is no future hope of any eventual level of synchronicity it seems makes it a dead end for them now whatever the spin. What will be sold (already is) as ‘investment’ is actually yet more loss of capability to design and build our own products or ownership over it. Whatever, I suspect BAE will be happy to take the money eventually and likely invest it the other side of the pond, especially as it’s future baring a small miracle will be post Brexit, likely to lay there more than here over time.

    • Put simply the USA is a far more profitable market for BAE Systems hence their buyout of major US defence contractors over the last couple of decades. The UK just doesn’t have the same appeal except for a few niche areas like Nuclear Submarine construction.

      BAE Systems in the UK market is increasingly a Systems integrator.

    • Are you aware that the British Army L85A2 and A3 are being upgraded and produced by Heckler & Koch? Same with the L86A2 and A3. All work on the rifles are done in the UK though. The issues with reliability and durability of these rifles has improved dramatically since H & K has taken over.

      • At one time H & K was wholly owned by BAE Systems – between 1999 and 2002, as a result of a with merger Marconi. That’s how and why H & K became evolved in the redesign and refurbish of the SA80.

        Shortsighted management sold H & K as part of a restructuring of BAE Systems because it wasn’t considered part of their core business.

      • At one time H & K was wholly owned by BAE Systems – between 1999 and 2002, as a result of a with merger Marconi. That’s how and why H & K became evolved in the redesign and refurbishment of the SA80.

        Shortsighted management sold H & K as part of a restructuring of BAE Systems because it wasn’t considered part of their core business.

  5. This is good news as BAE and Rheinmetall are the premier land military manufacturers in Europe. For BAE this will link up to combine high tech capabilities. For Rheinmetall it will create more opportunity for exports as they can escape the German government’s strict rules for export.

  6. I know little on this subject, so apologies.

    What are the advantages of Leopard 2 over CH2?

    Is it simply to save money vs the escalating costs of CH2 upgrades?

    I presume the L2 variant concerned has the same Chobham armour?

    • The primary advantages that the Leopard 2AX has over the Challenger 2 are:

      1) Over 3200 have been built vs 446 Challenger 2. This gives significant economies of scale.
      2) It uses a main gun that has ammunition compatibility with pretty much all NATO nations, that ammunition is also available from multiple manufacturers allowing UK MOD to shop around. It also means better interoperabilty with our allies including the USA and France.
      3) The 120mm L55 from Rheinmetall has better performance with standard Tungsten tipped rounds.

      The Challenger 2 has arguably better armour albeit the latest variants of the Leopard have closed the gap. The Challenger 2 is also in our system and there would have to be some logistic changes adopting a Leopard 2 variant.

      Upgrading the Challenger 2 whilst awaiting to see what happens with Franco/German tank developments over the next few years make sense. Whilst much is made of the new T14 Armata the main threat is still older T72 derived tanks that the Challenger 2 still overmatches.

  7. Currently work for a supplier to Rheinmetall, visited their facility in Vienna a few times, really good professional bunch, great R & D and their manufacturing build rate at the moment for tactical and non tactical vehicles is nothing short of amazing, big orders just seem to keep rolling in. Potentially looks like a good for the UK in my opinion

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