The latest news from the Rheinmetall Group

2013

(Continued on page 2)

INTEGRATION: Rheinmetall formally transferred its new IdZ-ES future sol-dier system to the German Bundeswehr on 7 March 2013. The handover cere-mony coincided with the 10th Armoured Division’s traditional International Division Skiing Championship at Ruh-polding in Upper Bavaria (s. page 14).

2012 successful despite diffi cult market environment

Rheinmetall maintains its two-pillar strategy

Düsseldorf. The Düsseldorf-based Rheinmetall group has set itself ambitious growth and earnings targets. Under its “Rheinmetall 2015” strategic program, which is primarily focused on internationalization, product innovations and cost, the company intends to expand its leading position in a range of markets on a sustainable basis. From 2015 onwards, the group also intends to generate average annual sales growth of between 3% and 5% combined with signifi cant-ly improved profi tability. These were the strategic targets set by Rheinmetall’s new CEO Armin Papperger on March 20, 2013, at the annual press conference on the group’s fi nancial statements in Düsseldorf. Talking to international me-dia representatives, 50-year-old Papper ger emphasized that the group intends to maintain its two-pillar strategy with its Automotive and Defence sectors.

Some facts and fi gures: Despite the diffi cult market environment, the Rhein-metall group closed the 2012 fi scal year successfully. With consolidated sales of E4,704 million, income exceeded that generated in the previous fi scal year by E250 million or approximately 6% (previous year: E4,454 million). Both sectors contributed to this growth. At 72%, the proportion of consolidated sa-les achieved abroad was once again up on the previous year’s fi gure (70%). The

key regions in terms of sales volumes were the German home market (28%), Europe excluding Germany (40%), fol-lowed by Asia (16%) and North and Central America (10%). At E301 million (previous year: E354 million), earnings before interest and taxes (Ebit) remai-ned at a high level. The group has to date performed better only in the record year of 2011. The Ebit margin amounted to 6.4% (previous year: 7.9%).

(Continued on page 2)

Fiscal 2013 is ayear of transition

Düsseldorf. Fiscal 2013 will become a year of transition towards impro-ved profi tability for Rheinmetall due to restructuring. According to CEO Armin Papperger, the group expects to achieve sales of between E4.8 billion and E4.9 billion. Both sectors are expected to contribute to this growth. Earnings before interest and

taxes (Ebit) of E240 million to E260 million are forecast, not including restructuring costs. Before conside-ration of restructuring expenditure, the Automotive sector is expected to achieve an operating result of around E140 million and therefore a profi t at the level of the previous year. The Defence sector is anticipated to ge-nerate an operating result of around E130 million in 2013. For fi scal 2014, Rheinmetall is assuming further sales growth in both sectors and expects to see a clear improvement in earnings.

For maritime marketsRostock-based MarineSoft is an internation-ally renowned maritime training and simu-lation software supplier with its main focus on ship machinery plants (see pages 6 + 7).

Searching for suitable managers worldwideKSPG’s HR-International function established at the beginning of 2012 was created to introduce central HR standards at the group’s foreign subsidiaries, and to promote and underpin international networking between colleagues abroad. Angela Stoffers has been entrusted with the challenging task of managing this job (see pages 12 + 13).

2012 successful despite diffi cult market environment

KSPG’s HR-International function established at the beginning of 2012 was created to introduce central HR standards at the group’s foreign subsidiaries, and to promote and underpin international networking between colleagues abroad. Angela Stoffers has been entrusted with the challenging task of managing this job (see pages 12 + 13).

“2013 marks for us the beginning of a strategic program which we will use to drive forward the development of our group into an international part-ner for security and mobility. Both the Defence and Automotive sectors still harbor huge potential for profitable growth. We are therefore maintaining both pillars,” exp-lained CEO Armin Papperger.

The company will introduce restruc-turing measures as part of “Rhein-metall 2015” that will impact the income statement for the current fiscal year by bet-ween E60 million and E80 million. The full saving ef-fects of E55 million to E70 million each year will become apparent from 2015 onwards. The company also aims to improve free cash flow on a sustainable basis.

H Defence: As a leading European systems supplier for military techno-logy, Rheinmetall Defence continues to operate in a growth market – even though national defence budgets are increasingly subject to fluctuations. The strategic priority of Rheinmetall is therefore expanding its presence in high-growth regions. Papperger: “We see particular potential in markets out-

side Europe such as in Asia and Aust-ralia. Rheinmetall will consolidate its local presence in international growth regions and systematically pursue the internationalization strategy that has been successfully implemented in re-cent years.” From 2015, around 50% of sales are expected to be generated with customers outside Europe.

Defence will continue to benefit from the ongoing need for substantial technical modernization of a number of armed forces. Therefore, Rhein-metall will also expand its service and systems business. The aim is to create a broad product portfolio with a balanced mix of highly-profitable components business and long-term, large-volume project business. Non-recurring expenses of E20 million were already incurred in 2012. Rhein-metall anticipates that these mea-sures will result in annual savings of E40 million to E50 million from 2015

onwards. The Defence sector will then return to an Ebit margin of 10%.

H Automotive: Rheinmetall still ex-pects a global growth trend in the in-ternational automotive market. Signi-ficant impetus for growth is primarily expected to come from the emerging markets -where Rheinmetall is already growing at a faster rate than the mar-

ket. Rheinmetall will therefore sys-tematically pursue its internationali-zation strategy of recent years in the Automotive sec-tor, particularly in the Mechatronics division. From 2015, Automotive intends to gene-rate over a third of its sales outside Europe. Particular

attention will be paid to the Chinese and Indian markets.

Rheinmetall is benefiting greatly from its focus on systems and components to reduce fuel consumption and emis-sions. In particular, the mechatronics product business is growing due to emission regulations becoming stricter. Rheinmetall will also be able to realize growth potential in the aftermarket busi-ness. Papperger: “However, cost structu-res still need to be improved in the Auto-motive sector, particularly the European production and location structure of the Hardparts division.” (See page 3 to 5).

Newsline is a summary of the mostimportant news articles publishedin “Das Profil”, the company news-paper of the Rheinmetall group

Publisher: Rheinmetall AGP.O. Box 10 42 61, D-40033 Düsseldorfnewsline@rheinmetall.comResponsible: Peter RückerEditor-in-chief: Rolf D. Schneider

Issue: June 2012

Newsline is a summary of the mostimportant news articles publishedin “Das Profil”, the company news-paper of the Rheinmetall group

Publisher: Rheinmetall AGP.O. Box 10 42 61D-40033 Düsseldorfnewsline@rheinmetall.com

Responsible:Peter RückerEditor-in-chief:Rolf D. SchneiderIssue: May 2013

Rheinmetall group was successful in 2012 despite difficult market environment

Maintaining its two-pillar strategy(Continued from page 1)

Düsseldorf. Despite stagnating de-fence budgets in many countries, Rhein-metall Defence increased its sales by 9% in fiscal 2012 to E2,335 million (pre-vious year: E2,141 million). This growth is the result of the first-time inclusion of the Rhein metall MAN Military Vehicles joint venture. 67% of total revenue was generated abroad (previous year: 63%). The order intake increased by E1,102 million to E2,933 million, which repre-sented growth of 60% (previous year: E1,831 million). This positive develop-ment is the result of a successful inter-nationalization strategy. Rhein metall Defence has systematically expanded

its global network of locations and sa-les and founded key joint ventures in re-cent years. At E4,987 million, the order backlog in the Defence sector is up 10% year-on-year (previous year: E4,541 mil-lion). The order backlog includes a num-ber of large-volume projects spanning several years, e.g. the contract for the series production of the Puma infantry fighting vehicle and the series contract for the Boxer armoured transport vehic-le on behalf of the Netherlands.

The Automotive sector increased its sales by E56 million toE2,369 million in fiscal 2012 (previous year: E2,313 million). The percentage of sales gene-

rated abroad rose slightly to 77% (pre-vious year: 76%). While the Mecha-tronics and Motor Service divisions contributed to sales growth, sales in the Hardparts division remained at the previous year’s level. The Mechatro-nics division benefited primarily from the major trends towards reductions in CO2 and emissions.

Focus on financials

Executive board: Dr. Gerd Kleinert, CEO Armin Papperger and Helmuth P. Merch.

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Düsseldorf. In an interview with the newspa-per Frankfurter Allgemeine Zeitung (FAZ), Armin Papperger – who took over as CEO of Rheinmetall AG at the beginning of 2013 and remains respon-sible for the group’s Defence sector – admitted he is a car lover with a particular fascination for mechatronics. Talking to journalists at the time of the annual press conference on the group’s fi -nancial statements, Papperger recalled spending a lot of time fi xing cars as a young man – useful experience that now gives him a better insight into the product line of the Neckarsulm-based automotive supplier. “I believe KSPG offers huge potential, the innovation pipeline is fi lled to the brim and our chances of success with system technology all around the engine are excellent.”

The change at the top of the Düsseldorf-based group is therefore a sure sign of continuity and development, all the more so as Bavarian-born CEO has been with Rheinmetall for many years. Engineer Papperger joined the quality manage-ment organisation of Rheinmetall Defence in 1990. After various management positions, he was appointed to the executive board of Rhein-metall Defence in 2010, took over as chairman of the board at the beginning of 2012 and joined the executive board of Rheinmetall AG at the same time. In the past, Papperger was mainly associ-ated with the advancement of the Defence sec-tor, where he succeeded in internationalizing the business and was instrumental in securing strategic mergers and acquisitions. In an inter-view with the Rheinmetall company magazine Newsline, the new CEO outlines the operational and strategic cornerstones that are defi ned in the strategic program “Rheinmetall 2015” and will enable the group to tackle future challenges.

Interview with Rheinmetall CEO Armin Papperger

The group’s potential for profi table growth is huge

Newsline: Mr. Papperger, as a fully fl edged “Defence” person you now also bear responsibility for the Auto-motive sector, i.e. the KSPG group. At the annual press conference on the group’s fi nancial statements, the ex-ecutive board of Rheinmetall AG for the fi rst time publically stated that it intends to maintain its two-pillar strategy – in other words, intends to maintain the existing structure of Rheinmetall with its two sectors De-fence and Automotive. Does that mean KSPG’s IPO is off the table for good?

Papperger: Yes, it does. First and foremost, I am a businessman and an engineer, and I want Rheinmetall to earn good money by virtue of its out-standing technical performance, top quality and unconditional customer orientation. This is also how I see the excellent business potential of our Au-tomotive sector. After all, KSPG sales in fi scal 2012 rose by approximately 56 million to 2.4 billion in spite of the clear weakness of the western Eu-ropean auto market. The Chinese joint venture companies not included in

these fi gures even boosted their sales by 90 million to a total of 388 mil-lion, i.e. an increase by 30%.

Newsline: Western Europe is show-ing signs of weakness – whereas other regions in the world are booming.

Papperger: You are right. The North American market has picked up and Asia remains the booming region with a big backlog in demand where mo-torisation is concerned. I am convinced that our strong international presence and competencies in the fi eld of fuel effi ciency and emission reduction im-provements put us in good stead to benefi t disproportionately well from global market growth in coming years. I want to use this opportunity with my colleagues from the Automotive sector. In other words, the two-pillar strategy puts Rheinmetall on a stable footing. And this won’t change in the foresee-able future.

Newsline: The German Automotive Industry Association VDA referred to 2012 as a year of positive and negative developments for the auto industry and expects 2013 to be a year of chal-lenge. How do you rate the develop-ment of KSPG?

Papperger: I agree with the assess-ment and our Automotive sector did very well in this market environment in 2012. To stay in the picture: thanks to our internationalization efforts, we were able to over-compensate the

downturn of business in Europe – i.e. the negative side of the auto market. The fact that our Automotive sector was not able to improve on the strong year 2011 was ultimately down to spe-cial effects. Both non-recurring costs in the truck business and the relocation of production facilities from Brazil and USA to Mexico had a negative effect on earnings in 2012. I share the VDA’s view for 2013: it will not be an easy year and we face a lot of big challenges. We have therefore already paved the ground in order to improve our competitiveness by way of cost savings and quality im-provements.

Newsline: Talking about “paving the ground”: Rheinmetall still expects global growth in the international auto market and considers itself well pre-pared for the future.

Papperger: Indeed, we expect signifi -cant impetus – especially from the so-called emerging markets where we are already growing faster than the mar-ket. We intend to advance our interna-tionalization strategy in coming years, especially in the fi eld of mechatronics.

From 2015 onwards, Automotive will generate more than a third of its sales outside Europe, with a special focus on the markets in China and India. Our focus on systems and components that help reduce fuel consumption and emissions is hugely benefi cial to us. Especially mechatronics-related busi-ness is growing thanks to increasingly strict emission standards.

Newsline: 2012 was not an easy year for the Defence sector, either. In the USA, savings initiatives have led to fi rst budgetary constraints and de-fence budgets in Europe are stagnat-ing or showing a downward trend. Has Rheinmetall reached the end of the road in terms of Defence growth?

Papperger: In 2012, sales by the De-fence sector reached an all-time high of 2.3 billion (up 9%). Our strong or-der intake is also a clear sign: in fi scal 2012, order intake rose by around 1.1 billion to 2.9 billion, corresponding to an increase by 60%.

Newsline: Nonetheless, dynamic or-ganic growth has slowed down.

Papperger: Correct, but as with the auto business we have rolled up our sleeves and are tackling the challeng-es. Firstly, we will continue to pursue a strategy of M&A and joint ventures, secondly we are implementing a sig-nifi cant cost reduction and effi ciency booster program that will lead to a sustainable improvement in competi-

Two-pillar strategy puts Rheinmetall on a stable footing

“We have paved the ground to improve our competitiveness by way of cost savings and quality improvements.”

tiveness and earnings. However, we are not only cutting costs but actu-ally intensifying our sales activities in countries that are important part-ners of Europe and Nato and investing in the modernisation of their armed forces.

Newsline: Do you expect a general trend reversal for Defence from 2015 onwards?

Papperger: I do. The modernisation backlog in many armies remains enor-mous so that international defence spending on the basis of known bud-getary planning fi gures is expected to rise again from 2015 onwards.

Newsline: Apart from our classical customers in Europe and Nato: which states are likely to become especially important for Rheinmetall Defence in the years to come?

Papperger: Australia is one example of a strategically important market of-fering high growth potential. The coun-try has a big responsibility in the UN and regularly participates in interna-tional missions. With our new company Rheinmetall Defence Australia, we now

have a strong team in situ: Following its fi rst breakthrough in the vehicles business, the team is now working hard on establishing Rheinmetall with its Simulation and Weapons and Am-munition divisions as a serious player “down under”.

Newsline: How do you assess De-fence’s chances in other parts of the world?

Papperger: The budgets of numer-ous emerging countries are likely to rise signifi cantly in the next years. Due to their growing strategic signifi cance, countries in the Middle East and Asia are investing heavily in the moderni-sation of their armed forces. Thanks especially also to our expertise in the area of mission protection, we believe we have good chances of growth which we intend to use.

Newsline: Which technical innova-tions do you think will give new im-petus for growth in the Defence busi-ness?

Papperger: I obviously can’t list ev-erything but to give some examples: we have invested heavily in the fi eld of Simulation and Combat Training Center and this has already paid off. Following Germany, we have now also succeeded in winning Russia and also another Western-oriented Middle Eastern state as a customer for our modern Combat Training Center. The Mantis air defence system handed

over to the German armed forces in 2012 is another good example of our innovative strength; this system pro-tects our own forces against aircraft and helicopters, guided missiles, also artillery fi re and mortar grenades. The future soldier system Gladius or-dered by the Bundeswehr in 2012 is one more example of our innovative strength. Gladius is an advanced sys-tem that gives the individual soldier a hitherto unequalled level of informa-tion superiority and allows individual infantry groups with their vehicles to be embedded in networked enabled operations command. Incidentally, all three examples show how important the Germany Bundeswehr is as a refer-ence customer for Rheinmetall.

Newsline: You have referred to 2013 as a year of transition.

Papperger: The current business year marks the beginning of our Rhein-metall 2015 strategic program with which we want to advance the de-velopment of Rheinmetall into an in-ternational partner for security and mobility. Due to the necessary re-

structuring measures at Rheinmetall, 2013 is therefore a year of transition towards greater profi tability. For 2014, we expect further sales growth in both sectors and a distinct improvement in earnings. We will reap the fruits of our efforts in the year 2015.

Newsline: To achieve these ambi-tious targets, in your fi rst new CEO let-ter – which will be issued at regularly intervals in future – you appealed to employees to look more closely at im-provement potentials in their respec-tive organisations.

Papperger: It may sound like a tru-ism, but if each employee gives his or her best at their place of work, the sum total of all efforts will be the very best. And that is why I personally seek to es-tablish a culture of respect, trust and openness in Rheinmetall, especially by improving inter-communication. Only thus can we transform our group – with team spirit, technological competence and innovative strength – consistently to succeed in our business operations.

Newsline: What sort of feedback has the workforce given to the CEO letter?

Papperger: The feedback has been good. My team and I have received lots of suggestions in response to the letter. I have always considered direct contact with the workforce extremely important and will continue to do so in future – also by way of the regular communica-tion through the letter.

2013 is a year of transition towards greater profi tability

“If each employee gives his or her best at their place of work, the sum total of all efforts will be the very best.”

Both the German Navy and interna-tional customers rely on the system know-how of the MarineSoft team in Rostock. Pictured here is the mission and training unit in the Gulf of Aden: During a Replenishment at Sea (RAS) manoeuvre, the frigates Hamburg and Emden are being refuelled from the supply ship Berlin. Visible in the background is the frigate Köln.

Rostock. One of the companies acquired by Rheinmetall Defence Electronics GmbH (RDE) in 2011 is Rostock-based Mari-neSoft Entwicklungs- und Logistikgesellschaft with around 40 employees. This move has strengthened the position of Rhe-inmetall Defence. The group already operates very successfully in the fi eld of military training and simulation and is one of the world’s leading suppliers in this segment. Rheinmetall now has a stake in a company that frequently had the competitive edge on the Rheinmetall subsidiaries RDE and benntec where surface vessels were concerned. MarineSoft is an internation-ally renowned maritime training and simulation software supplier with its main focus on ship machinery plants and more recently also communication solutions. The company produces courseware, computer-based training applications and in-formation systems for maritime requirements. MarineSoft also develops platform-specifi c simulation programs for training, offering a realistic reproduction of the functionality and properties of the original equipment on board the ship. Simulators running on COTS hardware cover the areas of operation as well as numerous troubleshooting and diagnosis processes.

MarineSoft Entwicklungs- und Logistikgesellschaft

Advanced maritime training and simulation

Dr. Volker Köhler (see picture), man-aging director of MarineSoft since au-tumn 2011, notes: “We have two main strengths: fi rstly, we concentrated on 3D-modelling of maritime machinery plants at a very early stage and sec-

ondly, the concept of combining learn-ing programs and simulation was de-veloped by us for the very fi rst time.”

In fact, the idea of modelling a ma-chinery plant simulator as a 3D-model dates back to the days of the German

Democratic Republic. Dr. Harro Kucha-rzewksi, co-developer of an advanced machinery plant simulator for Parchim-class submarine hunters (in those days) stationed at the former offi cers training academy of the GDR Navy in

Stralsund, was convinced that a com-bination of existing know-how and technology would make it possible to reduce the big hardware solution to a slim classroom product that was then marketed after Reunifi cation. “Under the umbrella of MarineSoft, this then resulted in the machinery plant simu-lator,” remarks Kucharzewski, one of the co-founders of the Rostock system specialist in 1990.

Nowadays, maritime training simu-lators would be inconceivable with-out computer-based machinery plant simulations that are much cheaper and less complicated than the real machines and equipment. MarineSoft produces software-controlled simula-tors for slow, medium and high speed diesel engines. “These are generic simulators for engines types installed on board container ships, ferries and high-speed ferries; and we also sim-ulate these systems,” says Jürgen Burg, quality and sales manager at MarineSoft. In a subsequent step, the interactive learning environment is created. In ma-chinery operation, personnel including technical and duty offi cers can train normal operation as well as com-plicated processes includ-ing troubleshooting. The simulation-based training is naturally in compliance with the internationally valid requirements and recommendations of the STCW convention and the internationally accepted ISM code of the International Maritime Organisation (IMO) that sets standards for safe ship operation.

Alongside its traditional activi-ties, MarineSoft has also started to apply its maritime expertise and know-how to other areas of business. “Once you start learning, you also start to forget” – this was the general motto taken for the area of knowledge man-agement and support tools. To ensure that the right amount of knowledge is available at the right time and in the right place, it needs to be retained by the trainer and trainee alike. A group of computer-based, interactive solutions forming the Electronic Performance Support System (EPSS) on the basis of graphic 3D models and original docu-mentation from the manufacturers has been developed for this purpose. The system can be used for training, tests and job support in situ.

Over the years, MarineSoft has of-fered development and other services on a relatively broad basis, with ser-vice offerings ranging from maritime training, courseware and learning technologies, software and system engineering to virtual reality and sim-ulation. Research and development

are naturally also part of the business portfolio. For instance, the interna-tional research project Munin which involves the development and testing of a concept for implementation of the vision of an autonomous and possibly unmanned vessel. Around 70 % of the workforce is working on by far the big-gest project of MarineSoft – the F125 frigate. Managing director Köhler be-lieves the organisation will have to be adjusted and given a project-focus, so that experts from different areas can be drawn into teams for specifi c proj-ects.

The development of network- and web-based training solutions, 3D vi-sualisation, mobile computing, and

real-time simulation – these are just some of the areas in which MarineSoft is currently engaged. Man-aging director Köhler: “Thanks to the combination of internal process know-how of the areas of work with our ex-perience in modern software technol-ogies and the use of modern methods of knowledge transfer and manage-ment, our company is highly success-ful in the fi elds of operator training and the support of maintenance and service activities for complex sys-tems, equipment and processes.” The Rostock-based system specialist can offer attractive terms and the best technical solutions – irrespective of the requirement, be it for a complete virtual, realistic training or a solution with hardware in the loop.

Rostock. Simulation-based training is a key aspect of machin-

ery plant simulators. “The concept of simulation-based training, i.e. to have the simulator controlled by

a learning program and not the instructor is one of the main features distinguishing MarineSoft from other successful sup-

pliers”, says Dr. Volker Köhler, managing director of MarineSoft. The company’s simulation-based training projects benefi t from the extensive

experience and involvement in numerous training projects for various naval customers around the world. This concept is based on the use of the simulator

as the central training instrument that can be controlled either by an instructor or by a learning program. The system is suffi ciently fl exible to adjust to varying require-ments r e -sulting f r o m the dif- ferent le ar n - i n g objec- tives, different practical skills and capabilities and also the training of human compe-tencies. As a fi rst step, the targets and requirements of the training process as a whole are identifi ed in order to prepare the actual training concept. Such con-cepts then serve as the centrepiece of the simulation-based training environ-

ment. Completed concepts include not only Instructor Guided Training, i.e. training supported by an instructor, but also Instructorless Training, i.e.

training that is carried out without an instructor. The former can be car-ried out as classroom training, individual training or team resource

management while the latter method is performed as an in-dividualised and “spot-on” training process involving

self-controlled training at the appropriate time and meeting the needs of the individual. And

this can be done on shore and onboard ship.

Simulation-based

Newsline: Dr. Beyer, the annual report for 2010 identifi es your role of Chief Compliance Offi cer for the fi rst time. Since when has compliance played an important role at Rheinmetall?

Beyer: You are right, although the term “compliance” was used in the group long before 2010. The conception of compli-ance, i.e. compliance with relevant laws and regulations is not new. Legality dec-larations undersigned by all executive staff date back to the 1980s.

Newsline: What has changed in recent years?

Salzmann: Tougher anti-corruption legislation has been introduced, for in-stance in the UK, USA and Italy. Authori-ties look more closely at commission pay-ments to consultants, both for anti-trust reasons and with a view to price-fi xing between competitors. Business partners nowadays likewise demand compliant behaviour. One of the reasons for this is obviously the awareness of the dam-age caused by corruption. The situation in Greece has highlighted how corrup-tion can lead to poverty in the medium to long term.

Newsline: Some countries in which Rhein metall operates have particularly strict anti-corruption legislation. Which countries are these and what is the reason for such tough rules in certain countries?

Beyer: The English-speaking states UK, USA and Canada immediately spring to mind. For example, Canadian legisla-tion prohibits any donations to political parties. The UK Bribery Act introduced in the United Kingdom in 2011 is of particu-lar signifi cance due to its international scope. It even applies to business out-side the UK. Companies and people can therefore also be sanctioned outside the UK. The US Foreign Corruption Practices Act is similar. These countries want to ensure that their local companies are assured equal opportunities in interna-tional bids and to prevent competitive disadvantages.

Newsline: At the end of 2012, Rhein-metall approved a new guideline on dealing with gifts and benefi ts. In which areas do you as the responsible Compli-ance Offi cer expect the largest number of benefi ts requiring approval?

Salzmann: The guidelines identify three types of benefi t: gifts, hospital-ity and invitations. A traffi c light system helps staff to assess what is possible and

Düsseldorf. An old German proverb says that small gifts preserve friend-ships. Gifts and other small presents are a means of showing friendship in normal everyday life, but can express some-thing very different in a business context where gifts to customers or suppliers are often made to help sway a certain decision in one’s favour. Under certain circumstances, such actions can be a punishable offence and are referred to as corruption. To counteract such offences, large corporations like Rheinmetall AG often have their own compliance organ-isations whose credo is aptly mirrored by the famous quotation from the former Polish foreign minister Wladyslaw Barto-szewski: “It pays to be decent”.

In terms of corruption, Germany ranks in the mid-range of comparable industrial nations according to Transparency Inter-national’s latest Corruption Perception Index. The organisation simultaneously confi rms Germany’s exemplary behaviour

with regard to anti-corruption measures in the security and defence industry. In a recent study of 29th January 2013 in which 82 different states were examined, only Germany and Australia were award-ed the highest category “A”, confi rming high levels of transparency and effi cient institutionalised measures for corrup-

tion avoidance. Aspects investigated included how many people are involved in contract awards and in which manner decisions are reached and monitored.

Nonetheless, corruption still plays an important role in Germany. One of the biggest scandals publicized in this con-text was the Siemens scandal of 2006.

Employees of the Munich-based elec-tronics group are said to have bribed po-tential customers abroad. The accurate assessment and clarifi cation of the case ultimately cost Siemens far more than E 2 billion, including fi nes, and fees for lawyers and consultants, not to mention the losses suffered due to the damaged

reputation. But Siemens reacted: today the group with some 370,000 employ-ees worldwide has put in place a several hundred strong compliance organisa-tion. Alongside this, practically the en-tire Executive Board was replaced.

Another case has featured promi-nently with the German authorities and

Compliance one of the top priorities for Rheinmetall

“It pays to be decent”

Decision-aids: Dr. Andreas Beyer (l) and Michael Salz mann with the two compliance panels that have already been used at many different events, e. g. training lessons.

Düsseldorf. The major corruption scandals of recent years – also in the German industry – have raised awareness of related issues at home and abroad. Many countries have introduced more stringent legislation and companies have extended their regulations. Newsline interviewed Dr. Andreas Beyer, head of the law department and Chief Compliance Offi cer at Rheinmetall AG as well as Michael Salzmann, Corporate Compliance Offi cer at Rheinmetall AG and Compliance Offi cer for Rheinmetall MAN

Military Vehicles GmbH, about the new guidelines on dealing with gifts and benefi ts and the signifi cance of compliance with valid rules for Rheinmetall. Dr. Andreas Beyer who grew up in Stuttgart has been working as General Counsel for the Rheinmetall group since 1999 and was CEO of Jagenberg AG between 2001 and 2004. 43 year-old Michael Salzmann, the father of a baby girl, has been responsible for compliance since 2010 – initially at RMMV in Munich and since 2011 for the whole group in Düsseldorf.

Newsline interview with compliance experts Dr. Andreas Beyer and Michael Salzmann

Regulations give usefull guidance

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what would definitely not be approved. With the previous set of rules, we were approached in all three areas so this is why we have now introduced a categori-sation. Generally, most questions will re-late to the area of gifts and hospitality, especially in the pre-Christmas period when larger numbers of small presents like calendars and wine are sent to our employees by business partners and customer representatives. The value threshold of e 100 is easily reached when invited out to Christmas dinners.

Newsline: Benefits are permitted if they are deemed to be within reason-able limits. What does this mean?

Salzmann: These limits – as set out in the new guidelines are initially defined by us Rheinmetall AG. The prime objec-tive is the appropriateness of the benefit in question. Although the term “appro-priateness” leaves scope for interpreta-tion, the gut feeling of any member of the work force will generally give an in-dication as to what is appropriate and what isn’t. This is particularly true for the assessment of benefits given an amber light in our new traffic light system. Fur-thermore, we also use internal regula-tions e.g. of our customers like state au-thorities for orientation. The valid limits relating to the gifts and benefits which officials are allowed to accept and related punishable offences are also used for orientation. We naturally also look at the rules and regulations of other companies listed in the Dax and MDax stock index.

Newsline: Which consequences must Rheinmetall employees expect if they fail to comply with the guidelines on gifts and benefits?

Beyer: Firstly, it is important to note that the new guidelines do not have their main focus on imposing labour-law related sanctions on employees. In fact, quite the contrary, the guidelines seek to protect the individual. Persons are be-ing given the ability to identify whether a benefit is still socially adequate and when certain actions should be ruled out. Nonetheless, sanctions can be im-posed in the event of any serious viola-tion of the rules. A written warning is normally the first step taken. Any viola-tion of valid standards under law can result in fines or imprisonment. Pas-sive and active corruption is regulated in articles 299 and 334 of the German Criminal Code. The maximum term of imprisonment in Germany is five years. Criminal sanctions can therefore have very serious repercussions for employ-ees. These are clearly out of proportion in relation to the success achieved by bribery.

Newsline: Which training programs are available to Rheinmetall employees?

Salzmann: Our intranet offers not only details on compliance guidelines but also E-learning programs. We also provide classroom compliance semi-nars. 850 RMMV employees were, for instance, recently given a compliance training to raise their awareness for re-lated matters. Such programs are crucial to each compliance organisation. Based on past experience of the German indus-try – that was also made known to the general public – we have highlighted the mechanisms of corrupt behaviour in the industry and the serious repercussions on the company and its workforce. Nu-merous examples give a good impres-sion of what corruption can imply for a company. We naturally also discussed standard situations that are quite likely to occur when sales representatives visit customers at home and abroad.

public since 2011: in this case, Thys-senKrupp AG is said to have formed a rail cartel and fixed prices to the disad-vantage of Deutsche Bahn AG and other local public transportation companies. The fines imposed are in excess of E 100 million. The affair is still not fully overcome. In December 2012, three of the six executive board members were practically dismissed with immediate effect.

Given the higher general awareness of the importance of complying with rel-evant laws and regulations, the concept of compliance has been one of the top priorities on the Rheinmetall corporate agenda in recent years. The key objec-tive is to promote compliance with regu-lations as an integral part of corporate culture. The central compliance organ-isation is the Compliance working group under the leadership of the Chief Com-pliance Officer, Dr. Andreas Beyer who is also the group’s top lawyer.

Rheinmetall’s compliance guidelines, organisational and procedural instruc-tions are constantly adapted, developed and complemented in accordance with valid legislation. The group’s guidelines for dealing with gifts, hospitality and in-vitations to events were drafted in Sep-tember 2012. As part of the compliance program, these guidelines are acces-sible via the Rheinmetall intranet under the “Compliance” link.

A definition of the concept of com-pliance that is generally accepted in Germany and comes from the govern-mental commission Deutsche Corpo-rate Governance Codex describes in great detail “compliance with legal rules and regulations and corporate guidelines”. The Newsline interview with Dr. Andreas Beyer as the Chief Compliance Officer and Michael Salz-mann as the Corporate Compliance Of-ficer explains just what this means for Rheinmetall AG .

The Rheinmetall traffic light system helps employees assess individual cases

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Newsline: What makes Rheinmetall Canada so successful in North America?

Knackstedt: As far as the Leopard 2 MBT contract is concerned, Rhein-metall’s battle tank expertise initially played a big role: of the approx. 2,125 Leopard 2A4 tanks produced, Rhein-metall built 997 which is almost half the total amount. Besides, we invested large sums into our infrastructure at the St-Jean-sur-Richelieu headquarters in order to optimize and modernize ve-hicle production and system integra-tion. Not to forget the successful and long-standing cooperation with the Canadian Forces and local as well as international companies like Textron, Kongsberg, Saab and IAI Elta. In doing so, we have acquired an excellent repu-

tation as a defence systems company. This was clearly one of the key factors why our partner Textron decided to se-lect Rheinmetall Canada as its partner in the TAPV project.

Newsline: Which other projects are you working on for Canada?

Knackstedt: The Close Area Suppres-sion Weapon (CASW) system is another key activity. As the systems company, Rheinmetall Canada is delivering more than 300 40mm grenade launchers with Rheinmetall’s integrated Ving-mate fi re control system and ammuni-tion with airburst technology. In the Electronic Systems sector, we are deliv-ering the core computer of the Gladius combat equipment (formerly known as the Future Soldier System) and – with our partner Saab – are also offering the modular version of combat equip-ment for the Canadian Integrated Sol-dier System Projects (ISSP). Alongside

these areas, Rheinmetall Canada of-fers solutions for Intelligence, Surveil-lance, Target Acquisition, Reconnais-sance (ISTAR) applications, e.g. the Sensor Command and Control Plan-ning Suite (SC2PS) as well as a real-time multi-sensor application capable of operating in real-time to evaluate and process sensor data from different sources like soldier systems, ground sensors, UAVs, helicopters, ships and combat aircraft.

Newsline: What about simulators?Knackstedt: We have fl exible and

competitive simulation capabilities. Besides numerous applications for air defence systems (such as Ados – an Air Defence Operator Simulator for the Netherlands), we are presently supply-

ing simulators for our own family of weapon stations and supporting our Defence colleagues in Bremen to mar-ket their simulation technology (e.g. in the projects Meso for the Navy and Leopard MBT simulators).

Newsline: The business segment Air Defence . . .

Knackstedt: . . .has been and remains extremely important. As mentioned previously, in 2011 the Canadian Forc-es fi nally took our Adats system out of service after 25 years. With our partner Elta, we are now busy preparing a Cana-dian version of the Multi Mission Radar (MMR) to bid for the fi rst sub-system of a future Canadian Air Defence system. Of course, we are also supporting Rhein-metall MAN Military Vehicles (RMMV) in connection with its activities in North America. One project worth mentioning is the planned cooperation in the Cana-dian truck program MSVS.

Newsline: When will the moderniza-tion of the Canadian MBTs be fi nished?

Knackstedt: In September 2010 we won the 26 million dollar contract for overhaul and modernization of 24 Leopard 2A4 main battle tanks to spec-ifi cations of the Canadian tank forces. The fi rst vehicles were already deliv-ered to the Gagetown base in May 2012 where the MBT was subjected to an in-tensive test program. Work is progress-ing well and we have handed over 14 tanks so that the fl eet can now formally be taken into service. The order is to be completed by October 2013.

Newsline: Which modernizations have you implemented at your plant?

Knackstedt: Amongst other things, we built a new water tank. Some people

may think the “tank swimming pool” slightly strange but it has allowed us to test our Leopard battle tanks for leak-ages prior to handover to the Canadian Forces.

Newsline: Is it right to assume that your Leopard 2 expertise goes beyond the actual Leopard contract?

Knackstedt: Yes, Our affi liate Rhein-metall Landsysteme won the order to convert twelve Leopard 2 MBTs into armored recovery vehicles. Addition-ally, Rheinmetall Defence Electron-ics is delivering two Leopard 2 fi ring simulators to the Canadian Forces. Rheinmetall Canada has therefore be-come the focal point for the Leopard 2 family in North America. Backed by our parent company, we can offer com-plete in-service support for the entire life cycle of the Leopard 2 – in keeping with our philosophy of “one face to the customer”.

Saint-Jean-sur-Richelieu/Ottawa. In 2011 Rheinmetall Canada presented itself with a powerful new structure – with four new business units (Vehicle Integration, Wea-pon Systems, Air Defence and Electronic Systems) providing a strong framework for successful operations on the market (see Newsline 2/2011). A number of po-sitive developments have since been re-ported, underpinning the success of the company’s reorganization. As pointed out by Dr. Andreas Knackstedt, president and CEO of Rheinmetall Canada, during an interview with the Rheinmetall company magazine Newsline, the fi rst upgraded Leopard 2 main battle tanks have already been delivered to the Canadian Forces. Furthermore, the company is proud of the recent success in securing a signi-fi cant work share in the TAPV program.

Dr. Andreas Knackstedt, president and CEO of Rheinmetall Canada:

“We are a sought-after partner”

Change in Gulfrepresentation

Düsseldorf. Effective 1 January 2013, Dr. Peter Hellmeister (Photo left), 60, took charge of Rheinmetall AG’s repre-sentation offi ce in Abu Dhabi in the United Arab Emirates. He succeeds Klaus Hennig, who will continue to serve Rhein metall in an advisory ca-pacity, primarily in support of Rhein-metall projects in the Gulf Cooperation Council (GCC) states. Dr. Hellmeister’s successor as managing director of PSM GmbH in Kassel is Dr. Björn Bern-hard (Photo right), 38, who took char-ge on 1 January 2013.

Over the years, Rheinmetall has scored major successes in a number of fi elds in the Arab world and the Gulf region in particular. For example, the name Rheinmetall is closely associated

in the region with armoured vehicles, naval systems, air defence, NBC recon-naissance, and facility management. In 2005 the Emirates placed an order with Rheinmetall for 32 Fuchs/Fox NBC armoured reconnaissance vehicles. Costing roughly E160 million, these vehicles have proven highly effective in service with the UAE armed forces.

Dr. Hellmeister became managing di-rector of PSM GmbH (the initials stand for “Projekt, System und Management”) in 2002. The company serves as general contractor for the Bundeswehr’s Puma

infantry fi ghting vehicle procurement program.

Dr. Björn Bernhard, his successor as managing director of PSM GmbH, joi-ned Rheinmetall in 2004 after comple-ting his studies and subsequently wor-king as a university research associate. After working as a systems engineer in propulsion technology at Rheinmetall Landsysteme GmbH in Kiel, in 2006 he switched to project management. Starting in 2008, he served as project manager for the entire Puma IFV project at PSM GmbH in Kassel.

Rheinmetall Defence at IDEX 2013 in Abu Dhabi as a reliable partner to GCC states

Convincing presentation in key region

Abu Dhabi. The 2013 IDEX defence exhibition (one of the world’s major defence shows and the most important event of its kind in the Middle East) took place between 17th and 21st February 2013 in Abu Dhabi (UAE). As one of the exhibitors, Rheinmetall presented an overview of its product portfolio. The Rheinmetall stand – one of the largest at the exhibition – was located prominently in the German section. Rheinmetall’s strong commitment is not without reason. Dr. Peter Hellmeister, head of the Rheinmetall representation in Abu Dhabi, notes: “To bring forward our in-ternationalization efforts, we have to and want to show a stronger presence in the growth markets. The MENA region – standing for Middle East and North Africa – and the GCC states are key areas, especially for our defence business.”

Tracked vehicle activities were re-presented by the Rheinmetall Kodiak armoured combat engineering vehicle, a heavy-duty tracked system designed for military and disaster relief opera-tions alike. Also on view in Abu Dhabi were several wheeled systems from Rheinmetall MAN Military Vehicles, including tried-and-tested logistics ve-hicles such as the TGS 8x8 Cargo, TGM 4x4 Cargo and the HX81 recovery vehic-le. In addition to these, tactical vehic-les like the 4x4 Armoured Multi Purpo-se Vehicle (AMPV), here confi gured for a reconnaissance role and equipped with Vingtaqs SLR as well as the mobile command post variant of the 8x8 GTK Boxer were on display. Interaction bet-ween the C4I system of the Boxer tacti-

cal operations center and the Gladius Future Soldier system were demonstra-ted for the fi rst time at IDEX.

In the air defence domain, the Rhein-metall Skyshield sensor unit and Sky-shield Revolver Gun were on view. These components can be used for defending military assets and civili-an critical infrastructure, as well as in military operations other than war (MOOTW) and for naval applications.

Alongside sensor systems, electro-optical components and fi re control systems, a wide range of munitions, combat equipment and simulation technology, Rheinmetall demonstrated its comprehensive expertise in the fi eld of force protection. This ranges from high-

tech ballistic protection panels to soft-kill systems like the Rapid Obscurant System (ROSY) and active hard-kill solutions such as the group’s cutting-edge Active Defence System (ADS).

Examples of Rheinmetall’s naval competence included the Herold and Herold Navy reconnaissance and sur-veillance systems.

Hellmeister drew a positive conclu-sion: “Our impressive presentations in 2013 have again underlined our claim to being a competent and reli-able partner for GCC member states. However, a point to remember in this context is that such exhibitions are always fairly unique events; to ensure a lasting effect, one needs continuity

and group-wide coordination.”

Neuss. Over the next five years, global players like Henkel, BASF and Daimler want to significantly increase the proportion of local managers not recruited in the company’s country of origin. This is the result of a recent survey conducted by the Personnel Consultancy firm Egon Zehnder Inter-national Deutschland. At the same time, well qualified local persons are highly contested in the emerging mar-kets Brazil, China and India. KSPG AG likewise intends to recruit more local managers while expatriates (i.e. per-sonnel sent on an assignment to a foreign subsidiary) are still rated as extremely important. The decision as to which jobs should be filled with lo-

cal staff and which are better suited for expatriates largely depends on the “maturity” of the foreign subsidiary. “In the early stages of a subsidiary abroad, it is normal to fill key func-tions such as Chief Executive Officer and Chief Financial Officer with (Ger-man) expatriates in order to ensure that the most important corporate process-es and the neces-sary core know-how are implemented properly from the outset”, says An-gela Stoffers, head of the new HR In-ternational organisation since January 2012 (see also article “Strategic part-ner for colleagues abroad”). Stoffers believes that it can also be expedient to rely on the expertise of expatriates in key functions during the growth pe-riod of a foreign company through to the stage of maturity. Stoffers: “Espe-cially during the integration of several divisions located at one site or the ac-quisition of further companies abroad, it can be beneficial to draw on the ex-pertise of well-connected expatriates. The question of when leadership of a foreign company can be handed over to a local management ultimately de-

pends o n the indi-vid-u a l case.”

D u r -ing the build-up of a foreign subsidiary, i.e. af- ter the first three to f i v e years, the local man-agement becomes m o r e important and can c o n -tribute towards the better implementation of s t r uc-

tures and processes (often introduced by expatriates). Stoffers: “Local man-agers give an added-value through their “inside view” and are often more readily accepted by business partners if the local manager is “one of them”.

Knowledge of the character ist ics of a country and its native lan-guage becomes increasingly im-portant as cor-porate growth abroad automati-

cally puts more emphasis on the local conditions in the respective country. Local managers therefore increasingly offer added value to the com-pany.

However, there is still a distinct lack of qualified lo-cal managers – particularly in emerging countries. The mar-ket abroad is getting more and more difficult because KSPG is fighting for the best man-agers in competition with the other big auto suppliers and OEMs. “Not to for-get that the

salary expectations of key personnel in emerging countries are rising and have partly already reached the lev-els of western salaries”, says Angela Stoffers.

Another important point to con-sider is that management person-

nel in countries like China or India traditionally have a dif-ferent understanding of loyalty towards their employers and

are generally more willing to switch jobs frequently – often simply because of a minor pay rise. Frequent job changes in these countries are not considered negative but often even interpreted as a sign of good perfor-mance. The challenge for KSPG is to

lower the so-called attrition rates. One good example of this is MS Mo-tor Service Asia Pacific Trading Co., Ltd in Shanghai which transfers more responsibility to its management per-sonnel step-wise, and promotes staff with individualised training programs to meet the needs, thus managing to keep its employees in the company for many years.

To recruit and keep staff in foreign subsidiaries in the long term, it is es-sential to give them a sense of belong-ing to the company and group, and to appreciate their work on a group level. Stoffers: “Local employees and managers are extremely important for KSPG. We therefore want to attach even more importance to raising their profile and their performance in the group. Simultaneously, we should be more willing to learn from their expe-rience, in other words to view them

as real partners in an appreciative manner.”

Added value through local managers

Added value from managers recruited locally thanks to their “inside view”

Newsline: Who decides which candi-date is best suited for a management position abroad?

Stoffers: Our HR colleagues respon-sible on a divisional level here in Ger-many are always involved in the pro-cess. By creating HR International, we now have an umbrella function with the aim of progressively supporting all key HR processes – including the recruitment of suitable staff to fi ll va-cancies and the conception and coor-dination of Young Managers Develop-ment programs as well as Executive Development seminars. Expatriate support is another important service offered.

Newsline: How do you identify suit-able candidates for jobs abroad?

Stoffers: Every two years, the group carries out a “potential analysis” for executives and other defi ned groups of persons. This instrument is used to es-tablish the performance and the com-petencies of individuals. It also gives an indication of development potential

and suitability for service abroad. For instance, we establish the suitability of candidates for cooperation in global teams and assess their intercultural skills. These results are then used to fi ll vacancies with suitable candidates and to implement an organized suc-cession planning process for manage-ment functions. Pools are established from which persons are then taken to fi ll vacant positions.

Newsline: What happens if you can’t fi nd a suitable candidate in-house?

Stoffers: If this is the case, we start to look outside the group. We check to see whether the time is right to look for key management personnel on the

local labour markets. If the respective subsidiary is mature enough for such a step, we then provide the necessary assistance to fi ll the position with a person from the country in question.

Newsline: That sounds like quite a challenge.

Stoffers: It is, especially as only a lim-ited number of persons are available

to meet the growing demand for quali-fi ed personnel in emerging countries. We therefore search for candidates through various channels. Our local HR colleagues get in touch with local and international head hunters; adverts are placed in internationally accepted “job exchanges”. We plan to cooperate even more closely with our HR colleagues in future in order to build co-operations with universi- ties and to develop our partner-ships with u n i -versities a n d colleg- es . O u r con-

tacts with Tongji University in China are, for instance, excellent and we recruit staff from there who have e.g. spent some time studying at a German university and therefore have no reser-vations about working for a German company.

Newsline: How do you develop your managers and executives?

Stoffers: The level of qualifi cation in emerging countries, especially of candidates with international degrees such as an MBA, is generally good. The challenge for them is to understand and apply KSPG-specifi c processes. We therefore want to integrate our ju-nior staff properly in our internal pro-cesses by, for instance, giving them technical training support in situ. To support local staff in ongoing projects, we also send German experts abroad for a limited period of time.

Neuss. KSPG’s HR-International function established at the beginning of 2012 was created to introduce central HR standards at the group’s foreign sub-sidiaries, and to promote and underpin international networking between col-leagues abroad. Angela Stoffers has been entrusted with the challenging task of managing the group’s HR International organisation. She is supported by three human resources offi cers who deal with HR International activities and other subjects such as company pension schemes or the implementation of group-wide HR projects. The 39-year-old lawyer previously worked as head of corporate HR policy, labour and social law at Rheinmetall and has acquired ex-tensive experience in various HR functions, also with another major automo-tive supplier. Newsline interviewed Angela Stoffers to fi nd out how the group identifi es and develops suitable managers for work in emerging countries.

Neuss. As a global corporation with more than 50 foreign subsidiaries, KSPG AG needs managers that embrace operational needs and think strategi-cally, have intercultural and integrative skills, are mobile and can network well with others. To support these and other capabilities, and in line with the pro-grams of the group holding Rheinme-tall, KSPG offers management training seminars to different target groups, including the Young Manager Program and the Executive Development Pro-gram (EDP) for more experienced ma-nagement personnel. The EDP is also available as an international program in English. In the past, management training seminars at KSPG’s foreign subsidiaries were usually tailored to the specifi c needs of local managers. HR-International has, however, been approached by various people abroad,

e.g. in India, who would like to partici-pate in the group’s training seminars. The next international EDP scheduled for 2014 will have an even stronger fo-cus on international modules. The Ger-man programs can be used as a basis for the international events. A separate Leadership Development Program who-

se modular structure is quite similar to the German program is currently being carried out in India. Head of HR-Interna-tional Angela Stoffers points out: “The Indian program was received really well by the twelve participants who have all spoken out in favour of a program conti-nuation (advanced module).” Besides, irrespective of their function and level

of seniority, staff working at a foreign subsidiary can participate in technical training courses and seminars to deve-lop e.g. their soft skills at their respecti-ve parent company, for instance Arnold Ji, the new head of Finance and Control-ling at MS Motor Service. Before moving abroad, Jan Pleyer who recently joined Pierburg in China as head of Operations likewise participated in a special pro-gram developed by the Neuss-based automotive supplier and its subsidiary Pierburg Pump Technology for young international managers offering high management, technical and project po-tential. Members of the HR-Internatio-nal team offer advisory support for the development and performance of ma-nagement training programs and help launch seminars for companies abroad, depending on the skills and levels of ex-perience of HR departments.

Leadership

Strategic partner for colleagues abroad

As planned, the Bundeswehr is cur-rently taking delivery of the thirty Gla-dius systems it ordered in 2012. The troops will have until June 2013 to train with the new system before going to Afghanistan. Developed by Rheinme-tall and originally known as “Infan-terist der Zukunft (IdZ 2)” or “Future Soldier”, Gladius is the most advan-ced system of its kind anywhere. Its introduction is a major step forward for the Bundeswehr, which will signifi -cantly improve the overall operational effectiveness of German infantry units while simul-taneously enhan-cing the surviva-bility of individual soldiers.

Gladius substan-tially exceeds the capabilities of pre-

vious infantry systems used by the Bun-deswehr, especially with regard to net-workability, command and control, and combat effectiveness. Refl ecting the heightened requirements profi le of the user as well as incorporating knowledge gained during comprehensive testing and in the fi eld, Gladius is essentially a new, highly advanced system.

A prominent feature of the Gladius sys-tem is the holistic design approach that takes full account of the complex opera-tional requirements levied on modern

soldier systems. Gladius is intended fi rst and foremost to bring the 10-man infantry section and its vehicle into the network-enabled operational loop. This network, consisting of reconnaissance, command and control components, and weapons, enables rapid exchange of in-formation as well as shared situational awareness as the basis for planning and conducting operations.

The individual soldier receives all re-levant data concerning the tactical si-tuation, the position of friendly forces,

the mission, and system status. It includes a GPS and an inertial na-vigation system as well as a ma-gnetic compass, facilitating reliab-le orientation on the ground.

German Bundeswehr fi elds new Gladius soldier system – holistic design approach.

E84 million order for 60 more systems

Düsseldorf. The Rheinmetall group and the Dutch armed forces have ag-reed to extend an existing agreement for the supply of various ammunition types in close cooperation between Rheinmetall and the Netherlands. The new 7-year agreement runs to the end of 2019. Under the existing agreement, Rheinmetall generated annual sales averaging E25 million during each of the past two years. Ad van de Geijn, Director of the Dutch Procurement Au-thority, and Armin Papperger, Chair-man of the Executive Board of Rhein-metall Defence, signed the contract at Unterlüß in northern Germany. The de-cision to extend the agreement, which dates from 2007, refl ects the longstan-ding mutual trust that characterizes

relations between Rheinmetall and the Dutch armed forces. At the same time, it sets the stage for intensifi ed long-term cooperation that will benefi t both sides.

This wide-ranging agreement further reinforces Rheinmetall’s role as a lea-ding supplier of large- and medium-ca-libre weapons and ammunition to Nato member states and other likeminded nations.

The Dutch Army turns to Rheinmetall for a wide variety of ammunition types in many different calibres, including service and practice versions as well as propelling technology. The partnership agreement provides the Dutch military with a reliable, long-term source of sup-ply for top-quality ammunition, cou-

pled with a streamlined procurement process. To date, both parties have be-nefi tted in a multitude of ways from the agreement, leading to better communi-cation as well as facilitating processing of customer requests and orders. The Dutch military has also gained from the sale of obsolete defence equipment. In short, major advantages have accrued to both customer and contractor, with close cooperation resulting in greater orientation to the evolving needs of the Dutch armed forces.

Cooperation tobe continued

Düsseldorf/Bonn. Moves by the German Bundeswehr to equip its infantry forces with the state-of-the-art Gla-dius soldier system are gathering pace. In January 2013, the Rheinmetall group was awarded an order to supply a further sixty systems. The procurement program began in 2012 with an initial order of thirty systems, enough to equip 300 troops.This follow-up order is worth E84 milli-

on, and encompasses equipment for 60 infantry sections with a total of 600 soldiers. Delivery of the new systems will take place in two lots consisting of thirty systems each, the fi rst one in the middle of 2013, another at the end of the year. This will ensure that the next two con-tingents of Bundeswehr troops due to deploy to Afgha-nistan will receive the new equipment well in advance.

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Berlin/Bremen. Rheinmetall has suc-cessfully completed modernization of a traffi c and driving simulator for trams on behalf of the Berlin Public Transport Authority (BVG). Coinciding with the in-troduction of a new type of tram in the German capital, in recent years Rhein-metall simulation experts have expan-ded the simulator’s virtual network of tram lines, updating and upgrading the computer and projection systems, and integrating additional functions into the simulator controls. They have also expanded the system to include a simulator cabin for the BVG’s new Bom-bardier “Flexity Berlin” tram. Rheinme-tall completed the multifaceted simu-

lator project within the agreed cost limits. BVG’s new traffi c and driving si-mulator, known as the VeFaSi for short, is based on an interchangeable driver’s compartment concept. It consists of a basic system and different driver’s compartments for the three trams in service with the BVG which the system

replicates. Vehicle-specifi c simulator software also forms part of the packa-ge. The basic system includes a moti-on system for reproducing the forces that occur during driving; the projec-tion system for replicating the driver’s view; a digital visualization system for calculating the virtual scenario in real time; and the virtual BVG tramline net-work. Rounding out the system are a si-mulation computer with the simulator software, a workstation for the trainer and a facility that enables visitors and/or other trainee drivers to watch. The-se driver compartments are designed to be interchangeable. In just thirty minutes, the simulator can be reconfi -

gured for any of the three tram vehicles currently operated in Berlin by the BVG by switching the driver’s compartment. Together with the basic system and the vehicle-specifi c software, it is therefo-re possible to respond to changing re-quirements, i.e. training new drivers or conducting periodic refresher courses.

Tram driving simulator

Manipulator technology

Seven Fox vehicles forclearing IEDs

Düsseldorf. The German Bundes-wehr has contracted with Rheinmetall to supply it with seven Fuchs/Fox ar-moured vehicles specially confi gured for detecting and identifying roadside bombs, mines, etc. This new Fuchs/Fox variant is called the KAI, short for

its offi cial Germany designation, “Kampfmittelaufklärung und -iden-tifi zierung”. The order is worth around €37 million. The vehicles

reinforce the Bundeswehr’s “Route Clearance System” for reconnoitring and neutralizing improvised explosi-ve devices, or IEDs, from the safety of an armoured fi ghting compartment. A total of seven vehicles are to be deli-vered between November 2013 and November 2014. In current and future peace enforcement and peacekeeping missions, IEDs will continue to pose a major threat to troops deployed in harm’s way. Today, the Bundeswehr still relies on troops equipped with manual devices for keeping routes of march and lines of advance free from roadside bombs, etc. As a result, cur-rent EOD detection and clearing pro-cedures are not only labour- and time-intensive but potentially dangerous.

Besides excellent crew protection, the Fuchs/Fox KAI features a multiple-joint, high-precision manipulator arm with a 10-metre reach and heavy lifting capacity. The manipulator arm makes it possible for EOD personnel to examine and identify unexploded ordnance and IEDs with extreme precision from a safe standoff without leaving the safety of the fi ghting compartment. Moreover, a

special rescue platform can be used for evacuating personnel and equipment from the danger zone.

The Fuchs/Fox vehicle used for the KAI platform is the latest version of this tried and tested 6x6 wheeled vehicle, which occupies a prominent place in the Bundeswehr inventory. First fi elded some thirty years ago, Rheinmetall has steadily upgraded the protection level and operational capabilities of this robust, reliable three-axle vehicle, adding modular protection features, a reinforced chassis and fragment-re-ducing spall liner in the interior of the fi ghting compartment.

In addition, the Fuchs/Fox 1A8 is equipped with highly effective anti-landmine and IED protection elements, special suspended seating that keeps the crew’s feet off the fl oor of the hull, textile rifl e holders and nets for secu-ring all wall-mounted equipment.

The Bundeswehr plans to deploy the Fuchs/Fox KAI in Afghanistan star-ting in the 4th quarter of 2014: even in a drawdown scenario there are nu-merous vehicle movements, and coun-tering the threat from booby traps and roadside bombs will be as important as ever.

The Fuchs/Fox KAI adds a new di-mension to the Bundeswehr’s heavy mine-clearing capability, and is inten-ded to reconnoitre danger zones that the Route Clearance System cannot reach. In addition, KAI will also be able to serve as a standalone EOD detec-tion system for reconnoitring hotspots during convoy escort operations.

BVG’s new traffi c and driving simulator, also known as the VeFaSi for short, is based on an interchangeable driver’s com-partment concept. It consists of a basic sys-tem and different driver’s compartments for the three trams in service with the BVG.

PPT’s technical buyer Fu-Kung Shen

“My dictionary was my best friend”

Fotos (8): Ariane Gehlert

34 year-old Shen moved from Taiwan to Mettmann near Düsseldorf with his parents and brother at the age of twelve. His parents – both cooks – hoped they could offer their sons a better future here in Germany. Shen re-calls that they arrived without speak-ing a single word of German. “We didn’t even know that there was a three-tier school system here.” Shen ended up in a secondary modern school with 80% foreigners. “I had expected lots of light-skinned blond children and was really surprised to fi nd that most of the pupils had black hair”, he remembers. His new life in Germany got off to a diffi cult start. “My dictionary was my best friend.” Having fi nished second-ary modern with excellent grades in

maths and science but poor grades in the other more language-orientated subjects, Shen started a three year ap-prenticeship as a toolmaker – and this was his big chance.

Although his teacher initially clas-sifi ed Shen as a “big risk”, a warm-hearted father-son relationship soon developed between the two – a re-lationship that has lasted to his very day. Shen soon improved his German language skills. The youngster who had been considered a “risk” com-pleted his apprenticeship with good grades. Shen acquired German citi-zenship and completed his compul-sory civilian service as a maintenance supervisor at the University of Wup-pertal. At the same time, he attended evening classes at Night School for six months followed by another two years at Day School which he com-pleted with an entrance qualifi cation for technical university. He started his

mechanical engineering studies at Wuppertal in 2002.

Alongside his academic studies, Shen worked part-time for Thielen-haus Technologies in Wuppertal where he wrote his thesis on the “Analysis and composition of necessary prod-uct data for the improvement of in-situ services by the example of a machine tool for rolling bearings” and was given his fi rst permanent job. Shen started in the sales department, and was responsible for the Asian market. From then on, his professional life was shaped by numerous busi-ness trips to Asia including his original home country Taiwan.

In August 2011 Fu-Kung Shen left his job as a purchaser for Thielen-

haus and joined Pierburg Pump Technology GmbH in Neuss as a technical buy-er. In his new function, he is responsible for selecting and negotiating with Asian suppliers on behalf of PPT as the leading manufac-turer of oil, water and vacuum pumps for cars and commercial vehicles. The task is varied and challenging. “I man-age complete projects, learn a lot and meet lots of interesting people.”

Technically, Shen’s job demands not only that he is fully up to date with de-velopments but always stays one step ahead. Renowned car makers launch new car models every four to fi ve years. Shen’s key role is generally in the middle of a project phase. To give an example: while the new VW Golf VII model was launched quite recently in November 2012, Shen is already think-ing about the successor model, the Golf VIII.

Neuss. “I am a banana child”, says Fu-Kung Shen jokingly: “Yellow on the out-side and white inside.” He looks like a Taiwanese but at heart he is a German engineer. These two attributes make him the ideal technical buyer for Neuss-based Pierburg Pump Technology GmbH (PPT). Shen’s negotiating partners are spread across Asia. His development from an immigrant child attending second-ary modern school to an engineer working in a global environment is exemplary.

As a development partner of major automakers, PPT drives innovations and designs new solutions for power-ful, consumption-optimised engines. Shen: “Basically, we focus on envi-ronmentally friendly technologies that allow fuel savings and emission reduction, and simultaneously offer optimum performance at all times.”

Design drawings are the starting sig-nal for Shen. Once these are available, the technical buyer has three main goals: best quality, best price and best delivery time.

Shen’s diplomatic skills are needed when negotiating with selected Asian partners. Frequently asked about his origins, he answers that he is a banana child that is “yellow on the outside and white inside” with a German pass-

port. This helps him to avoid political discussions that are

inevitable if he mentions his Taiwanese origins. Shen

prefers to stick to technicalities which he is more comfortable with:

“I have always been good at thinking things through logically and have had a good spatial perception since early childhood days.”

For a technical buy-er, fi nding the right words is more than just mastering the technical vocabulary. “Relationships play a

big role in Asia”, emphasises Shen. The key task is to overcome the mis-conception that Germans have money and are willing to pay excessively high prices, and to obtain a discount for foreigners. “This has to be done with care to ensure that the partner does not lose face when he adjusts an overpriced offer to the requirements”, says Shen.

Shen sees his job as a great chal-lenge: “Anyone who has worked for the purchasing or sales department has been given an excellent training for his own personality. One learns to assert oneself.” Internationally. And the fi nancial reward is good.

Martina Kiefer

Not only Pierburg Pump Technology benefits from his striving for perfection in his daily work. Some of his colleagues have already taken part in free Kung fu self-defence training sessions offered by Fu-Kung Shen.