Austrian Federal Army plans to invest billions in drones!

Austrian Federal Army plans to invest billions in drones!

Where are the Austrian Armed Forces going? Many people are asking themselves this question, especially given the massive investments in the coming years. From 2022 to 2024, 3.4 billion euros are planned for equipment, and another 1.7 billion euros will be added for 2024. But where is the local industry in this game?

The government has imposed a ban on austerity in national defense; it is the only state agency where no euro cuts will be made. Nevertheless, the domestic economy is left out when it comes to large orders. A full 60 percent of the added value should remain in the country, but smaller dual-use manufacturers in particular have little chance of participating in the procurement. Federal Army procurement focuses heavily on international providers.

Purchases big brands and international manufacturers

For example, 315 Magni-X drones were ordered from the Israeli manufacturer Elbit Systems. These drones cost 8.48 million euros and are equipped with advanced night vision cameras and AI software. The maintenance of the devices also remains in the hands of the manufacturer. The Ministry of Defense attributes foreign procurement to the quality of the products and thus justifies the decisions. However, the sector could benefit much more from domestic companies.

The split between the defense and economic ministries, which are responsible for industrial cooperation, is causing tensions. While an “Industrial Cooperation” task force is trying to develop clear rules for counter-trade by the end of the year, the domestic industry is waiting in vain for feedback. So far there have been no agreements that would involve local companies. Last year, the armed forces signed a contract for four transport aircraft without any counter-deals - another example of the neglected domestic economy.

Countertrading and its challenges

In Austria, the discussion about counter-deals is sensitive after the Eurofighter affair, which has had a negative impact on the procurement process for years. Although countertrading is common practice internationally and is not discredited, there is great uncertainty here. Manfred Essletzbichler from Wolf Theiss points out that clear criteria and a transparent process are urgently needed to prevent old scandals from repeating themselves. Philipp J. Marboe, also from Wolf Theiss, is optimistic and expects that countertrading will soon be included in the procurement plan again.

The task force, which includes representatives from the Ministry of Economic Affairs and the Industrial Association, is tasked with evaluating alternatives and creating clear guidelines. Paul Frühwirth, Managing Director of the AIA, notes how important it is to give local companies the opportunity to benefit from such deals. It is simply recommended to work more closely with European manufacturers in order to reduce dependencies on the USA and promote their own production capacities.

Against this background, the Federal Army also wants to become active on its own initiative in the future. They are pursuing a do-it-yourself approach and have already developed prototypes of drones such as “Flip”, “Maya the Bee” and “Puck”. However, these are not intended to go into production, but rather only serve as teaching models.

The situation remains tense. While foreign policy tensions and the procurement of international military equipment are simmering, there was recently a demonstration against war and the arms race in Simmering, which, however, was only attended by a few interested people. What happens next remains to be seen.

The challenges are great, time is short. Will we use the opportunity in the future to promote local know-how or will we continue to stick with big names in the international arena? The next few months could be crucial in determining whether the local defense industry will do well in the future.

For those who want to delve deeper into the topic, the reports from profile, Economic News and Industrial magazine exciting insights and current information.