"War Production" Changes How Businesses Think About Geopolitics

Companies are now sustaining conflicts

Just a year after the Ukraine war began, as Russian forces continued to strike cities throughout Ukraine, the German defense company Rheinmetall made a stunning announcement: it would be opening a factory in Ukraine.

It was a move counter to what many businesses were doing. In 2024, for instance, 1 in 3 new businesses in Ukraine shut down, around 120,000 firms. Instead, one of the world’s top 20 defense companies was launching, not closing.

According to Rheinmetall’s CEO, Armin Papperger, the new factory, located in Western Ukraine, would build and repair tanks. While this itself is provocative, Papperger’s reasoning for opening the factory was most significant.

He did not want Ukraine to rely on the West indefinitely for arms and weapons. Instead, he believed Kyiv should be able to produce what it needs, a goal Papperger hoped his factory would help achieve.