The place where Europe's ability to defend itself is also decided breathes armaments and industrial history like few others. The zeppelins came from here, and the Dornier works once stood here.

The engines for the now historic Porsche tractors were made on the shores of Lake Constance, which on this late January day is calm under a cloudy sky.

A few tourists take the ferry from Romanshorn in Switzerland to Friedrichshafen in Germany.

Two border police officers are waiting for the ferry and pick out a passenger.

Gustave parts

Business correspondent in Stuttgart.

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Philip Pickert

Business correspondent based in London.

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During the Second World War, the city was largely destroyed because ZF Friedrichshafen and Maybach-Motorenbau were important suppliers for the Wehrmacht.

Maybach is now called MTU and, as Rolls-Royce Power Systems, belongs to the British industrial group Rolls-Royce, which no longer has anything to do with the car brand.

An important supplier for the German armed forces is MTU (not to be confused with the Munich group MTU Aero Engines).

The company manufactures the engines for all important German tanks: the Leopard 1 and 2, the Boxer, the Marder, the Puma, even for the Panzerhaubitze 2000. According to a spokesman, customers include various important armaments groups: KMW and Rheinmetall from Germany, Hyundai Rotem and Hanwha Defense from South Korea, KNDS/Nexter from France.

General Dynamics from the USA, the producer of the Abrams tank, is also on the illustrious list of customers.

Rolls-Royce as a "burning platform"

But it is precisely at this key point in the German armaments industry that trouble could now threaten, according to business circles and local politicians.

Because if the federal government actually starts to order more armaments at some point, MTU will have to ramp up production quickly.

Even if the company should earn good money with the tank engines, it remains to be seen whether it will succeed.

The main reason for this is the precarious situation of the parent company Rolls-Royce.

The 119-year-old group is about to undergo far-reaching restructuring, as the new CEO Tufan Erginbilgic announced in an internal speech to thousands of employees last week.

His speech contained drastic warnings.

He called Rolls-Royce "a burning platform" that is constantly losing money with investments.

A program to increase efficiency and profits is "our last chance".

This would have resulted in discussions with investors.

The biggest problem child is the core business of the industrial group: engines for civil aviation, which the company leases.

The more hours the airplane engines fly, the more money comes in.

The corona pandemic, when air traffic was paralysed, brought great losses for Rolls-Royce.

The figures for the 2022 financial year will be announced at the end of February.

A new boss has also taken over in Friedrichshafen

But the group's problems are even older.

Analysts point to the chronically poor price development for years.

Rolls-Royce shares have lost almost two-thirds of their value in the past five years, and not just because of the pandemic.

In the past three months, the price has recovered somewhat because China reopened after the corona lockdowns.

This has stimulated long-haul air travel.

However, some in the group fear that London will squeeze Friedrichshafen to improve its financial situation.

The requirements of the parent company can only be achieved if all investments are reduced, says MTU works council chief Thomas Bittelmeyer of the FAZ. "If there are orders for tanks, we stand there with our pants down." to process additional corresponding orders from the federal government, [we] are keeping to our promise to adjust the production capacities according to the order volume," said the spokesman.

Just like in London, a new boss, Jörg Stratmann, recently took over the helm in Friedrichshafen.

Both companies are currently examining their business and processes under the new bosses, "in order to improve financial performance," an MTU spokesman answers the question of what contribution Friedrichshafen should make to the austerity measures.

The review is based on the priorities of the parent company.