Artillery Orders Flow as KNDS Wrestles with Factory Conversion to Meet €33bn Backlog

Defence contractor KNDS enters 2026 with soaring demand, a €33.1B order backlog, and plans to convert a Mercedes plant to meet artillery production targets.

The defence contractor KNDS enters 2026 with a problem many industrial groups would envy: demand that far outstrips current production capacity. With a record order backlog of €33.1 billion at year-end 2025, the company is under mounting pressure to transform paper orders into delivered hardware — and that means finding factory space, skilled labour, and supply-chain reliability fast.

New business is coming thick and fast. Revenue climbed 15.9 percent last year to €4.4 billion, while new orders hit €13.5 billion. The backlog alone is a powerful talking point for investors ahead of the planned dual listing in Frankfurt and Paris, expected in 2026 subject to market conditions. But the narrative is shifting from order intake to execution capability.

North American Artillery Push Adds to the Squeeze

On June 3, American Rheinmetall announced that the RCH 155 — offered in partnership with KNDS — is the proposed solution for the US Army’s Mobile Tactical Cannon programme. This is not a signed contract or a final selection, but it thrusts KNDS directly into the Pentagon’s artillery modernisation pipeline. The fully automated 155mm L52 howitzer can fire more than eight rounds per minute out to a range of 54 kilometres, combining the firepower of a self-propelled gun with the mobility of the Boxer wheeled armoured vehicle.

Across the border, Canada represents another potential market. At the CANSEC 2026 defence exhibition in Ottawa, General Dynamics Land Systems–Canada unveiled the Grizzly LAV 155mm, a self-propelled howitzer that mounts KNDS’s RCH 155 turret on a modified LAV 6.0 chassis. KNDS Deutschland is supplying the 155mm gun. Again, no contract has been awarded, but the vehicle is positioned as a candidate for Canada’s indirect fire support modernisation programme.

These North American developments follow a firm European order. The British government signed for 72 RCH 155 howitzers in May, valued at nearly £1 billion, placed through OCCAR and awarded to ARTEC, the joint venture between KNDS and Rheinmetall. The UK deal alone ties up production slots and underlines the scale of the delivery challenge.

Auto Plant Conversion Emerges as a Potential Solution

With the order book bulging, KNDS needs industrial capacity quickly. An intriguing option has emerged from an unlikely source: Mercedes-Benz. The carmaker plans to phase out large-volume Sprinter production at its Ludwigsfelde plant near Berlin by the end of 2029, as it shifts e-Sprinter assembly to Poland. The facility’s utilisation is guaranteed until then, but the eventual vacancy has sparked discussion about converting parts — or all — of the site for military vehicle production.

Media reports have floated scenarios ranging from using individual factory halls to a far more comprehensive takeover of production space. No concrete structure has been confirmed, and neither KNDS nor Mercedes-Benz has disclosed specific conditions or a binding agreement. Still, the very possibility signals a broader trend: Europe’s defence industry is scouting idle auto capacity as the continent’s carmakers restructure.

Industrial Reality Check

Converting a commercial-vehicle plant into a defence factory is no small task. Automotive assembly lines are built for high volumes and standardised processes, whereas defence production typically involves smaller batches, more variants, and stringent security and certification requirements. Ludwigsfelde could offer infrastructure and a skilled workforce, but KNDS would still need to invest in security protocols, supply-chain adjustments, and a suitable product mix. The Boxer wheeled vehicle has been mentioned as a candidate for production there, but that remains speculative.

For the upcoming IPO, the industrial execution story matters as much as the growth narrative. Investors will scrutinise the company’s ability to scale: additional production sites, stable supplier networks, and reliable delivery schedules. A credible capacity strategy could bolster the equity story, but without official confirmation, Ludwigsfelde remains an option on the table, not a priced value driver.

KNDS continues to prepare for its public debut, with work proceeding according to plan. The artillery announcements from the US, Canada, and the UK give the IPO narrative a concrete product-angle alongside the headline backlog figure. Yet the fundamental test remains whether Europe’s defence industry can move from a pile of orders into serial production fast enough — and whether the auto sector’s factory closures can be turned into an opportunity rather than a distraction.