Austria - Military Industry

Large military enterprises existed in Austria even prior to the First World War. Austria-Hungary was one of the world's major manufacturers of arms. The Skoda company in Bohemia was the largest single arms producer, fully meeting the empire's requirements with considerable output available for export. Fascist Germany actively utilized its industrial potential. For example, according to several Western press estimates, up to 10 per cent of German aircraft, a large number of armored equipment and gun fire weapons were manufactured on Austrian territory. During the war, a large part of the military enterprises were destroyed by allied airforce bombers of the Atlantic coalition. The remaining enterprises were dismantled later or transitioned to produce civilian goods.

After the liberation of Austria in 1945, from the Hitlerite forces (from 1938 it was annexed to Germany), the country was divided into four zones: Soviet, US, British and French. In May 1955, representatives from the USSR, the US, Great Britain and France signed the State Treaty reestablishing Austria's independence. According to this document, the division of the country was put to an end and, in October, 1955, the Austrian parliament adopted the neutrality law. The State treaty imposed specific limitations not only on the number of personnel and the equipping of Austria's armed forces, but also on the production of individual types of weapons and military equipment.

In comparison with many leading capitalistic countries, Austria did not havea developed and organizationally complex military industry at its disposal. However, the interest of local firms in this area of production was continually growing. By the 1980s, more than 50 enterprises from various branches of industry were engaged in the production of weapons and military equipment. The military production turnover of Austria'sindustry significantly exceeded 10 billion shillings a year. The requirements of the Austrian armed forces for light tanks, BTRs, artillery fire armament, ammunition, and engineering, radio electronic and optical equipment was met through its own production. The country's production capacity to produce armament could be significantly increased if necessary in a short time.

Because of the small opportunities in theinternal market, the characteristic feature of the Austrian military industry was its high export trend. According to various specialists' assessments, towards the end of the Cold War more than 80 percent of the weapons and military equipment produced in the country was delivered abroad. Austria then held the seventh place in the Western world in the export of armaments. The main purchasers were the developing countries of Latin America, Africa, and the Near East.

Under the Second Republic, from 1945, Steyr-Daimler-Puch, the largely privately owned firm accounted for the bulk of Austria's production. Its manufacturing facilities are divided among three divisions. The first, Steyr-Mannlicher, produces small arms, notably the 5.56mm assault rifle, the standard weapon for both readiness and militia forces and a popular export item to military and police forces in many countries of the world. It is also available in carbine and light machine gun versions.

The second, Steyr-Allradtechnik in Graz, is a producer of all-wheel drive vehicles and trucks. The third Steyr division, Spezialfahrzeuge AG, has developed the Austrian Spanish Cooperative Development (ASCOD) family of mechanized infantry combat vehicles in conjunction with a Spanish firm. The basic version is equipped with a 30mm machine gun and carries eight infantry soldiers in addition to a three-man crew. The firm has also designed the Pandur armored vehicle for the Austrian army as an antitank-missile-launcher platform.

Noricum, previously a subsidiary of the state-owned United Austrian Iron and Steel Works (Vereinigte Österreichische Eisenund Stahlwerke--VÖEST; commonly known as VÖEST-Alpine), manufactures artillery ordnance as well as the GHN-45 155mm gun. In 1991 fourteen defendants, including leading executives of Noricum and VÖEST-Alpine, were sentenced to prison terms for violating Austrian neutrality laws by selling 200 GHN-45 howitzers and large quantities of munitions to Iran during the Iran-Iraq War of 1980-88. Noricum is also reported to have marketed the guns illegally to Iraq. Noricum and Hirtenberger Patronenfabrik, another state-owned company implicated in the transactions, were later sold to the private firm of Emmerich Assmann, ending the government's involvement in arms manufacture. The Austrian armaments industry is heavily dependent on export markets because the requirements of the country's forces are limited, and domestic procurement is open to competition from foreign suppliers.

Production had to be set at far higher levels than can be absorbed domestically in order for manufacture to be economically feasible. Shrinking world demand and mounting sophistication of weaponry impose serious pressures on the industry. The United States Arms Control and Disarmament Agency has estimated that during the 1981-91 period, arms exports peaked in 1981 at US$430 million. They declined minimally until 1987, when they dropped sharply to US$60 million and later declined further to US$10 million. In only one year, 1981, did arms exports amount to as much as 2 percent of total exports. In 1987 and 1988, they amounted to 0.2 percent of total exports and to even less in the next three years.

During the first years after its formation in 1955, the Austrian army depended heavily on the United States for light weapons, trucks, uniforms, and even helmets, with some additional equipment transferred from the former British occupation forces as well. The first aircraft were older Soviet models. The army was initially supplied with American M-24 light tanks, which were replaced by the M-47. Since the 1970s, the main battle tank has been the M-60, which Steyr modernized to A3 standard beginning in 1986, using engines and other equipment from the United States. Austria also made a major purchase of self-propelled howitzers from the United States. Nevertheless, the importance of the United States as an arms supplier declined in the 1980s.

During the 1985-89 period, estimates suggested that Austria imported military equipment valued at US$240 million. The United States was the source of US$70 million worth of equipment, and Western Europe accounted for US$160 million worth of equipment. Very little came from France and Britain, and restrictions in the State Treaty precluded arms imports from Germany. Sweden--the primary source of aircraft and missiles--was believed to be the predominant supplier. Austria's purchases of Saab and Draken fighters from Sweden were largely offset by Swedish orders for Austrian munitions.

The aviationindustry is practically non-existent in Austria. The aircraft fleet is equipped with foreign-produced aircraft. However, Austrian firms cooperate internationally in the production of aviation equipment. The leading firm in this area is Vereinigte Edelstahl Werke (VEW), a branch company of the concern, Fest Alpine, with enterprises in the cities of Kapfenberg, Terniz, and Murzzuschag, which maintained cooperative connections with large aircraft construction concerns of Western Europe such as Messerschmitt-Bolkow-Blohm(MBB) and Dornier (both the FRG), Aeritalia (Italy), and also enginemanufacturing firms such as Motoren- und Turbinen-Union (MTU, FRG), Pratt andWhitney (US), Rolls-Royce (Great Britain), and others.

Aluminum and titanium alloy casting is VEW's specialty item. The firm accumulated a great deal of experience in producing it. The product was primarily in the structural elements of aircraft airframes and engines. Parts and assemblies manufactured at Austrian plants were used in the BO-105 and BK-117 (FRG) helicopters, the Agusta firm helicopters (Italy), in A300 and A310 wide-bodied transport aircraft, and also in the production of tactical fighters such as the VIGGEN (Sweden), the AMX (jointly produced by Italy and Brazil), and others. Additionally, Austrian castings were used for theproduction of engines manufactured by the companies Pratt and Whitney, Rolls-Royce and MTU.