PSM Wins $4.3B Deal For German Armored Vehicles

FRANKFURT (AP) -- The German government has contracted PSM GmbH to build 405 new Puma armored fighting vehicles for the army.

The Federal Agency for Defence Technology and Procurement approved the euro3.1 billion ($4.3 billion) deal with PSM, a joint venture owned by Rheinmetall AG and Krauss-Maffei Wegmann GmbH & Co. KG, the companies said Monday.

The Puma, a tracked vehicle sporting an 30mm cannon in the turret, is designed for rough terrain like that faced by the German troops serving in Afghanistan and can be air-dropped into the field.

"This is an important day for us," Rheinmetall Chief Executive Klaus Eberhardt said in a statement. "In terms of technology, the start of serial production of the Puma underscores Rheinmetall's cutting edge position, and clearly demonstrates the efficiency and effectiveness of the German defense industry as a whole."

German lawmakers approved the project in September 2002 and five of the vehicles were built for testing at the end of 2004. The German army signaled its approval for the new design in March.

Shares of Rheinmetall were down 2.7 percent to euro30.74 in Frankfurt, part of a wider decline amid the DAX, which was down 1.6 percent.

More in Supply Chain