Germany Turns on Its Top Gunmaker

Heckler and Koch is one of the most successful gun makers in the world. Its HK416 assault rifle is said to have been used to kill Osama bin Laden and the G36 is standard issue for militaries across the globe. In years past, the company profited from Germany's aggressive export policies. In 2008, Chancellor Angela Merkel's government approved a controversial but lucrative licensing deal for HK that allows Saudi Arabia to produce the G36 itself. But lately, the mood in Berlin has shifted. And HK's most important client has become its fiercest critic. Last year, Berlin reversed course on arms exports following a storm of media criticism. Tighter restrictions ground HK's Middle East business to a halt, hammering revenues. Even worse, for a company that prides itself on engineering it likens to "fine watchmaking", the government is now questioning the quality of its signature product.