Hörder Bergwerks- und Hüttenverein receives a large order for munitions for a new rifle of the German Army from the Ministry of War, but cannot fulfil it due to a lack of suitable capacity. General Director Massenez offers the engineer Heinrich Ehrhardt from Thuringia the opportunity to fulfil this order on behalf of Hörder Verein in a company founded especially for this purpose. Ehrhardt accepts the challenge and begins the work of putting together a factory in rented premises in Dusseldorf’s Bilk district. With the financial support of a consortium of banks, Hörder Verein founds Rheinische Metallwaaren- und Maschinenfabrik Actiengesellschaft on 13 April 1889, which from then on is under the decisive leadership of Heinrich Ehrhardt.
On January 28th, the Imperial Patent Office awards Heinrich Ehrhardt a patent (No. 67921) for a "Process for Punching and the Simultaneous Shaping of Iron and Steel Ingots in a Heated Condition". Numerous attempts by the resourceful engineer – beginning at Zella (in Thuringia) back in 1889 – to find a way of producing seamless tubes are now crowned by success. In addition, he develops a pressing and drawing technique, for which he is awarded Patent No. 73005 on April 21st 1892. The tubes and hollow bodies manufactured using Ehrhardt's pressing and drawing technique find eager customers in industry, the military, railway and shipping companies as well as gas and water utilities.
In the Derendorf plant, a tube mill and iron foundry are set up in order to start artillery tube production. The new production facilities also permit the manufacture of non-military items such as steel wheels or cylinders.
Because the expanded production programme has substantially increased the need for steel, Heinrich Ehrhardt acquires (with Paul Heye, his later son-in-law), a small drop forge in Rath near Düsseldorf, which is transformed into the Metallwerk Ehrhardt & Heye stock corporation.
For the first time, Rheinmetall stock is officially listed on the Berlin stock exchange.
The company Rather Metallwerk is integrated into Rheinische Metallwaaren- und Maschinenfabrik as the "Rath Division". Ehrhardt's company henceforth has the capacity to manufacture its own high-grade steels and semi-finished products, making it largely independent of outside suppliers.
Ehrhardt develops the first fieldworthy recoiling cannon, one of the outstanding engineering achievements of the age.
Now nearly 60, he is awarded high honours by the king of Norway, the emperor of Austria, and finally, the German Kaiser, Wilhelm II. For the company, Ehrhardt's invention means major commercial success.
On the Lüneburg Heath in northern Germany, not far from the village of Unterlüß, Rheinische Metallwaaren- und Maschinenfabrik leases a large area of land for testing its weapons and ammunition. The first building to go up in 1905 is a 16-square meter shop for manufacturing shells and cartridge cases. In the years that follow, the firing range is considerably extended with additions to the site. Today, the Rheinmetall testing terrain in Unterlüß comprises a total area of approximately 50 square kilometres, 80 percent of which is used for commercial forestry.
By acquiring Munitions- und Waffenfabrik AG of Sömmerda in Thuringia, previously known as Dreyse'sche Gewehrfabrik, a manufacturer of handguns, cartridges and igniters, Rheinische Metallwaaren- und Maschinenfabrik extends its production programme and secures its hold on the market.
In the years that follow, production is systematically expanded. Rheinmetall's recoiling cannon brings the company its first business successes abroad. The British Army orders 18 batteries including ammunition and cassons. Additional orders are received from Norway, Austria and the United States of America.
After an intense competitive evaluation Rheinmetall receives an order from the US government for 50 rapid-fire guns with long barrel recoil, together with the accompanying ammunition. Even though this order was not very large it was highly significant as the US rarely ordered foreign weaponry.
The first loading, assembly and packing operation for artillery rounds is built at Unterlüß.
With a view to extending the Düsseldorf production facilities, Rheinmetall acquires the neighbouring "Germania" factory, which is integrated into the company as Works II.
The "System Ehrhardt" mountain howitzer is fielded in German Southwest Africa. The Unterlüß range is extended so as to be able to test fire Rheinmetall's new naval guns.
At the outbreak of the First World War in August, Rheinmetall is one of Germany's largest manufacturers of military equipment. In January 1914, the Rheinmetall factories employ a workforce of almost 8,000. A year later, Rheinmetall has a total of 14,000, and by 1918 the workforce has mushroomed to almost 48,000 blue- and white-collar employees, including some 9,000 women.
With the cease-fire in November, arms production in Germany comes to an abrupt halt, and the company, whose production space in Düsseldorf has increased nearly fourfold during the war years, is forced to lay off much of its staff.