VW to change from automobiles to protection at key plant | EUROtoday

Volkswagen (VW) is in talks with the Israeli protection agency Rafael Advanced Defense Systems over a attainable collaboration which might see manufacturing swap from automobiles to protection tools at a key VW plant, in keeping with a report within the Financial Times.

The unique report within the newspaper, quoting folks accustomed to the plan, says the businesses plan to transform Volkswagen’s struggling Osnabrück plant right into a facility which makes elements for the Israeli state-owned firm’s Iron Dome air protection system.

In response to queries from DW, a spokesperson for Volkswagen mentioned “the production of weapons by Volkswagen AG remains ruled out for the future, and we do not engage in speculation regarding further plans for the Osnabrück site.”

However, with the Osnabrück website scheduled to section out its present manufacturing in 2027, the spokesperson mentioned the corporate “continues to explore viable options” and is speaking to varied “market players.”

“This is part of an open review process for the period after 2027,” the spokesperson mentioned. “There are currently no concrete decisions or conclusions regarding the future direction of the site. We are also keeping local employees informed about the status of this process.”

A struggling manufacturing facility

Volkswagen has been in search of options to avoid wasting round 2,300 jobs on the Osnabrück plant within the state of Lower Saxony because the 2024 choice to pivot away from present manufacturing by 2027. Last September, VW took the choice to shorten the working week by a day on the facility as a part of broader cost-cutting measures.

The manufacturing facility at Osnabrück produces the T-Roc Cabriolet model, in addition to the Porsche Cayman and Porsche Boxster fashions. The VW spokesperson mentioned the corporate was nonetheless taking a look at methods to proceed producing autos on the website into the long run.

“The Volkswagen plant in Osnabrück has developed various vehicle concepts in recent months to explore potential market opportunities and prospects,” they mentioned. “Whether and to what extent these will result in concrete projects remains to be seen.”

Earlier this month, the Volkswagen Group mentioned it plans to chop 50,000 jobs in Germany by 2030, after income hit their lowest stage in a decade. European carmakers have battled a variety of challenges lately, from struggles related to electrification, to elevated competitors from China.

The German auto big’s CEO Oliver Blume informed shareholders just lately that the Volkswagen Group, which owns the Volkswagen, Porsche, Skoda and Audi manufacturers amongst others, was “operating in a fundamentally different environment.”

According to the Financial Times report, the plan goals to avoid wasting all 2,300 jobs in Osnabrück. The article quotes one of many folks accustomed to the plans as saying: “The aim is to save everybody, maybe even to grow. The potential is so high. But it’s also an individual decision for the workers if they want to be part of the idea.”

The report provides that the German authorities actively helps the plan. Although Germany’s federal authorities has no stake in Volkswagen, the state of Lower Saxony holds practically 12% of the shares and 20% of the voting rights.

Tapping into the booming protection sector

If confirmed, the tie-up between Volkswagen and Rafael Advanced Defense Systems can be the most important instance but of a significant industrial firm pivoting from its conventional enterprise to the now booming protection sector.

Since Russia’s full-scale invasion of Ukraine in February 2022, European protection corporations have doubled and, in some circumstances, even tripled in worth. Meanwhile, European governments are ramping up navy spending, with EU member states having spent nearly €400 billion ($463 billion) on protection in 2025 alone.

Volkswagen has to date not made a significant pivot in direction of protection. Its subsidiary MAN makes navy vehicles with German protection main Rheinmetall. However, if the plans with Rafael Advanced Defense Systems have been confirmed, it might signify Volkswagen’s deepest dedication to the arms trade because it produced autos and bombs for the Nazis throughout World War II.

According to the Financial Times report, the manufacturing facility would make navy autos and different elements for the Iron Dome, however not missiles themselves.

With the automobile trade and different industrial sectors throughout Europe and Germany presently battling numerous headwinds, a pivot in direction of a protection sector flush with money and primed for presidency funding has develop into more and more engaging.

Paolo Surico, a professor of economics on the London Business School who focuses on defense-related innovation, mentioned the pivoting of commercial companies in direction of protection is “crucial” if the protection spending scale-up is to supply wider ecomomic advantages.

However, he cautioned that forms and lengthy waits for corporations to obtain the mandatory permits to provide for the protection sector may complicate the method.

Hans Christoph Atzpodien, normal supervisor of the German Federal Association of the Security and Defense Industry, agrees. He beforehand informed DW that whereas the {qualifications} of automobile trade staff will typically meet the necessities of protection corporations, retraining and safety clearance necessities might decelerate the method.

“The timelines for issuing these authorizations are currently nowhere near fast enough to enable a rapid transition of the relevant personnel,” he informed DW final 12 months.

Surico additionally mentioned it is vital that manufacturing stays open to a number of companies, quite than one huge participant, for a wider pivot from sectors such because the automobile trade to protection to work.

“Give the same procurement, the same contract to multiple firms in which each one exploits their comparative advantage along the supply chain,” he informed DW. “Each one can exploit this comparative advantage and therefore make production more efficient and the economic benefits more widespread.”

According to the Financial Times report, manufacturing at Osnabrück for Rafael Advanced Defense Systems may start inside 12 to 18 months.

However, a attainable stumbling block could possibly be getting staff to agree to change to weapons manufacturing, in keeping with an individual accustomed to the discussions.

Edited by: Srinivas Mazumdaru