Is VW eyeing Iron Dome components manufacturing at German plant? | EUROtoday

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

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

In response to queries from DW, a spokesperson for Volkswagen stated “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 web site scheduled to part out its present manufacturing in 2027, the spokesperson stated 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 stated. “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 searching for options to avoid wasting round 2,300 jobs on the Osnabrück plant within the state of Lower Saxony because the 2024 determination 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 stated the corporate was nonetheless taking a look at methods to proceed producing autos on the web site into the longer term.

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

Earlier this month, the Volkswagen Group stated it plans to chop 50,000 jobs in Germany by 2030, after earnings hit their lowest stage in a decade. European carmakers have battled a spread of challenges in recent times, 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 individuals aware of 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 almost 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 could 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 firms have doubled and, in some instances, even tripled in worth. Meanwhile, European governments are ramping up navy spending, with EU member states having spent virtually €400 billion ($463 billion) on protection in 2025 alone.

While Volkswagen produced navy autos for the Nazis throughout WWII, it grew to become primarily a civilian producer from the beginning of the postwar period. Only its subsidiary MAN produces navy vans, in collaboration with German protection main Rheinmetall. However, if the plans with Rafael Advanced Defense Systems have been confirmed, it will mark a possible shift from purely civilian automotive manufacturing to defense-related manufacturing.

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

With the automotive trade and different industrial sectors throughout Europe and Germany at present battling varied headwinds, a pivot in the direction of a protection sector flush with money and primed for presidency funding has grow to be more and more engaging.

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

However, he cautioned that paperwork and lengthy waits for firms to obtain the required permits to supply for the protection sector may complicate the method.

Hans Christoph Atzpodien, common supervisor of the German Federal Association of the Security and Defense Industry, agrees. He beforehand informed DW that whereas the {qualifications} of automotive trade employees will typically meet the necessities of protection firms, 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 yr.

Surico additionally stated it is necessary that manufacturing stays open to a number of companies, moderately than one huge participant, for a wider pivot from sectors such because the automotive 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 potential stumbling block could possibly be getting employees to agree to modify to weapons manufacturing, in accordance with an individual aware of the discussions.

Edited by: Srinivas Mazumdaru