Volkswagen is in talks with Israel’s Rafael Advanced Defense Systems over a deal that would convert production at one of the German group’s missile defense car factories. The information is from the Financial Times.
According to a report published in the newspaper, the two companies plan to transform the already struggling Osnabrück plant to manufacture components for the Israeli state group’s Iron Dome air defense system. The conversion would require little investment and would be “relatively simple”, according to sources interviewed by the newspaper. With the change, production could begin in 12 to 18 months, as long as workers agree to migrate to weapons manufacturing.
If plans go ahead, the two companies could preserve all 2,300 jobs at the plant located in western Germany, which was under threat of closure.
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“The objective is to save everyone. The potential is enormous. But it is also an individual decision for the workers if they want to be part of this idea”, said an anonymous source, who would be aware of the plans.
According to sources heard in the newspaper’s report, the German government actively supports the proposal.
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Turn to defense
This partnership would be, so far, the most emblematic case of a shift in the German automotive industry, pressured by Chinese competition and a slow transition to electric vehicles, towards the booming defense sector.
VW already produces military trucks in a joint venture between its subsidiary MAN and weapons manufacturer Rheinmetall. The alliance with Rafael, however, would represent a major return to the military sector: the automaker produced military vehicles and the V1 flying bomb for Hitler’s Wehrmacht during the Second World War.
According to the plan under discussion, the Osnabrück factory would start producing parts of the Iron Dome, including heavy trucks that transport the missiles, as well as launchers and power generators. The factory, however, would not produce the missiles themselves. These would be manufactured by Rafael itself, which plans a separate installation in Germany. The systems produced there could be sold to European governments.
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Defense investment in Europe
The company is targeting contracts with governments across Europe, including Germany, as it ramps up the continent’s air defenses since Russia’s large-scale invasion of Ukraine. Last year, the country received the first of three batteries for the Israeli Arrow 3 system, from Israel Aerospace Industries.
The choice of Germany as a European industrial base takes into account both the country’s role as one of Israel’s main allies in the region, and its idle capacity in domestic industry.
The move comes as the EU’s biggest economy expects to spend more than €500 billion on defense by the end of the decade, with air defense among its declared investment priorities.
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European iron dome?
Israel attributes the interception of more than 90% of missiles launched by adversaries to its network of air defense systems. Still, experts question whether the Iron Dome — with a range of 70 km and use focused on intercepting rockets fired from Gaza — is adequate to face longer-range threats in Europe.
