Sale of VW plant opens door to Israeli defence production in Germany

Volkswagen has agreed to sell one of its German plants to the state of Lower Saxony and Israeli investment firm Aurelius, paving the way for the site to be transformed into a defence industry hub.

Lower Saxony Minister-President Olaf Lies announced the planned acquisition of the Osnabrück site at a press conference earlier this week, according to an article by Euractiv.

Lies highlighted the Osnabrück facility’s highly skilled workforce, established industrial infrastructure and extensive experience in carrying out complex manufacturing operations. He also pointed to the changing security environment in Europe and the growing need to strengthen Germany’s defence capabilities.

“At the same time, there has been a fundamental change in our security situation and our need for protection,” he said.

The planned takeover comes after Volkswagen announced major job reductions last week and raised questions over the future of several of its German production sites.

Industry observers cited by Euractiv suggested that the rapid expansion of the defence sector could offer an opportunity for Germany’s struggling automotive industry, which remains a key pillar of the country’s industrial base. Other major Western automakers, including Renault of France and Ford of the US, have already moved into the defence sector as governments increase military spending.

As an initial step, Israeli defence company Rafael Advanced Defense Systems is expected to manufacture components for its air defence systems at the Osnabrück facility.

Volkswagen said Rafael would provide its technological expertise, while the existing workforce at the plant would have a key role in establishing the new manufacturing operations.

“Today, we are establishing a long-term industrial partnership with our German partners, with the aim of ensuring that the technology is produced entirely in Germany, in order to protect Germany and Europe,” Rafael CEO Yoav Tourgeman said.

Rafael is internationally known for developing the Iron Dome air defence system, which is designed primarily to intercept short-range rockets and artillery projectiles.

Romania signed an agreement last year to establish an Iron Dome capability, making it the first European country to acquire the system after Azerbaijan purchased it in 2016. Greece has also recently agreed a €3.1 billion deal for its planned “Achilles Shield” air defence architecture, which is expected to combine systems including the US-made Patriot and Rafael’s Israeli-developed Spyder.

By Nazrin Sadigova