An underutilised Volkswagen factory in Germany, long thought to be earmarked for closure, might be saved with a little help from an Israeli weapons firm.
According to the Financial Times, Volkswagen is in discussions with Rafael Advanced Defence Systems, a defence company owned by the state of Israel, to convert the German automaker’s Osnabrück factory to make parts for the Iron Dome missile defence system.
The Osnabrück plant currently makes the T-Roc Cabriolet, and will do so until some time in 2027. Production of the Porsche 718 Boxster/Cayman there has already ceased.
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Sources have told the business newspaper that under the mooted plan Osnabrück won’t actually produce missiles, but will make support systems such as launchers, electricity generators, and the heavy trucks used to transport the missiles. Missile production requires a specialised factory, and this will be done elsewhere in Germany.
If workers give their seal of approval to the plan, the factory could be converted in 12 to 18 months, and the parties hope to save all of the factory’s 2300 jobs.
The plan reportedly has the support of the German government, which has been busy encouraging outside investment to shore up its manufacturing base.
A Volkswagen spokesperson told the Financial Times it was in discussions with “various market players” about the plant, but there are “currently no concrete decisions or conclusions regarding the future direction”.
The Osnabrück factory was opened in 1874 to produce wagons, and was taken over by Karmann in 1901. As a contract manufacturing site, Karmann built cars for Mercedes-Benz, Nissan, Renault, Triumph, BMW and Volkswagen at Osnabrück. When Karmann went bankrupt in 2010, Volkswagen took over the facility.
Volkswagen has been hit hard by falling sales in China, slowing EV growth, and tariff uncertainty in the US. Earlier this month it announced annual profits were down 53 per cent, and it intended to shed 50,000 jobs by 2030, up from the 35,000 planned a few years ago.
Rafael is hoping to sell the Iron Dome system to countries across Europe, which is busy rearming itself in the wake of Russia’s invasion of Ukraine in 2022.
Iron Dome is a defensive missile system used to track and intercept short-range missiles launched from no more than 70km away. It was developed by Rafael and Israel Aerospace Industries, and has been deployed across Israel to protect the country from attacks originating from Gaza and Lebanon.
If Volkswagen does end up producing components for the Iron Dome system, it won’t be the first time the automaker has made war machinery since the end of World War II, as the company’s MAN truck division produces military vehicles in conjunction with Rheinmetall, a German arms producer.