The German automotive giant Volkswagen is in talks with the Israeli defense company Rafael Advanced Defense Systems, exploring the possibility of converting the company's factory in Osnabrück, Germany. The factory will be converted from vehicle production to manufacturing components for the Iron Dome air defense system, according to a report in the Financial Times which cited sources familiar with the details.
This is an initial step being considered as part of a search for a future solution for the factory, as its current production activities are set to end.
The Osnabrück plant, which employs about 2,300 workers, is expected to cease production of the T-Roc Cabriolet model in 2027. The planned cessation of production presents a significant challenge for Volkswagen, which must decide the site's future and the continued employment of its workers. As part of this, the company is examining several alternatives, one of which reportedly includes a partnership with security sector players.
According to the report, Volkswagen and Rafael are exploring the conversion of the factory to produce components for the Iron Dome, including heavy-duty trucks that carry the system's missiles as well as launchers and electricity generators. It would not produce the projectiles themselves.
Volkswagen itself addressed the issue, clarifying that it continues to explore various solutions for the factory. In a statement, the company noted that while discussions are ongoing with various market players, no final decision has been made.
Neither Rafael or the German Ministry of Defense commented on the reports, and declined to provide any further details on the possibility of such a collaboration. The lack of an official response leaves the matter under evaluation, without confirmation from the authorities.
The Iron Dome, part of Israel’s tiered air defense system, intercepts short-range missiles and rockets aimed at the Jewish state, as well as drones.
Rafael already manufactures the defense systems in Germany, such as the EuroTrophy and the anti-tank MELLS multirole lightweight guided missile system. Earlier this month, Yuval Steinitz, Chairman of Rafael Advanced Defense Systems, spoke with Bild and said that Israel has offered to help Germany strengthen its defense systems by manufacturing the Iron Dome air defense system on German soil.
Efforts to find a solution
The discussions with Rafael are not taking place in a vacuum. Volkswagen has been working for some time to find an overall solution for the Osnabrück plant as part of a broader process of adjustments and changes in its operations. In the past, the company held talks with the German company Rheinmetall regarding the sale of the site, but these talks stalled at the end of last year and did not lead to an agreement.
Nonetheless, Volkswagen CEO Oliver Blume mentioned earlier this month that the company continues to engage with security companies to develop a solution to ensure the factory's continued operation or repurposing. His comments suggest that the company is open to security-related collaborations, even if it remains cautious about direct weapons manufacturing.
The need for a solution for the factory arises not only from economic considerations but also from social and employment aspects. Thousands of workers at the site face uncertainty, and the company’s management must balance business considerations with its responsibility to its workforce.
The possibility of converting a car factory to produce components for an air defense system highlights the changes occurring in the global industry, where the boundaries between civilian and security sectors are becoming increasingly blurred.
In January, French vehicle manufacturer Renault announced that it would produce drones for Ukraine and France, marking its first foray into the defense industry since World War II. According to a report in French trade publication L’Usine Nouvelle, Renault will partner with Turgis Gaillard for a 10-year contract worth some $1.2 billion. The drones will be similar to Iran’s popular Shahed drones, the report said.
However, in Volkswagen's case, the company appears keen to maintain a clear distinction between its traditional operations and weapons production, according to the Financial Times.
According to the report, if the workers agree to switch to producing components for the Iron Dome, production could be ready within 12-18 months.