THE HAGUE, Netherlands — Germany’s economy should embrace the pivot from cars to defense equipment as a major growth driver, according to a proposal by the country’s leading defense industry group.
The Federal Association of the German Security and Defense Industry (BDSV) pitched the idea last week while hailing the incoming government’s pledge to continue expanding the defense budget drastically. To overcome production bottlenecks, the argument goes, why not repurpose manufacturing capabilities of Germany’s famed, but ailing, automobile sector?
The idea is part of a package of measures advanced by the defense industry that seeks to inject the same type of urgency into military manufacturing that animated German leaders when it came to substituting Russian gas in the country’s energy mix following Moscow’s war against Ukraine.
In Brussels and national capitals here, there will be fresh money to spend on defense. At the same time, the continent’s production sites were never intended for mass output. The European Union has nevertheless unveiled a plan, dubbed “ReArm Europe,” that could funnel more than €800 billion ($868 billion) to defense spending across the Union’s 27 member states.
The push coincides with a remarkable breakdown in the transatlantic partnership with the United States. Germany and Europe more broadly have long relied on weapons imports from the U.S. to meet their domestic needs, even though the continent is home to a host of significant arms manufacturers itself.
Redirecting the German auto sector to produce tanks, shells and other military gear is not an entirely new idea. In June 2024, auto parts giant Continental and arms behemoth Rheinmetall signed a memorandum of understanding to facilitate the retraining of auto workers affected by layoffs in the shrinking industry.
“The far-reaching changes in all industries can only be mastered together,” said Continental’s board member for human resources and sustainability, Ariane Reinhart. Rheinmetall, meanwhile, gloated about the defense sector boom in a joint press release and was quick to point out the company expected 40% more profits in 2024 than just a year before.
The agreement outlined various means for Rheinmetall, itself an automotive company, to recruit trained workers, including holding events at automotive plants and offering employment at defense factories near locations that were shutting down or downsizing.
Last month, the defense giant announced it would repurpose two factories in Berlin and Neuss that previously made car parts to produce primarily military goods instead.
Rheinmetall’s operating profit in its weapons segment nearly doubled to €339 million ($368 million) in the first nine months of 2024, while its automotive business declined by 3.8% to €74 million ($80 million) during the same period.
Other defense players are getting involved, too, with sensor specialist Hensoldt reportedly in talks to hire 200 workers from auto parts suppliers Continental and Bosch, according to Reuters.
And German-French joint venture KNDS recently acquired a historic rail car plant in Görlitz from French train maker Alstom. The factory will be retooled to produce components for military vehicles, including the Leopard 2 battle tank and Puma infantry fighting vehicle.
In an email to defense news, Hans Christoph Atzpodien, the head of the German defense industry lobbying group, said he expected “wholly new dimensions to the question of arms demand,” including the need for faster deliveries, not just higher volume.
The government should support the transition by providing means for retraining and covering the costs for relocation of employees, he argued.
One key bottleneck lies in security screenings for would-be weapons builders, the BDSV association said. Such background checks can take many weeks or longer, a process that must be accelerated dramatically, according to the industry group.
Meanwhile, other sectors of the economy are itching for a piece of the pie, Atzpodien said, including the machine building, steel and construction industries.
“In general, I am quite sure that we will soon enter a mode in which a great many economic resources from other sectors will now be harnessed for armaments,” he said.
Linus Höller is a Europe correspondent for Defense News. He covers international security and military developments across the continent. Linus holds a degree in journalism, political science and international studies, and is currently pursuing a master’s in nonproliferation and terrorism studies.
Read the full article here
