Rafael Advanced Defense Systems plans to begin manufacturing Iron Dome parts at the Osnabruck factory that currently belongs to Volkswagen, as confirmed by the carmaker's management this weekend, according to German magazine WirtschafWoche, as reported by Globes.
The project marks an unprecedented collaboration between Israel's defense industry with a core German corporation. Among its benefits, it will save thousands of employees from being laid off imminently. According to the magazine, Volkswagen will not be involved in the deal but will be selling the plant to a consortium which will include the state of Lower Saxony and a Bavarian investment fund.
The factory is being sold as part of Volkswagen's streamlining plan in Germany that was recently approved. The plan also involved closing four factories, laying off up to 50,000 employees as the carmaker moves to focus on its "core assets." The Osnabruck factory will also stop its production of cabriolet versions of Volkswagen's T-ROC model, which it currently produces, during the second half of 2027.
Over the last few months, secret behind-the scenes negotiations have reportedly been taking place, in which Rafael allegedly submitted a written bid to acquire the facility to produce defense components, such as trucks, generators, and launchers. Components for other weapons systems may also be manufactured at the factory.
According to reports, Olef Lies, minister-president of Lower Saxony, was involved in the negotiations and will announce the new partnership on Monday. He is also expected to announce the factory's new activity and that "no jobs will be lost."
With the Local elections are due to be held in Germany in about a week., the announcement holds significant political interest for the current government. The collaboration also bypasses the opposition of Volkswagen's third-largest shareholder, the Qatar Investment Authority, which holds 10% of the company's shares and 17% of the voting rights.
The report also said the emerging structure of the deal was drawn up following opposition from Qatar's sovereign wealth fund. The fund, which holds 10% of Volkswagen's shares and 17% of the voting rights, threatened to block the move. It was therefore decided that Lower Saxony would purchase the Osnabruck factory from the company, together with the Israeli government-owned company and Aurelius Capital, a Munich-based investment fund.
The Osnabruck plant is Volkswagen's smallest factory in Germany and currently has 2,300 employees. The factory was not mentioned at all as part of the company's future, in Volkswagen's business plan approved at the weekend, according to the German magazine.
According to the report, the main unresolved issue is whether employees will retain their jobs and what safeguards they will receive. Volkswagen reportedly plans to sign a memorandum of understanding with the Munich-based investment fund guaranteeing workers' rights. The local trade union has yet to explicitly endorse the shift to defense production but has previously supported "finding a sensible solution."
