Volkswagen plans to transform its Osnabrück factory into a defense industry

In the statement made by Volkswagen, it was stated that the company, which is experiencing one of the deepest crises in its history due to layoffs and factory closure plans after the competition from Asia, has signed a letter of intent between the parties as a result of the negotiations it has been carrying out with the stakeholders for months.

Within the scope of the agreement, Aurelius Capital will be the majority shareholder of the facility, while the state of Lower Saxony will also have a share in the facility.

The agreement, the financial details of which have not yet been disclosed, is awaiting the approval of the relevant boards and competition authorities to complete the process.

The first project will be done with Israeli Rafael

In the statement made by Volkswagen, it was confirmed that the first "anchor project" at the facility will be a collaboration with the Israeli defense company Rafael Advanced Defense Systems.

The company statement included the following statements:

"These plans include the potential production of systems and components for air defense systems for Germany and Europe. During the cooperation process, Rafael will transfer his technological expertise and deep-rooted experience in the field of modern air defense systems, while the workforce at the Osnabrück factory will play a central role in establishing manufacturing operations and industrializing production. This partnership is aimed to pave the way for other collaborations and projects to be implemented in the future under the roof of the newly established company."

It is stated that with the transfer formula in question, the political crisis that occurred due to Volkswagen's major partner Qatar, which owns 17 percent of its shares, opposed a direct partnership with Israeli Rafael Advanced Defense Systems was also overcome.

This transformation, supported by the German federal government and the state of Lower Saxony, which has a 20 percent share in the company, faced protests from local people and anti-war groups, as well as Qatar's veto.

Thanks to the transfer of the factory, Volkswagen will be able to produce defense technology at the facility without being directly involved.

Employment will be protected until 2029

Within the scope of the agreement, it is aimed to protect 1400 of the current approximately 1800 personnel working in the factory.

While 1200 positions are expected to remain in the new structure after natural separations and early retirement processes, these employees will be offered employment guarantee until the end of 2029. The search for a solution continues for the remaining staff in the technical development department.

In his statement on the subject, Lower Saxony Prime Minister Olaf Lies justified the state's participation in this investment with the changing security architecture and said, "Germany and Europe should increase their competencies and become more independent. As Lower Saxony, we want this process to create added value and safe employment." made his assessment.

Volkswagen Chief Executive Officer (CEO) Oliver Blume also said, "Volkswagen stands by its responsibility towards the Osnabrück plant. With the agreement signed today, we are taking an important step to open the doors of a new industrial successor for the plant. Osnabrück employees have proven time and again how great the expertise, flexibility and determination this plant has. The plant will build on these strengths in the future." he said.

Automobile production ends, military projects begin

Meanwhile, the agreement in question will also bring an end to the automotive production tradition that has been going on for more than 125 years in the city of Osnabrück. Vehicle production at the factory, which joined Volkswagen in 2010, will be gradually reduced and automobile production will be stopped completely with the last T-Roc Cabriolet model coming off the line in the summer of 2027.

After this date, Volkswagen will cease ownership of the facility but will continue to provide infrastructure and expertise support.

It is also stated that Volkswagen will continue to cover some of the personnel costs during the transition period until 2029.

The transition plan to the defense industry is seen as an "ethics test"

Volkswagen's transition plan to the defense industry is considered a critical part of its strategy to compensate for losses in the passenger vehicle division and preserve employment at a time when Europe is in the process of rearmament.

On the other hand, the fact that Volkswagen produced military vehicles for the Nazi regime during the Second World War and used forced labor makes it historically controversial for the factory to switch back to military production. Due to Israel's attacks in Gaza, any cooperation with this country through the facility in question is seen as both a political and legal "ethics test" in Germany.