Volkswagen Group, which has launched a sweeping restructuring, will sell one of its German plants to be converted into a military production facility.
Volkswagen said on the 7th that Israeli investment firm Aurelius Capital and the government of Lower Saxony, the group's second-largest shareholder, had agreed to acquire the Osnabrueck plant and use it as a specialized center for security and defense, according to the business daily Handelsblatt and other outlets.
Aurelius is planning its first project at the plant with Rafael Advanced Defense Systems, the Israeli state-owned company that produces the Iron Dome air defense system, local media reported.
Rumors that Volkswagen would hand the Osnabrueck plant to a defense contractor had circulated earlier. Volkswagen approached Rafael about an acquisition, but the Qatar Investment Authority, the group's third-largest shareholder, objected. The joint acquisition by an Israeli investment firm and a German state government is seen as a way to work around Qatar's opposition.
The union agreed to the sale on the condition that about 1,400 of the plant's 1,800 jobs be preserved through 2029 and that efforts be made to guarantee employment for the remaining workers.
Volkswagen assembles the T-Roc Cabriolet at Osnabrueck but agreed with the union in 2024 to end vehicle production there next year. The Dresden plant, whose closure was decided at the same time, is being leased by the Dresden University of Technology to build a campus for artificial intelligence and robotics research.
Volkswagen management said on the 3rd that it had unanimously approved a large-scale restructuring plan, called the Future Plan 2030, centered on cutting about 50,000 jobs. The decision came two months after reports in July that the company was considering cutting up to 100,000 jobs and closing four plants in Germany, which drew strong protest from the union. Reuters described the job cuts as the most extensive restructuring in Volkswagen's 89-year history.
The supervisory board said European production capacity exceeds demand by more than 500,000 vehicles and that securing production volumes for 2031 through 2034 would be difficult at four plants: Emden, Zwickau, Hanover and Neckarsulm. The company will discontinue about half of its entire model lineup by 2035 and cut the number of specification and option combinations per vehicle by about 75% over the same period to simplify manufacturing.
Volkswagen's results have been hit by intensifying competition from Chinese rivals, tariff pressure from the United States and weak sales in Europe. Sales fell 8.4% in the first half of this year from a year earlier, while operating profit dropped 11.6%.
