🇩🇪 Germany’s economic motor shifts from Global Car Giant to Europe’s Military Industrial Hub
Germany is experiencing its longest period of stagnation since World War II. The manufacturing sector is reportedly losing around 15,000 jobs per month, while major carmakers such as Volkswagen and Mercedes-Benz have seen profit declines of over 40%.
In response, Berlin has committed more than $500 billion (€460 billion) in defense spending over the next decade, with annual military expenditure projected to reach around $190 billion by 2029.
Several industrial conversions are already underway:
- Rheinmetall is repurposing former auto-parts facilities in Berlin and Neuss for military production.
- Volkswagen is reportedly discussing converting its Osnabrück plant to produce defense-related components, including transport vehicles and missile systems.
- KNDS has acquired a former Alstom rail factory in Görlitz to produce components for Leopard 2 tanks and Puma infantry fighting vehicles.
Defense companies such as Hensoldt are also recruiting engineers and technicians from automotive suppliers like Continental and Bosch.
The German defense industry association has nearly doubled its membership in a year, as civilian suppliers shift toward military contracts. Some firms, such as Schaeffler, are also expanding production into drones.
Analysts estimate that raising defense spending to 3% of GDP could generate tens of billions in annual output and create up to 245,000 jobs.
📰: WSJ