Key facts
- European automakers are shifting production to defense manufacturing due to declining EV demand.
- Volkswagen is in talks to convert a factory into a defense manufacturing hub.
- The European defense sector needs an additional 160,000 skilled workers by 2030.
- NATO members in Europe are projected to invest approximately €72 billion ($78 billion) annually in military capabilities.
- Defense manufacturers are actively recruiting from the automotive sector due to layoffs.
European automakers are increasingly turning to defense production as demand for electric vehicles falters and geopolitical tensions necessitate increased military spending. Volkswagen is reportedly in discussions with Israeli defense firm Rafael to convert one of its factories in Osnabrück, Germany, into a facility for producing components for the Iron Dome missile defense system. This move signals a significant shift for an industry grappling with slowing EV sales and competition from Chinese rivals.
Major automotive companies are experiencing job cuts, while defense manufacturers are reporting a surge in demand for skilled workers. Germany's defense sector currently employs around 60,000 people, with an additional 90,000 in its supply chain. A study estimates that NATO members in Europe will invest approximately €72 billion ($78 billion) annually in defense, potentially creating or maintaining about 680,000 jobs across the continent. By 2030, the European defense sector could require up to 160,000 additional skilled workers if defense spending aligns with NATO's 2% of GDP guideline.
Defense manufacturers like Hensoldt are actively seeking to hire employees facing redundancy from the automotive sector. KNDS, a defense manufacturer, plans to acquire a former Alstom train manufacturing facility in eastern Germany, aiming to retain about half of its 700-person workforce to produce components for Leopard 2 tanks starting in 2025. However, the transition is not seamless, with recruitment experts noting that while some assembly line roles are transferable, others like sales and procurement may be more complex. Lengthy security clearance processes can also impede swift transitions into defense employment.