Future of the VW Osnabrück plant: Is the Iron Dome missile deal at risk of collapse?

Vehicle production at VW in Osnabrück is scheduled to end in 2027, meaning around 2,300 jobs depend on a follow-up solution.

Israeli defence company Rafael Advanced Defense Systems is reportedly considering setting up production of Tamir interceptor missiles for its Iron Dome air defence system in India, the Bild daily said citing company sources.

The move could mean that Volkswagen’s plant in Osnabrück may no longer be in the running as a production site for Iron Dome components.

In the spring, Volkswagen confirmed that it was in talks with defence industry companies about the future of the plant in Osnabrück.

According to Reuters, Rafael signed a memorandum of understanding for the site in April. The plan was to manufacture components for the Israeli missile defence system there.

Vehicle production at VW in Osnabrück is scheduled to end in 2027, meaning around 2,300 jobs depend on a follow-up solution.

Qatar said to be complicating talks

According to Bild, the project has met with resistance from within the VW group. The report says the Qatar Investment Authority (QIA), one of Volkswagen’s largest shareholders, has reservations about working with the Israeli state-owned company.

Reuters also reported in June, citing several people familiar with the talks, that the Qatari sovereign wealth fund was making the negotiations more difficult.

QIA holds around 17% of Volkswagen’s voting rights and has two seats on the supervisory board.

India gaining in importance

According to information obtained by Bild, Rafael could therefore push ahead with setting up production in India. The decision has not yet been officially confirmed.

India is a key growth market for international defence companies. With its “Make in India” strategy, the country aims to locate a larger share of defence production on its own soil.

From Israel’s perspective too, India has for years been regarded as one of its most important defence partners. In addition, Rafael already operates a production line for Tamir interceptor missiles in the US state of Arkansas together with American company Raytheon.

Volkswagen is still looking for a long-term perspective for the Osnabrück plant. Most recently, business magazine Capital reported that the state of Lower Saxony is even considering taking a stake in the site to support the transition to possible arms production. A decision on the plant’s future has yet to be taken.

Yenibakis-Vehicle production