Israeli government owned Rafael Advanced Defense Systems is in advanced negotiations to convert a huge Volkswagen car plant in Germany into a factory for manufacturing components for the Iron Dome air defense system, UK newspaper "The Financial Times" (FT) reports. Iron Dome has already been sold to a range of European countries including Finland and Greece and other countries are in talks to buy the defense system including Germany. Rafael has German subsidiaries engaged in defense production for Germany and other European countries.

Volkswagen has encountered severe financial difficulties with profits cut by tens of percentages in recent years and for the first time in its history the company is considering shutting down factories in Germany. According to the FT one of the factories scheduled to be closed down, which is in Osnabrueck, will be converted, if an agreement is signed with Rafael, to a factory for manufacturing components for the Iron Dome air defense system. Among the main shareholders in the Volkswagen Group is the state of Lower Saxony, as well as the Qatari investment fund (10%). The state hopes that the deal will "save" the 2,300 workers employed at the plant.

"The goal is to save everyone, maybe even grow," one of those involved in the move told the UK newspaper, "The potential is high. But it is also an individual decision of the workers if they want to be part of the idea." Workers at Volkswagen are part of the management and have a large say in business and strategic decisions. The field of arms production has so far been morally frowned upon in Germany, so it will be interesting to see whether workers will prefer to keep their jobs with the help of defense production, or risk unemployment.

One of Israel's major supporters

Under the plan, the plant will produce the trucks on which the Iron Dome batteries are mounted, as well as the generators needed for the system to function and the launchers, but not the interceptor missiles. Rafael's plans are to create a separate factory to manufacture the Tamir interceptor missiles that are part of the system. The first production could begin within a year to 18 months, according to the FT.

In recent months, it has been reported that Elbit will use the factories of a number of German companies to produce the EuroPuls rocket system, which has been sold to many armies in Europe. Elbit is a partner with Diehl and KNDS in the EuroPuls project, and according to reports, Bayern Chemie and MBDA will also be part of the production. On the German side, it has been reported that there is a plan to sign a huge deal of up to €6 billion to procure hundreds of such systems for the German army and other European armies. According to the FT, Israeli companies are "choosing" Germany as a production site due to the special relations between the countries and the fact that Berlin is one of Israel's most major supporters in Europe.

Volkswagen was founded in 1937 in Nazi Germany. Its factories used forced labor and it produced military vehicles and trucks for the German army during World War II, as well as the V1 rocket and fighter jets.

Published by Globes, Israel business news - en.globes.co.il - on March 25, 2026.

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