Volkswagen nears deal with Rafael to produce Iron Dome equipment at Osnabrück plant

Volkswagen, the German state of Lower Saxony, and Israeli defense company Rafael are reportedly nearing an agreement to produce military support equipment at the automaker's Osnabrück plant.

According to sources speaking to Bloomberg, discussions between the parties are ongoing and the deal has not yet been finalized. However, it is stated that if the negotiations continue to progress positively, a conclusion could be reached in the coming weeks.

The plan under discussion is said to cover the production of support equipment for Rafael's Iron Dome air defense system. In this context, the production of items such as heavy-duty trucks used to transport missiles, launchers, and generators is on the agenda.

The project had previously been a subject of debate due to objections from the Qatar Investment Authority, one of Volkswagen's major partners. The fund owns more than 10 percent of Volkswagen shares and controls approximately 17 percent of the voting rights. According to sources, although the Qatar Investment Authority has two seats on the board of directors, it does not have the minority right to block the project on its own.

A NEW SCENARIO FOR OSNABRÜCK

One of the options on the table is for parts of the Osnabrück facility to be transferred to the state of Lower Saxony, with the state then forming a joint venture with Rafael. It is reported that this formula aims to reduce the concerns of the Qatari side by limiting the appearance of Volkswagen directly collaborating with the Israeli state-owned defense company.

A spokesperson for Lower Saxony State Premier Olaf Lies stated that the state is evaluating how it could be involved in a possible future industrial solution for the Osnabrück facility.

A potential deal could help resolve one of the most sensitive items on Volkswagen's restructuring agenda ahead of the supervisory board meeting on September 4. The company is seeking cost savings due to high labor costs, factories not operating at full capacity, and competitive pressure from China.

CEO Oliver Blume is targeting billions of euros in savings, while powerful labor representatives oppose factory closures. The debate is even more critical for the Osnabrück plant; production of the T-Roc Cabriolet, the last Volkswagen model produced at the facility, is expected to end next year.

A deal with Rafael could also set a precedent for other Volkswagen facilities experiencing idle capacity issues. Blume had previously said that in cases where replacement vehicle production is not possible, partners, investors, and new industrial use cases would be sought.

The project, which comes at a time of increasing global demand for air defense systems, is also seen as linked to the Iron Dome's short-range missile defense capability. Germany does not currently use the Iron Dome; the country's air defense architecture includes the Israeli-made Arrow 3 and US-made Patriot for high altitude, and the IRIS-T and Skyranger systems for low altitude.

News Source: 12punto