Germany is Becoming the "European Arms Factory"
According to a report by Reference News Network on April 23, the German magazine Focus reported on April 20 that Germany is in trouble: the economy is stagnating, factories are reducing production, and market sentiment is low. Meanwhile, the war in Europe is raging, and fear of Russia is growing day by day, making the military-industrial sector suddenly a major theme for the future.
Mercedes-Benz reported a 49% drop in profits for 2025. According to The Wall Street Journal, Volkswagen's profits also decreased by 44%. At the same time, funding flowing into the defense sector has reached unprecedented levels, with new defense projects in Germany and the EU expected to mobilize nearly 1 trillion euros.
The German industry is losing about 15,000 jobs each month. By 2030, Volkswagen alone plans to cut 50,000 jobs in Germany. Meanwhile, new job opportunities are emerging, but they are concentrated in an industry that has long been avoided: the military industry.
Schaeffler Group, an automotive parts supplier, is an example of this transformation. The group is currently producing drone engines, armored vehicle systems, and military aircraft components. CEO Klaus Rosenfeld hopes that in the future, 10% of the group's revenue will come from defense business.
The historic engine manufacturer Deutz, based in Cologne, is also increasingly relying on military business, currently providing engines for Saudi Arabia's Patriot air defense system, unmanned systems, and armored vehicles. The company achieved a 15% growth last year and did not have large-scale layoffs.
This trend is particularly evident at Rheinmetall. According to the group's plans, two factories located in Berlin and Neuss, which originally produced automotive parts, will primarily produce defense technology products in the future. These two factories will be integrated into the weapons and ammunition business unit but will still operate as "mixed factories" to take on some automotive parts orders.
According to Reuters, the Franco-German joint venture KNDS defense systems company is taking over a factory in eastern Germany from train manufacturer Alstom to produce Leopard 2 main battle tanks and Puma infantry fighting vehicles there in the future.
The German government intends to promote this development. According to The Wall Street Journal, Minister of Economic Affairs and Energy Katrin Göring-Eckardt stated, "Europe must have the capability for self-defense, which also means establishing a strong and reliable security and defense industry." (Translated by Jiao Yu)
Germany is shifting its industrial focus towards military production amid economic stagnation and rising defense needs in Europe. The defense sector is expected to create approximately 10,000 jobs, with companies like Schaeffler and Deutz AG increasing their military contracts. The German government supports this transition, emphasizing the need for a strong defense industry to ensure European self-defense capabilities.
- Germany's defense industry is expected to mobilize nearly 1 trillion euros for new defense projects.
- Mercedes-Benz reported a 49% profit drop, while Volkswagen's profits decreased by 44%.
- Schaeffler Group is producing drone engines and military vehicle components as part of the industrial shift.
- Deutz AG is increasingly relying on military contracts, providing engines for defense systems.
- KNDS is taking over a factory to produce Leopard-2 tanks and Puma vehicles.