As Germany’s automotive and civil industries face mounting challenges—ranging from the electrification shift to global competition and declining demand—an increasing number of regions and companies are setting their sights on the booming defense sector. This article explores the concrete cases, regional strategies, and key voices driving this transformative shift.
Regions Leading the Defense Pivot
Northern Germany: Growth Through Armaments
- Lower Saxony, Mecklenburg-Vorpommern, and Schleswig-Holstein have seen economic growth in part due to the expansion of their defense industries, especially naval shipyards and armaments facilities. This stands in stark contrast to the decline in states traditionally reliant on automotive manufacturing, such as Baden-Württemberg and Bavaria.
- Lower Saxony’s State Premier Stephan Weil (SPD) stated: “You have to make sure you can do what is possible for your economic structure,” highlighting the state’s commitment to fostering defense industry growth.
Baden-Württemberg and Saarland: Industrial Hubs in Transition
- Baden-Württemberg is actively trying to become a technology leader in defense, with State Premier Winfried Kretschmann (Green Party) advocating for rapid expansion of the sector and referencing the success of Diehl Defence, which increased turnover by 50% in 2024.
- Saarland is preparing an “armament summit” and engaging with leading arms manufacturers to attract new factories and investment. Economy Minister Jürgen Barke (SPD) and State Premier Anke Rehlinger (SPD) are spearheading these initiatives.
Companies Making the Shift
Automotive Giants Enter Defense
| Company | Previous Sector | Defense Pivot | Key Statements/Actions |
|---|---|---|---|
| Rheinmetall | Automotive/Defense | Repurposing Berlin & Neuss plants for military gear | CEO Armin Papperger: “In Europe, we currently have ten factories whose size we are doubling or building entirely new ones.” |
| Continental | Automotive Supplier | Retraining workers for defense jobs | Board member Ariane Reinhart: “The far-reaching changes in all industries can only be mastered together.” |
| Volkswagen (VW) | Automotive | Osnabrück plant eyed for combat vehicle production | Discussions ongoing with Rheinmetall for plant conversion |
| KNDS | Rail/Automotive | Bought Görlitz rail factory for tank components | Will produce parts for Leopard 2A8 tanks; move praised as a model for industrial repurposing |
| Hensoldt | Electronics | Hiring ex-Continental/Bosch workers for defense | CEO Oliver Doerre: “We are benefiting from the difficulties in the automotive industry.” |
| Deutz | Engine Manufacturing | Producing tank engines | Saw share price jump after defense announcement |
| Lufthansa Technik | Civil Aviation | Military aircraft services division | CEO Michael von Puttkamer: “The €100bn earmarked for military restructuring is an opportunity to step further into the sector.” |
Industry Voices on the Defense Opportunity
- Benedikt Douglas, Partner at Deininger (defense and automotive expert): “For the first time in a long time, we are seeing not only a willingness to invest in defense, but also a real tailwind from society. Companies—from large system houses to specialized SMEs—are feeling this directly: the number of applicants is rising, especially among qualified specialists.” Douglas also cautions that the sustainability of this upturn depends on long-term planning and political stability.
- Susanne Wiegand, CEO of Renk (tank parts manufacturer): “This is a great way to develop technology. Innovations come from the military world and find their way into civil applications and vice versa.”
- Cathryn Clüver Ashbrook, political scientist: “Germany is on the verge of a historic change. They are rethinking how to use [civilian] production capacity, technology and procedures to be more efficient in the military world.”
Challenges and Outlook
While the transition offers new growth avenues, there are also hurdles. Firstly, there are questions about whether Germany’s existing infrastructure and workforce can meet the ambitious targets for defense production. The industrial backbone has seen serious losses during the 80s, 90s when a vast shift was done from industry production in Germany towards China. Secondly, there is a problem in regulatory and social Acceptance: Many companies remain cautious, citing complex regulations and lingering societal reluctance to fully embrace the defense sector. There are still reservations within society against defense activities. That may be come into force especially in the long run – when the habitual effects of the Russian threats shift the people’s focus on other every-day problems like social insurance issues. Last, but not least: The defense boom is closely tied to political decisions and geopolitical tensions, making long-term stability uncertain. When current wars and conflicts are “solved”, meaning frozen, the need for long-term preparedness is certainly not that present anymore.
The way ahead
Germany’s industrial landscape is undergoing a profound transformation. As the automotive sector contracts, regions and companies are seizing the defense opportunity—repurposing factories, retraining workers, and forging new partnerships. With billions in new defense spending and a clear political mandate, the pivot from cars to cannons may well define the next era of German industry. Yet, the ultimate success of this shift will depend on sustained investment, regulatory adaptation, and societal support.
