Germany’s top defense contractors are considering the automotive sector that is fighting for survival before they even start producing military weapons that will be used over the continent. This twist of scenery might totally turn around Germany’s economy, which after two years of contraction is struggling to stand up again.
This change is happening alongside the support that Europe builds up for its own defense because of the nightmare that one day the US may not back Ukraine sufficiently. German defense companies are now engaged in a serious search for new capacity which, in some cases, includes the dismantling of car production lines to set up military equipment factories.
Rheinmetall, a dominant player in the European weapons market, declared that the company is about to re-task two of its automotive spare parts plants in order to turn them into places where defense equipment is primarily made.
This decision, on the one hand, shows the structural change undergone in the industrial sector of Germany, where traditional players such as the automotive industry encounter difficulties in adapting to new market demands.
Furthermore, Hensoldt, which is the producer of the TRML-4D radar systems the Ukrainian army has in its conflict with Russia, is already negotiating directly with Bosch and Continental, two giant automakers, to rent 200 workers from them. Hiring displaced employees from the automotive sector with that of the defense unit will fight job losses and boost defense in Germany.
This reorientation is happening in a highly important period for Germany’s economy. It is that, the automobile branch that even in the past directly dispensed industry to run fully on its own feet to the aircraft industry and so on after converting to electric powered vehicles is trying to meet lower demand and this seems a rather desirable situation for the military industry to fill in.
It was only a short period of time before bamboozled leaders the world over carried out this obviousness when the U.S. president lost words with the Ukrainian topic. This evidentness caused debates over whether they would be ready to invest up to 800 billion euros in military improvement, including such a plan as borrowing 150 billion euros collectively.
The implied signs of the economic benefits are cashable. The more that defense companies expand and consequently, they hire more workers, the less the percentage of unemployment will be and the higher the economic growth will be. Moreover, the research, development, and manufacturing of cutting-edge military technology might cause a spill-over effect and result in attracting more money to related areas.
On the other hand, this switch is stemming not only with challenges but also with benefits. The conversion of the traditional automobile industry to the military one then from kinetic war to cyber war & so on will require huge investments and also the re-skilling of the workers.
Nevertheless, crowds of people are optimistic about the potential advantages of the enterprise. The CEO of Hensoldt, Oliver Doerre, asserted in an interview, “The difficult situation in the automobile sector is to our advantage.” He also informed that even with an additional investment of around 100 mln Euro, they could possibly double the annual output of their TRML-4D radars.
The way the German government plays its role in conducting this change will appear as the most important factor in this process. A short overview of the German economic landscape shows that the defense sector creates new jobs while existing companies and start-ups are leading the way in the mobility sector transformation.
Amid such a radical shift in industry, Germany may be able to lead the way for other European countries that are in the same predicament. The completion of this change might be able to show that a country can change its liable bases to be able to support the global security means and then deal as well with the economical inactivity.
The next several months and years will be very important to deciding the long-distance influence that this industrial mulching would have on Germany’s economy.
As the defense companies would be more than doubling up on their contracts and creating as many as new places and redirecting skilled workers from other sectors, a primary task will be to monitor the impact of the shift on the overall economic indicators, the unemployment rate, and on the German position in the global defense market.
While the change can provide both opportunities and threats, it is a pivotal moment for Germany’s economic history. With the help of this transition, the country can even resurrect its economy and have a stronger position in the Europe defense field, which is a very uncertain global area.
According to the developing situation, the world’s attention will be focused on Germany for the development of this industrial rotation and the possible insights that can be gained by other countries dealing with similar economic and security challenges in a world that is changing at a fast pace.
