Rafael Advanced Defense Systems will begin manufacturing Iron Dome components next year at the plant currently belonging to Volkswagen in Osnabruck, the carmaker’s management confirmed at the weekend, German magazine "WirtschafWoche" reports.
This is a precedent-setting step in which Israel’s defense industry will collaborate with a core German corporation, and among other things help save thousands of employees from imminent layoffs. Volkswagen itself will not be involved in the deal and will sell the factory to a consortium that will also include the state of Lower Saxony and a Bavarian investment fund, according to the magazine report.
The sale of the factory is part of Volkswagen’s streamlining plan in Germany that was approved at the end of the week, which also includes laying off up to 50,000 employees, closing four factories and focusing on the carmaker’s "core assets." The Osnabruck plant currently produces cabriolet versions of the company’s T-ROC model, but will end this activity in the second half of 2027. In recent months, secret negotiations have been taking place behind the scenes, in which Rafael reportedly submitted a written offer to acquire the operation for the purpose of manufacturing components for the Iron Dome system, including trucks, generators, launchers and more.
"No jobs will be lost"
According to reports, minister-president of Lower Saxony Olef Lies, who was involved in the negotiations, will announce on Monday the new partnership, the new activity of the plant and that "no jobs will be lost." Local elections will be held in the state in about a week, and the announcement is a top political interest of the current government. The solution found circumvents the opposition of Volkswagen’s third-largest shareholder, the Qatar Investment Authority.
After it was revealed that Rafael was negotiating with Volkswagen management about producing defense components (the interceptors themselves will not be manufactured there), the Qatari Investment Fund, which holds 10% of the company's shares and 17% of the voting rights, expressed firm opposition to the new activity. The solution found is for the provincial state to purchase the factory from the company, together with a Munich-based investment fund called Aurelius Capital and the Israeli government-owned company.
It is possible that components for other weapons systems will be manufactured there. According to the German magazine, although the federal government's involvement in the deal was initially considered, it will ultimately not be involved. It was previously mentioned that the provincial state will pay €200 million for the plant, but it is not clear what the total amount that all partners will pay will be.
The Osnabruck plant currently has 2,300 employees and Volkswagen’s smallest factory in Germany. In Volkswagen’s business plan approved at the weekend, it was not mentioned at all as part of the company's future, according to the magazine.
According to the report, the only question is about the continuity of employment of the workers, and what protection will be provided for them. The magazine reports that Volkswagen intends to pursue a memorandum of understanding with the Munich investment fund that will guarantee the rights of the workers. The trade union there has not yet expressed unequivocal support for the transition to the production of defense components but has previously expressed support for "finding a sensible solution."
No response has been forthcoming from Rafael.
Published by Globes, Israel business news - en.globes.co.il - on September 6, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.