Rafael signs deal to turn Volkswagen plant into defense hub
Rafael, Lower Saxony and investment fund Aurelius signed a declaration of intent to transform Volkswagen’s Osnabrück site into a center for security and defense technologies. The first phase will focus on developing and producing air-defense components, potentially including systems linked to Rafael’s Iron Dome, with detailed negotiations and regulatory approvals still to come.
Rafael Advanced Defense Systems, the German state of Lower Saxony and Aurelius Capital have signed a joint declaration of intent to develop Volkswagen’s Osnabrück plant into a center for security and defense technologies, potentially paving the way for Rafael to establish production of air-defense components in Germany.
The declaration, signed Monday, sets out the parties’ intention to establish a strategic partnership to transform the Volkswagen site into a center of excellence for innovation in security and defense. Lower Saxony will participate as a shareholder and support the conversion process, with the stated aim of preserving industrial value and creating long-term employment in the region.
In the first phase, the partnership will focus on the possibility of developing and producing components for air-defense systems, using technologies that Rafael says have already demonstrated their effectiveness internationally. The company has previously considered the Osnabrück site for production linked to its Iron Dome air-defense system, including launchers, heavy-duty military vehicles, power generators and other equipment. The Tamir interceptor missiles themselves were not expected to be manufactured at the German site.
“The technology will be fully manufactured in Germany and will contribute to strengthening the security of Germany in particular and Europe in general,” Rafael CEO Yoav Turgeman said at the signing.
The announcement comes after months of uncertainty over the future of the Osnabrück plant and Rafael’s plans to establish production there. Volkswagen had been exploring a potential partnership with Rafael, but the project became complicated by opposition from Qatar Investment Authority, Volkswagen’s major shareholder, which owns 10.4% of the company’s shares and controls 17% of its voting rights.
The latest structure would give Lower Saxony and Aurelius a role in the future of the site while Rafael would provide defense technology and industrial expertise. Aurelius Capital would contribute investment capabilities and access to an international network of investors.
Aurelius founding partner Tomer Jacob described the agreement as an effort to transform the automotive facility into a defense production center, saying it was made possible by Rafael’s technology, the support of the Lower Saxony government and cooperation with Volkswagen.
The Osnabrück factory employs around 2,300 people and has been under pressure as Volkswagen restructures its German manufacturing footprint. The company has been seeking alternative uses for several facilities as it responds to weak demand, high costs and increasing competition from China.
Lower Saxony Prime Minister Olaf Lies said the declaration gives the Osnabrück site an opportunity for a future in a strategically important industry. He said Germany and Europe need to strengthen their security and defense capabilities and reduce their dependence on external suppliers, adding that the site’s existing workforce and industrial infrastructure provide a foundation for the transformation.
The declaration does not yet constitute a final transaction or production agreement. The parties said the next stage will involve detailed negotiations, examination of regulatory requirements and completion of their respective internal approval procedures. The state of Lower Saxony will accompany and support the process.
The announcement also leaves open the possibility of a broader defense cluster at Osnabrück rather than a facility dedicated solely to Rafael. The stated goal is to establish a center focused on security and defense technologies, potentially bringing together Rafael and other companies at the site.
Rafael has been considering Germany as a manufacturing base as part of its growing presence in the country. The company has operated in Germany for more than two decades through subsidiaries including Dynamit Nobel Defence, EuroSpike and EuroTrophy, which have established industrial and commercial infrastructure in the German market.
