Various Rescue Models

One option would keep Volkswagen involved through an ownership or employment company, with Rafael and possibly Lower Saxony forming a separate production company to handle the defense components, thereby sidestepping the issue of an indirect Qatari stake in an Israeli arms company. A more radical alternative would have Lower Saxony take over the plant from VW altogether, taking the decision out of the VW Group's hands and, with it, out of reach of the Qatar Investment Authority's influence. That path would carry real risk for the state, however, which would then be on the hook not just for funding the conversion but potentially for buildings, capacity utilization, employees and future social plans as well.

Olaf Lies, Lower Saxony's Minister-President and a member of VW's supervisory board, is broadly supportive of the defense industry repurposing the site, but insists that Volkswagen cannot simply walk away and leave the state or a new owner to deal with the fallout. VW, in his view, should stay involved in whatever solution emerges. Asked about this, the State Chancellery would confirm only "constructive talks with various partners", declining to say anything further about the scale of any involvement or possible state funding.

Red-Green Backs Weapons Production

Yet according to the business magazine Capital, the red-green [SPD-Green] state government is fundamentally willing to back the shift from car-making to arms production with a stake of its own, a structure reportedly being weighed as a possible template for other VW sites under threat. Lower Saxony already holds 20% of Volkswagen's voting rights, which leaves the state in an unusual position: it could end up acting simultaneously as a major VW shareholder, a possible new plant owner, a financial backer and the party politically answerable for the outcome.

You might be interested From Carmaking to Arms Production

With that, the battle to preserve jobs at the Osnabrück site is wide open once again. The plant was reportedly meant to build certain components of the Iron Dome system going forward, among them mobile launch systems, heavy carrier vehicles, generators and power supply units, along with other mechanical and vehicle-related parts. Rafael's main goal was to create additional capacity for European customers, and it is this part of the plan, above all, that gives the Lower Saxony site its strongest card to play.