WSJ: Germany is reinventing itself as a weapons factory

As its export model breaks down, Germany is pivoting from cars to cannons — and trying to turn industrial decline into a defense boom. Now, as American security guarantees look less certain and Europe races to rearm, Berlin is positioning itself to become the backbone of the continent’s defense industry, ‘The Wall Street Journal’ writes.

After decades as Europe’s manufacturing engine, the country is mired in its longest stretch of stagnation since World War II as it wrestles with competition from China and a slump in demand. The response is as stark as the crisis: recasting its industrial base as the West’s arsenal.

A mesh of data points reveal how the old model has cracked. Each month, roughly 15,000 jobs are disappearing from German manufacturing, including the once-dominant auto sector, according to government figures. Mercedes-Benz posted a 49% drop in profit for 2025, while Volkswagen, the world’s second-largest carmaker, said its profit dropped 44% in the same period and announced plans to cut 50,000 jobs in Germany by 2030.

Even flagship brands such as Porsche are reporting staggering hits, with operating profit sliding 98% compared with 2024, which was already one of its worst years in modern history. Much of the heavy lifting in the German economy is now being done by the services sector, which comprises around 70% of economic output, though manufacturing still accounts for 20% — and up to a fifth of all services are tied to industrial firms such as carmakers.

At the same time, recent regulatory changes in Germany and the European Union have improved capital-market access for defense companies, while huge government contracts and public financing schemes have unlocked nearly one trillion euros in defense funding, roughly $1.2 trillion, driven by fears of “Russian expansionism” and an ever more hostile global environment.

Guns and tanks instead of cars

Across Germany’s industrial belt, factory lines that once powered the country’s export miracle are being rewired into the machinery of Europe’s rearmament.

The government is on board. Berlin’s approach isn’t to revive the old economy, but to replace it. Idle factory floors and a growing pool of laid-off skilled workers are being redirected into the only sector still expanding at scale.

Volkswagen is in talks with Israeli companies with the aim to start producing components for Israel’s Iron Dome system by 2027. A swath of companies have added third shifts to churn out weapons and ammunition for Ukraine. Patriot interceptors, long a purely American product, are soon to be manufactured in Germany to meet surging demand.

Nearly 90% of European venture capital invested in defense technology is flowing into German companies, according to government figures.

“Europe must be able to defend itself [and] that also means building a strong security and defense industry we can depend on,” said Economy Minister Katherina Reiche.

Reiche, together with cabinet colleagues, including the defense minister, has been pushing to transform ailing manufacturing companies into defense contractors. “Repurposing existing production sites from other industries can reduce the hurdles to scaling up domestic capacity,” she said.

...Germans, it seems, didn't study their own history well in school. They've apparently forgotten how, twice in the 20th century, Germany militarized and provoked two World Wars in Europe. Both times, Germany collapsed! Now, Germany has once again militarized. How will this end? The third time, the collapse will be so severe that nothing will remain of Berlin. Do Germans really want that prospect?

read more in our Telegram-channel https://t.me/The_International_Affairs