Rafael, Lower Saxony and Aurelius to develop Volkswagen site in Germany

JERUSALEM — Israel's Rafael today announced it has entered into a partnership with the German state of Lower Saxony and investment fund Aurelius Capital, which is 'aimed at developing the Volkswagen site in Osnabrück into a center of excellence for innovative security and defense solutions.' The deal cements expectations that had been circulating since May that envisioned Rafael playing a role at a Volkswagen plant in Germany, with the site potentially tapped to build parts for the Iron Dome system. However, that deal has appeared rocky at times, with reports saying a direct Rafael-VW team up may not be possible. The solution appears to be a workaround, Instead of VW teaming with or selling to Rafael, the car manufacturer has agreed to sell the Volkswagen Osnabrück GmbH site to a new partnership formed by Aurelius and Lower Saxony, with Aurelius as the majority partner. The pair will create what a statement posted on Volkswagen's site called 'a center of excellence for security and defense solutions. The goal is to secure the location and the majority of its jobs in the long term.' In turn, the two new partners signed an agreement today with Rafael that will see the Israeli company use the location as a hub to produce its systems. A series of statements from different stakeholders indicate the government hopes to develop into a broader national security production areas. The Osnabrück site has been in an iffy place for several years, with VW having said it planned to end production there in 2027. That has led local government and industry officials to try and find alternative uses for the site, in order to keep locals employed. In a statement from the state of Lower Saxony detailing the deal, Olaf Lies, Minister-President of Lower Saxony, said that 'through this Statement of Intent, we are opening up a genuine future perspective for Volkswagen's Osnabrück site… The Statement of Intent forms part of a broader strategic realignment of the Osnabrück site, which is also supported by Volkswagen AG.' The Minister-President of Lower Saxony noted that the vision is for Osnabrück to have the industrial foundations to position itself for the future. 'This partnership creates realistic opportunities for long-term, highly skilled employment at a location that has stood for industrial excellence for 125 years' Lies added, in the statement circulated by the local government. NDR, the north German public broadcaster, added some details from locals, including union leaders praising the deal as saving the workforce. Rafael, one of Israel's three defense giants, is known for developing several key Israeli defense systems. It developed the Iron Dome and David's Sling air defense system, as well as the Trophy active protection system for tanks. 'We are building a long-term industrial relationship with our German partners with the idea that the technology will be fully produced in Germany, to protect Germany and Europe' Yoav Tourgeman, Rafael's CEO and president, said in a statement. Speaking to Breaking Defense in July, Tourgeman said Rafael was looking at car manufacturing facilities as potential sites for collaboration in Europe. The deal comes as Germany and other European countries seek to increase their defense industrial base in the wake of several years of war in Ukraine. This has included numerous large defense deals with Israel. Germany is acquiring the Arrow Air Defense system for more than $6 billion. In late August, Greece signed a $3.4 billion deal with Israel for air defense systems. It's not clear which Rafael systems would be built in Osnabrück. But there is plenty of options even for just building local systems: Rafael has already seen decades of success in Germany, with the establishment of a partnership for its EuroTrophy Gmbh facility, as well as sales of its EuroSpike system. The statement of intent that was signed formalizes the move by Rafael to work at the Osnabrück. 'The next phase will include detailed negotiations, assessments of regulatory requirements, and the necessary internal decision-making processes by all parties involved. The State of Lower Saxony will actively accompany and support this process,' the statement noted.