Europe's auto industry shifts focus to defense production

Martin Büchs runs a family business in Bavaria that supplies parts to carmakers. Recently, he has been shifting his company, Jopp, to focus on the growing defense industry. This change comes as Europe’s auto sector faces challenges, especially with the rise of electric vehicles, which need fewer parts. Büchs had to cut 20% of his workforce over the past five years due to these changes in the automotive market. Many manufacturers are exploring opportunities in defense as European governments increase military spending. Germany recently relaxed its debt rules to allow more defense investment. Other countries, such as Sweden and the Czech Republic, are also boosting their military budgets. The European Union plans to use €800 billion to strengthen security, and NATO encourages countries to increase defense spending. Transitioning from auto manufacturing to defense production is not easy. It requires new equipment and retraining workers. However, companies across Europe are starting this transformation. For example, Schaeffler AG in Germany is seeking defense industry partners, and Hungary's Büttner Kft is reallocating its resources to the defense sector. In France, Europlasma aims to diversify into defense by acquiring a factory that supplies parts to Renault. Despite the growing defense industry, it is still much smaller than the auto sector, which employs around 13 million people compared to just over one million in defense. Experts warn that relying on the defense sector to replace lost automotive jobs is unrealistic. New companies are also emerging in the defense space, like Frankenburg Technologies in Estonia, launched by a group of individuals with various backgrounds. Meanwhile, Volkswagen is open to partnering with defense firms to utilize its surplus capacity, as it cuts jobs and factory output. However, entering the defense market involves navigating strict certification processes that can be lengthy and costly. Businesses must first receive military orders before pursuing certifications, which can take one to two years and cost at least €200,000. This makes the transition financially challenging for many manufacturers. If Europe aims for military independence from the US, it must support domestic companies like Jopp. Büchs believes that his company can become a supplier for the defense industry as demand grows. Other businesses like Hirsch Engineering Solutions in Germany have already made this shift, producing parts for a range of military and aerospace applications. The path to entering the defense sector can be difficult, but success can lead to secure, ongoing opportunities.