In Germany, defense becomes the way out of an industry in crisis and disrupts an old taboo.

Since the Russian invasion of Ukraine, Berlin is accelerating its rearmament and opening up new opportunities for its factories. In an economy weakened by expensive energy, Chinese competition, and the automotive crisis, defense is becoming both an industrial lever and a strategic choice.

In 2022, 100 billion has shifted the balance and put defense at the center of a frozen debate in Germany.

The turning point comes from a clear geopolitical shock. In March 2022, Berlin launched a special fund of 100 billion euros to modernize the Bundeswehr. Two years later, Germany also reached NATO’s goal, with 2% of GDP dedicated to defense.

This choice breaks with a historical restraint. For a long time, defense has remained a sensitive sector in Germany. However, the war in Ukraine has shifted the debate. Now, national security is entering industrial calculations, not just diplomatic discourse.

Weak demand, expensive energy, and aggressive China: the German industry sees defense as a quick way out.

This shift comes at the worst time for the traditional industry. In the automotive sector, orders are declining, investments are leaving the country, and job cuts are multiplying. The automotive sector is facing Chinese competition, high costs, and the electric transition.

At the same time, some factories are operating below their capacity. Machines are idle, margins are shrinking, and visibility remains low. In this context, military public money offers what many were looking for: volumes, long-term contracts, and a less cyclical market.

For some subcontractors, the shift is no longer abstract. It is about filling orders and preserving skills. Thus, the defense path appears as a credible way out, even if it does not replace the entire German export engine alone.

Deutz invests in drones, Volkswagen tests the waters: the conversion is moving beyond speeches.

At Deutz, the shift is already visible. The Cologne-based motor manufacturer, founded in 1864, has strengthened its positions in drones. After acquiring Sobek in 2025, it also took a stake in Tytan. The industrial signal is clear.

Volkswagen is progressing more cautiously, but the movement exists. The group presented prototypes at a security fair to test the market. Then, the Osnabrück site, threatened after 2027, could host military-related activities. Concrete conversion begins.

Growth, jobs, innovation: defense can help the German industry, but the shift remains delicate.

On paper, the benefits go beyond just weapon orders. Defense can support investment, preserve skilled jobs, and accelerate certain dual-use technologies. A growth effect is still possible, especially if production and research are more localized in Europe.

However, the equation remains tight. Military programs require time, reliable supply chains, and coordinated purchases. If Europe imports too much or decides too slowly, the industrial rebound will be weaker than expected, and the impact on employment will take time to appear.

Berlin is therefore betting on a dual movement: protecting itself more and giving its factories a new horizon. There remains a major limit. Not all companies will be able to follow this sensitive, costly, and regulated shift. The taboo is receding, but industrial selection is already beginning.