(Bloomberg) -- German auto workers are finding a lifeline with defense contractors, who are ramping up hiring just as the faltering car industry cuts back on jobs.
Munich-based radar maker Hensoldt AG is in talks to hire full teams from two separate auto-parts suppliers — in one case up to 100 people — to keep up with a surge in military orders, Chief Executive Officer Oliver Dörre said.
“The current struggle of the automotive is a pure chance for us,” Dörre said Friday in an interview with Bloomberg Television.
The teams consist of software engineers and will add to Hensoldt’s ranks after the company hired around 1,000 employees this year, Dörre said, declining to name the auto suppliers. He sees Hensoldt’s headcount expanding by a similar amount next year, and plans to be active with new partnerships and potential dealmaking.
Defense spending is on the rise across Europe, giving a boost to weapons makers as wars in Ukraine and the Middle East drag on and the return of President-elect Donald Trump stokes calls for a stronger commitment to security. Trump has pressed European allies to shoulder more military spending, while political leaders are seeking to channel government funds to homegrown companies and jobs.
At the same time, Europe’s auto industry is grappling with stagnant demand for electric vehicles and increasing competition from China. Parts suppliers including Continental, Bosch as well as Schaeffler have cut jobs as the slump has worsened.
The German auto industry is forecast to shed 12% of the 770,000 jobs in the sector by 2030, according to consulting firm PwC, as digitization and automation make current roles obsolete. Volkswagen AG is locked in tense talks with unions as the carmaker seeks to retrench.
Other defense contractors are also taking in workers. Rheinmetall AG, which makes tanks and ammunition, said in June that it plans to hire up to 100 workers from tire manufacturer Continental.
French traincar maker Alstom told Bloomberg News last month that it was in talks to transfer an unwanted manufacturing site in Görlitz, Germany, to the Amsterdam-based arms company KNDS.
Dörre sees a chance for German defense firms to drive innovation in key areas such as AI and software development, after decades of military underinvestment. He said that while Germany’s political environment remains rocky, rearmament over the next decade aligns with the political need to bolster the economy.
“The current discussion in the election campaign is a lot about re-strengthening Germany‘s economy, and I think here the defense and security industry can play a major role,” he said.
Consolidation
Hensoldt, whose top shareholders include Italy’s Leonardo SpA and the German government, can play a role in European defense-sector consolidation, Dörre said, while cautioning that each deal needs to fulfill a specific objective rather than just adding scale.
“2025 will be a year of new partnerships for Hensoldt,” he said. “We are well-prepared, if things would move, to act immediately, and even go for a bolder move, if that would be necessary.”
Hensoldt has ramped up production since the Russian invasion of Ukraine in 2022 as German military spending picked up. The company this week raised its medium-term targets to 10% annual revenue growth and said it wants to more than double revenue to around €5 billion ($5.2 billion) in 2030.
Dörre, though, said politicians need to provide more clarity on spending plans for the longer term in order for contractors to make investments to expand capacity. In Germany, Hensoldt’s biggest market, the government’s decision on whether to set aside strict limits on debt will be key, he said.
“We need the planning security from politicians,” he said. “They have to walk the talk.”
--With assistance from Albertina Torsoli, Aaron Kirchfeld and Benedikt Kammel.
(Updates with additional comment, background from third paragraph)
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