October 2026 marked a turning point for German unions in the car industry. With the years of boom for cars seemingly over, a new boom has been called. This time for Germany’s arms industry. It will benefit arms companies and, so the hope goes, Germany’s labor market too. 

German corporations are converting backwards, from civilian production to the military. Yet arms have done Germany and the world so much “good” – twice: in 1914 and again in 1939.

Large German arms companies such as Rheinmetall, Krauss-Maffei Wegmann, Hensoldt, Diehl and Heckler & Koch will benefit, as will European manufacturers such as Airbus and the guided-weapons maker MBDA. They profit from Germany’s new super defense budget, which has washed big cash into the coffers of Germany’s growing “military-industrial complex” (MIC). Germany’s conservative government hopes to crank up the industry of the world’s third largest economy: Germany.

Billions of – German – euros will also go to US military companies like Lockheed Martin and Boeing. However, industry experts point out that the blessing of state money will not bring a sudden improvement in the equipment of Germany’s army, the Bundeswehr.

The construction of a new battle tank by Krauss-Maffei Wegmann (KMW, now part of KNDS), for example, will take two or three years. It is an oversized weapon that has been of no use in Ukraine’s defense against Russia. Undeterred, and spurred on by “tough-guy macho images” of German politicians posing in battle tanks, KMW and Rheinmetall can hope that another 230 “Puma” infantry fighting vehicles will be ordered.

Car maker Audi, meanwhile, lends employees to the Bavarian arms companies Diehl, Airbus, MBDA and KNDS on a voluntary basis. In the face of a – frequently rehearsed – “growing international threat” (meaning: Russia), the German arms industry is booming, also in Bavaria.

Audi now wants to support Germany’s armament with personnel, and to expand prospects for its own employees. Years of management literally “asleep at the wheel” ensure that the German auto industry is in crisis. Many arms companies, by contrast, can hardly cope with the flood of orders and the expected profits. An Audi spokesman recently confirmed that the car manufacturer has launched a scheme for the temporary regional deployment of personnel together with partners from the Bavarian metal and electrical industry.

There was, as Audi said, great interest, yet participation in the scheme is voluntary. As part of the temporary employment, Audi employees willing to change can work for a limited time at the arms makers Diehl, Airbus, MBDA and KNDS. Audi’s target group was engineers, quality assurance engineers, project managers and employees working in technical development. The borrowed Audi employees remain employees of Audi AG for the entire time.

Audi organized a major information event, and the scheme has already met with great interest among the workforce – most likely pushed by the daily barrage of apocalyptic news about the impending loss of tens of thousands of jobs in Germany’s car industry. Audi has announced it is “reducing” 9,500 jobs in Germany over the next five years, while saying that the regular workforce is “secured” until 2029.

At the same time, arms maker Rheinmetall is negotiating the takeover of the Alstom locomotive plant in the regional city of Kassel, with 900 employees. The takeover is becoming more real by the day. Rheinmetall already operates a plant in the immediate vicinity, in the industrial “park” of Kassel’s Mittelfeld district (no real park there), and is also looking for a site and personnel to expand its tank production.

The works council does not want to give up locomotive construction in Kassel without a fight, as its deputy chair recently emphasized. In a recent interview, the works council and IG Metall announced a protest against the possible takeover. The works council convened an extraordinary meeting and plans to coordinate with the union, and union actions are planned. 

Meanwhile, the works council and workers learned from the newspapers that the management-to-management talks had progressed. Workers were surprised that the interested party was once again the MIC’s Rheinmetall. All the while, the works council had been (mis)led to believe that the talks with Rheinmetall had ended without result and that Alstom was now negotiating with a new interested party. Deliberately misinforming works councils is perhaps not an entirely new strategy of management.

Workers and the union agree that the car of the future is not a tank. Yet management’s restructuring includes layoffs and plant closures. In other words, “restructuring” is yet another piece of jargon in the playbook of the language of managerialism.

Pushed by corporate management and Germany’s conservative Merz government, the European automotive industry is faltering and switching its production to armaments. Perhaps more profit can be made from making things that kill.

Workers are exposed to a daily barrage of corporate media news that can be summed up as “the European automotive industry is in a deep crisis.” However, there is almost never a necessary clarification of what kind of crisis it is.

This is not primarily a resource crisis. Shareholders of all these corporations are literally swimming in money. Yet more profit can be made elsewhere. Corporate CEOs and their entourage of apparatchiks have been generously compensated in recent years. In the period after COVID-19, the majority of European car manufacturers recorded a significant increase in profits.

The European automotive industry – and especially the German automotive industry – has been based on three pillars for decades:

  1. many years of experience with internal combustion engines,
  2. a focus on the premium segment with large SUVs and models with high profit margins, and
  3. the exceptional profitability of the Chinese market.

Today these patterns are reversing. German cars used to be synonymous with technology and quality; today they are criticized and sometimes even mocked. In test reports and the trade press, Germany’s car makers are ridiculed for a technological lag, especially in electric mobility, battery technology, on-board software and autonomous driving. Perhaps German car makers have taken to heart what is commonly attributed to Alfred P. Sloan, the longtime boss of General Motors (nybooks.com): 

“The business of General Motors is

not to make cars, but to make money.”

For a long time, the Chinese market made it possible for Germany’s auto bosses to sell a production far beyond the needs of the domestic market and to make considerable profits in the process. This is now developing into its opposite. China is no longer the engine of profitability, but the place where the technological lag created by German auto bosses is revealed – the proverbial emperor has no clothes. In the face of this “self-made” crisis, an increasingly large part of the European (mostly German) automotive industry is now entering two new dead ends:

  1. It is further slowing the transition to electric vehicles in order to extend the life of the internal combustion engine as long as possible.
  2. The second impasse is the militarization of the production apparatus. Several manufacturers are now looking for new “growth” (read: higher profit) areas in the militarization of their production. The MIC is where corporate profits can be made.

Yet this is not merely a technological crisis. It did not fall from the sky. It is the result of a capitalist logic in the age of Uber-monopolies: a handful of car bosses choose to keep an outdated technology in order to secure their monopoly-created profits for as long as possible.

As always, managers operate with two strategies. These are the two Golden Rules (those who have the gold make the rules!) of management. When things go right and others have done the work, take the credit. When things go badly – in particular when you are responsible for your own mismanagement – blame someone else: workers and trade unions, for example.

Now corporate bosses are making workers pay for the consequences of their managerial decisions. Against corporate mismanagement, a different logic should be enforced. First, dividends and share buybacks from profitable years must be taken into account. If a company has distributed billions to shareholders, it cannot present the bill to workers afterwards. A special tax must be levied on the dividends and share buybacks that the major automotive companies have paid out in recent years. These funds must be channeled back into:

  • research and development,
  • the transition to electric and autonomous vehicles,
  • employee training and job security.

This also means that not a single euro of state “subsidies” – the much-welcomed state cash, despite or perhaps because of free-market ideology – may flow to corporations that lay off workers, close plants or pay dividends to shareholders.

Second, a genuinely Europe-wide industrial plan for the electrification of transport is needed, drawn up jointly by the EU, trade unions and management. This means not just cars but, above all, electric public transport: electric buses, trams, metros and other trains. This would ensure pollution-free inner cities.

Third, an affordable electric car should no longer cost over €61,000 ($70,500). The goal is to produce electric vehicles that are smaller, simpler, repairable, material-saving and affordable. The objective is also to develop electric buses, e-bikes and electric motorcycles. In addition, massive investment must be made in the material requirements of electrification: low-CO₂ power generation, power grids, charging stations, batteries, recycling, public transport and democratic mobility planning.

Without abundant, clean and affordable energy, electrification will remain unstable (e.g., Trump’s attack on Iran – an endless war that washes billions into oil corporations) and unevenly distributed. There is a very real risk that the transition away from fossil fuels will be reserved for those who can afford it. Workers will be excluded from the new car market or doomed to keep using their aging vehicles.

Finally, the crisis in the automotive industry must not be used to push Germany’s industry towards a war economy. The skills of employees in the automotive industry are of great value. They extend to metallurgy, electronics, software, batteries, assembly, logistics and maintenance. 

These skills should serve to produce goods that benefit the European population, not to drive Europe into a logic of militarization, the military-industrial complex, constant armament and military conflict. German arms have never done the world any good. Corporate Germany should know this much.

Thomas Klikauer has over 1200 publications (including 16 books) and writes regularly for Cross Border Talks ( Europe), Countercurrents (India), and ZNet (USA) on global warming, labor relations, and Germany’s far right.