Europe’s idling factories eye future in the military

Subscribe to enjoy similar stories. Europe’s industrial production recovered at the start of a year that could see the beginnings of new investment and a new dawn for the beleaguered manufacturing sector. In the 20-member eurozone, industrial output was 0.8% higher in January than a month earlier.

But compared with a year earlier, production stagnated, extending a slump that began with Russia’s full-scale invasion of Ukraine in early 2022. However, ambitious plans to boost defense investment in response to growing doubts about the reliability of the U.S. as an ally in the face of potential Russian aggression may lift Europe’s manufacturers out of their torpor by finding a new purpose for underused factories.

“Between producing cars and producing tanks, there is some connection," said Pierre Wunsch, head of Belgium’s central bank, in a recent interview with The Wall Street Journal. German arms maker Rheinmetall could take over plants from carmakers like Volkswagen Group, its chief executive told analysts Wednesday. “One thing is clear: Before I’ll build a new tank factory in Germany, we’ll of course take a look at it," Armin Papperger said.

A jump in European military outlay would mean a jump in production abilities, he said. “If that happens, we have to double our ammunition capacity," he said. “If that happens, we have to double our vehicle capacity." Volkswagen, a global titan of auto making, has laid out plans to cease making vehicles at its plants in the German cities of Dresden and Osnaebrueck, part of a drive to save billions of dollars a year in costs as it struggles with lackluster demand.