Berlin is pivoting from cars to cannons as its export model breaks down, with the country trying to turn industrial decline into a defense boom.
Germany is mired in its longest stretch of stagnation since World War II, with 15,000 jobs disappearing from manufacturing each month, including the once-dominant auto sector.
Flagship brands such as Porsche are reporting staggering hits, with operating profit sliding 98% compared with 2024.
Now, as American security guarantees look less certain and Europe races to rearm, Berlin is positioning itself to become the backbone of the continent's defense industry.
Recent regulatory changes have improved capital-market access for defense companies, while huge government contracts and public financing schemes have unlocked nearly one trillion euros in defense funding.
Companies such as Schaeffler and Deutz are making engines for drones, onboard systems for armored vehicles, and components for military aviation.
The government is on board, with the economy ministry funding a matchmaking platform to connect established defense supply chains with companies from other sectors.
Nondefense companies are helping alleviate the pressure on traditional supply chains to scale up, with nearly 90% of European venture capital invested in defense technology flowing into German companies.
