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Germany's auto industry, once the backbone of Europe's biggest economy, is in rapid decline. In the past year, the industry shed more than 51,000 jobs. That is 7% of its workforce. NPR's Berlin correspondent Rob Schmitz reports some companies are now turning to manufacturing weapons to survive.
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ROB SCHMITZ, BYLINE: Bright-yellow robotic arm carefully places freshly oiled bolts onto a blue plastic tray along an assembly line run by the JOPP Group, an automotive supplier in the town of Bad Neustadt in northern Bavaria. These types of robots are slowly replacing workers, as more companies like JOPP throughout Germany's industrial heartland shed their human counterparts.
MARTIN BUCHS: I think the automotive industry in Germany, but also in Europe, is in a bit of a crisis mode since maybe five years.
SCHMITZ: JOPP Group CEO Martin Buchs says inflation, tariffs and competition from China have proven to be too much for Germany's once-dominant auto industry.
BUCHS: At peak times, we had 2,000 employees. Unfortunately, we had to cut 500, so now we have 1,500 employees.
SCHMITZ: He says that's still a sizable workforce for a German company like his, which assembles gearshift mechanisms for Ford, Porsche and Mercedes-Benz. But all of this downsizing means that Buchs is looking to diversify what his company manufactures.
BUCHS: So we think it's very important for the German industry and for us to find new markets. And where are new markets? Well, government has committed a lot of new funding for defense. We are quite close to what defense industry needs, so it's very obvious for us to look to this market.
SCHMITZ: Buchs says JOPP is using its in-house injection molding and machining technologies to build military drones and unmanned vehicles. The company signed its first defense contract earlier this year.
BUCHS: If we don't want to reduce our labor force even more, we have to go into new industries. And the defense industry is a big potential.
SCHMITZ: It's a big potential for Sebastian Schulte, too. He's the CEO of Deutz AG, a company in Cologne whose founder invented the four-stroke combustion engine in the 19th century.
SEBASTIAN SCHULTE: We also produced tractors, produced buses. We produced power plants, smaller power plants. So we were a pretty large company.
SCHMITZ: At its peak in the 1970s, Schulte says Deutz had nearly 40,000 employees. But in the past 20 years, the company has been reduced to just 3,000 workers in Germany who focus on building combustion engines for agricultural and industrial vehicles and equipment. But now, says Schulte, Deutz's business is picking up again thanks to diversifying their business into building electric generators and building combustion engines for military vehicles. He says this transition is helped somewhat by German society's changing view on building military hardware after Russia's invasion of Ukraine three years ago.
SCHULTE: The typical German industrial companies before '22, they tried to have nothing to do with defense. It was like, you know, somewhere between gambling and other businesses which are not perceived as - so the most attractive one by society.
SCHMITZ: That has changed, says Schulte, and for Deutz, it means building massive combustion engines for tanks and howitzer weapons. He says the requirements from his industrial clients are just as strict and demanding as those from his military clients, which equals a straightforward transition for his company.
Carsten Brzeski, an economist for ING, says the stories of both Deutz and JOPP are familiar ones in today's German economy.
CARSTEN BRZESKI: It indeed is a sign of an industry that has been struggling now for a couple of years, that is also realizing gradually that competition out of China is here to stay. So this is a sector in severe transition with new competition. And if you are in this sector, of course it is more than natural that you try to find other opportunity in order to keep your business running.
SCHMITZ: Brzeski says there will certainly continue to be a fallout in Germany's automotive sector, but with hundreds of billions of dollars' worth of new defense spending in the coming decade, he says many struggling companies would be keen to get in on all that new money put towards defending Europe.
Rob Schmitz, NPR News, Bavaria.
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