As Germany ramps up its defence spending, the federal government and businesses are exploring whether military production can offer a lifeline for struggling sites. This article examines how re-militarisation is reshaping restructuring in Germany.
Businesses in Germany are currently facing unprecedented challenges. Growing concerns regarding de-industrialisation, evidenced by the daily announcements of job cuts, has given rise to a focus on restructuring and transformation programmes in the country. While many employers start to engage in 'footprint conversations' as they rethink their business operations, some are finding new and unique opportunities as a result of Germany's re-militarisation efforts. As an increasing number of businesses explore this avenue, we take a look at some of the practical considerations for employers who may want to repurpose their at-risk workplace for military production, saving jobs as a result.
Germany's focus on re-militarisation
Against the backdrop of a challenging and fragile geopolitical situation, several countries in Europe have increased their focus on defence spending. This is certainly the case in Germany, with the new Chancellor pledging that the country would have the "strongest conventional army in Europe." However, the federal government's billion-euro programme to 'rearm' Germany shines a spotlight on the key question of how the production capacity required can possibly be secured in light of the significant shortage of skilled workers. It is for this reason that the current governing parties are expressly exploring how the 'conversion and upgrading of existing plants to meet the needs of the defence industry can be supported.'
Practical considerations for German employers
Corporate Germany has been having this conversation for a long time, but now it has a renewed importance. Practically all major restructuring projects currently taking place in the country involve some consideration of whether the company or company division could be repurposed or used for military objectives, usually in the absence of alternative investors. Below, we take a look at some of the key considerations for employers faced with this scenario.
1. Proactively engage social partners
Such restructuring talks require an open dialogue by and between the social welfare partners (i.e. the employer and employee representative organisations), particularly on the part of the trade unions' representatives. Any conversion of an existing plant (while also retaining key employees and a qualified workforce) will only be possible with the approval and agreement of these social welfare partners. Interestingly, these projects are currently garnering acceptance and support among the social welfare partners, even when it comes to transferring employees from what was formerly civilian production to military product manufacturing.
German employment law supports this process through a distinct procedure that enables works councils to make proposals to safeguard jobs and operating sites. These procedures can also be easily reformulated by both sides pursuant to procedural agreements that can ensure that the employee representatives are included in the process in a manner that advances employee interests.
2. Plan for upskilling and the workforce transition
One focus of the labour negotiations will be the qualification (or upskilling) of those employees set to transfer to the repurposed site, a process that may well take several months and requires advanced planning. Social welfare policy mechanisms, including transfer agencies, re-training funds, the use of an employee job placement entity or temporary part-time work, can serve as important tools in shaping such a transition.
3. Understand the unique demands of military use
The unique features of a military workforce should not be underestimated by employers. Military roles are typically long-term, repetitive, and subject to strict certification and security checks. Employers must consider the mental and emotional impact on employees and ensure robust support systems are in place to help them adapt to the new environment. These systems are crucial to ensure that that the transition is successful.
4. Prioritise internal communication and support
Clear and consistent communication is essential to maintain trust and morale during transitions. Employers must explain the rationale behind any shift toward defence production and provide ongoing HR support to help employees navigate the change.
5. Consider regional suitability and consult with experts
Defence-related projects are more likely to be viable in less densely populated or economically weaker regions, such as parts of central and eastern Germany. Employers should factor geographic and demographic considerations into their restructuring and site planning.
That notwithstanding, for practically every restructuring project, no matter how small, it will now be imperative for employers in Germany to check at least once with experts on whether military use is an option for preserving jobs. Discussions with the relevant trade unions are decidedly useful here, as is direct contact with labour directors and HR managers in the military industry.
Takeaways for employers
Germany's re-militarisation is no longer a distant policy shift – it's a real, practical consideration when planning a restructuring.
For employers, this means thinking beyond traditional cost-cutting and exploring whether defence production can offer a sustainable path forward for sites and staff. But success will depend on early engagement with social partners, thoughtful workforce planning, and a clear-eyed understanding of the operational and human realities of military work.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
