Rheinmetall CEO visits VW plant as defence companies look to expand

BERLIN (Reuters) -Rheinmetall CEO Armin Papperger visited Volkswagen's Osnabrueck plant on Friday as part of a delegation of Europe's top ammunition maker, labour representatives said, in the latest sign of closer cooperation between the defence and auto sectors.

Papperger earlier this month said Volkswagen's factory in Osnabrueck, which may be repurposed or sold as part of the carmaker's revamp, would be "very suitable" for defence production.

A spokesperson for Volkswagen confirmed that representatives from Rheinmetall and Volkswagen's commercial vehicle brand MAN Truck and Bus, who formed a joint venture in 2010, met in Osnabrueck to talk about the potential for further cooperation.

No concrete decisions were made regarding the future of the site, the spokesperson added.

Papperger's visit comes as German defence firms are seeking ways to expand amid European efforts to ramp up military spending, with struggling automotive firms a possible source of staff and production sites.

Volkswagen is seeking an alternative use for its Osnabrueck site and its 2,300 employees, after it agreed with unions last December to end production there as part of a company-wide drive to cut capacity and costs.

Rheinmetall owns 51% in Rheinmetall MAN Military Vehicles, with the remainder held by MAN Truck & Bus SE, a division of Traton, the truck maker majority-owned by Volkswagen.

"As IG Metall, we see numerous opportunities to establish new contract manufacturing for various industries under the Volkswagen umbrella," Stephan Soldanski of the IG Metall labour union in Osnabrueck said.

"It would be short-sighted to focus solely on the defence industry instead of actively promoting alternative economic sectors and forward-looking concepts."

(Reporting by Victoria Waldersee. Writing by Christoph Steitz. Editing by Matthias Williams, Mark Potter and Louise Heavens)