The Globe and Mail reports in its Tuesday edition that Volkswagen on Monday struck a preliminary deal that will see one of its German sites switch to defence production under new ownership, a first in the automaker's efforts to restructure plants struggling to compete with lower-cost Chinese rivals. A Reuters dispatch to The Globe says the deal offers a potential blueprint for other Volkswagen sites facing an uncertain future as Europe's largest carmaker embarks on its biggest-ever restructuring to revive margins and battle chronic overcapacity in its stagnant European market. Under the initial terms of the deal, Volkswagen will sell its factory in Osnabrueck to Israel's Aurelius Capital and Volkswagen's home state of Lower Saxony, in a move labour officials said could preserve 1,400 of the site's 1,800 jobs. The agreement comes days after Volkswagen unveiled a major revamp to cut jobs and simplify its structure, highlighting how rising defence spending in Europe could help absorb excess manufacturing capacity in the automotive sector. Volkswagen has warned that up to four German plants could face closure or repurposing unless alternative uses can be found amid weak demand, high costs and growing competition from China.