Government wants to privatise state-owned defence contractor

Over the past 20 years RUAG has developed from an armaments enterprise into an international technology group Keystone

The Swiss Federal Council has decided that RUAG International, Switzerland’s state-owned arms manufacturer, should be developed into an aerospace technology group and fully privatised in the medium term. 

The government has also approved unbundling procedures for the sections of RUAGExternal link that perform services for the armed forces, the defence ministry said in a statementExternal link on Monday. 

“The Federal Council takes the view that this approach will best meet the armed forces’ needs and take account of the Confederation’s ownership interests and Switzerland’s position as a location for work and technology,” it said. 

In the past 20 years RUAG has developed from an armaments enterprise into an international technology group. Nowadays, fulfilling its statutory role to provide equipment to the armed forces constitutes only part of its activities. 

On January 1, 2020, RUAG will become a new holding company with two subsidiaries: MRO Switzerland, which will be responsible for providing services to the Swiss Armed Forces (2,500 employees, manufacturing sites in Switzerland), and RUAG International, which will perform for the other areas of business (6,500 employees, two-thirds of whom are based abroad). 

These subsidiaries will be managed separately, be legally and financially independent, and will operate separate IT systems. 

Focusing on aerospace 

The Federal Council examined the further development options devised by RUAG and supported setting-up an aerospace group, according to the defence ministry. In the medium term, this would comprise the aerostructures and space divisions, it said. 

“The focus lies on developing the expertise RUAG has built up in these business fields in recent years, and in retaining the technical knowhow in Switzerland. This also applies in relation to Switzerland’s space policy,” the defence ministry said. 

RUAG has submitted several options for privatisation. The Federal Council will decide on what approach to take at a later point in time.