By David Oliver
This was the message of RUAG Group’s CEO, Urs Breitmeier when he met the press on 26 April. He said that the Swiss Ministry of Defence is the key beneficiary of the efficiency gains thanks to long-term contracts.
Since 1999 RUAG has doubled sales to ensure it is strongly positioned in the face of international competition – both now and in the future – RUAG is pursuing its tried and tested corporate strategy based on three key areas: “Combining civil and military applications”, “Focusing on core business” and “International growth”.
Three divisions have made substantial contributions to this growth.
Key performance factors for RUAG Space included success in the launch vehicle business in Europe and the United States, plus participation in all aspects of European space programmes and a determined focus on commercial product development and industrial series production.
With the development of two production sites in the United States, at Decatur, Alabama and Titusville, Florida, approximately 20 employees were hired and the first significant sales will be posted in 2017.
Also, the German technology company HTS with 3 35 employees specialises in engineering services and produces customer- specific mechanical products for space flight has been acquired.
In the Aerostructures division, the transfer-of-work project has led to the step-by-step assumption of full supply chain responsibility for the 1,000-plus parts for two Airbus fuselage sections. The project is scheduled for completion by mid-2017. The opening of a new production site Eger in Hungary is an integral part of RUAG Aerostructures capacity and capability plan and will also support competitiveness at the other two production sites in Emmen and Oberpfaffenhofen in April 2017. It will employ 180 members of staff by the end of and manufacture sub-assemblies of Airbus A321 0and Bombardier CRJ aircraft.
RUAG Aviation performs technical maintenance and repair work, modifications, upgrades and systems integration for jet fighters, propeller and transport aircraft, military helicopters, air defence systems and unmanned aerial vehicles – providing support for systems over their entire life cycle. Turnaround times for systems maintained by RUAG Aviation are remarkably short, meaning they return to service very quickly. Customers such as the Swiss Armed Forces, the German Bundeswehr and the air forces of many other countries appreciate this added value.
There have been increases in the headcount by over 100 employees in the military jets and related components business at the Emmen, Interlaken and Stans locations, and an increase in the headcount at the Oberpfaffenhofen site by about 40 persons in connection with the higher Do 228 production rate.
While RUAG’s civil business increased to 57% of net sales in 2016, the Federal Department of Defence, Civil Protection and Sport (DDPS) remains RUAG’s largest and most important single customer although its share of sales fell slightly in 2016 to 31%.
In a public tender process, RUAG Defence was awarded in March 2016 the contract to operate the Swiss Armed Forces two combat training facilities equipped with the latest simulation systems, for the next five years.
Since 2016, RUAG Defence has offered realistic training for operations managers, C-level executives and senior management at the Cyber Training Range. In its first year of operation, numerous cyber-security training programmes were designed and carried out for companies from a range of industries, operators of critical infrastructure and public-sector organisations.
In addition, RUAG Defence has acquired the UK-based cyber-security specialist Clearswift and strategically expanded its data security business. Leading data communications and storage/archiving products and solutions will be an ideal complement for RUAG Defence’s newly created Cyber Security business unit. Furthermore, Clearswift’s client base and global network of partners will be a substantial addition to the Defence division’s portfolio. RUAG Defence also plans to establish itself as a leading cyber-security partner for European armed forces, government and business. The company is building an independent business unit in which it will invest several tens of millions of Swiss francs in the coming years.
While the Space, Aerostructures and Ammotec divisions operate exclusively on the global market, they contribute to RUAG Group’s technology base. The Aviation and Defence divisions, in which the DDPS owns 57% and 76% respectively, are heavily dependent on the DDPS. The Aviation (DDPS share 57%) and Defence (DDPS share 76%) divisions are heavily dependent on the DDPS.
The RUAG Group now generates over 80% of sales in open competition and must prevail over competitors even for a good third of orders for the Swiss Armed Forces. Over 2,000 jobs in Switzerland and 4,200 jobs abroad depend on these orders.
However, Urs Breitmeier admitted that he would like to see changes in the Swiss Confederation’s control and oversight role which strictly concerns the exclusive federal contracts, mostly service-level agreements (SLAs) that make up 20% of sales. He said that this 20% has the potential to tie up, and in recent years actually has tied up, a large portion of management capacity — at the expense of the remaining majority of the business.
Breitmeier was also unhappy with further mentioned that the Swiss Armed Forces’ procurement volumes continuing to shrink. Compared with NATO countries target spending 2% of their GDP, Switzerland’s defence budget is only 0.8% of its GDP. He said that RUAG is now confronted with serious various challenges. To remain competitive in terms of technology and price, RUAG must continually reorientate itself. It needs more entrepreneurial freedom to meet the expectations of today’s owner in enhancing Switzerland’s security.