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RUAG

The state-owned RUAG is the preferred supplier and center of excellence for the Swiss Armed Forces. RUAG is an international Technology Group, active in two segments: Aerospace & Technology and Defence & Security. The Group's holding company is based in Berne (Switzerland). RUAG has production sites in Switzerland, Germany, Austria, Hungary and Sweden. RUAG Aerospace has become a major independent supplier in Europe for equipment, mechanisms and structures for satellites and launch vehicles as well as for scientific instrumentation. The business Unit Space of RUAG Aerospace has sites in Sweden, Switzerland and Austria and employs 650 employees.

As a provider of products and services for security and defence technology, RUAG is a strategic partner to the Swiss Armed Forces as well as serving customers around the world. RUAG Defence offers advanced services and products for defence and security. It addresses armed forces, original equipment manufacturers and security and emergency organisations around the world. RUAG is a leader in the upgrading and armouring of vehicles and offer command hardware and software, simulation solutions and life cycle support for the complete range. The company's strength lies in advanced custom solutions for individual customer requirements.

It is a specialist in maintaining and enhancing heavy weapons systems, manufacturing innovative protection solutions, and developing, integrating and maintaining communications, command and reconnaissance systems. RUAG is also one of the world's leading manufacturers of simulation & training equipment (virtual and live). RUAG Defence is a strategic partner of the Swiss Armed Forces; it is also an internationally focused expert in IT and electronics solutions, and in maintenance and enhancement programmes for heavy weapons systems. RUAG Ammotec specializes in small-calibre ammunition for hunting, sports, the military and government agencies. It is also a specialist in industrial pyrotechnics.

RUAG was founded on 1 January 1999 as a joint stock company under private law. RUAG Holding AG's sole shareholder is the Swiss Confederation. In the space sector, core business includes the development and production of technologies for satellites and carrier rockets. In the aviation sector, RUAG is involved in aircraft construction as well as maintaining and fitting out civil and military aeroplanes and helicopters. RUAG also offers high-precision metalworking services to a worldwide clientele. RUAG Space is the largest independent supplier of space technology in Europe. RUAG Aviation is a leading niche supplier for the maintenance of civil and military aircraft. RUAG Technology is an international competence center for special metal technologies, environmental technology and aircraft structures.

RUAG Swiss/Suisse was established as a private stock company from the arms producing companies formerly owned by the Swiss federal government. The four enterprises in Swiss defense:

  • Swiss Electronics Enterprise (SE): The development, manufacture, integration and maintenance of simulators and training systems. Special areas included maintenance and expert systems, calibration of measuring equipment, and special glasses.
  • Swiss Aircraft and Systems Company (SF): SF's core activities included the maintenance of overall systems and their components, the development, production and assembly of structural components, systems integration and services for aircraft, helicopters, and systems that stem from military and civilian aeronautics and space technology.
  • Swiss Ammunition Enterprise (SM): SM was the center of competence for ammunition during its entire life cycle (from development to liquidation). Metalworking and the operation of a recycling center were the main features of the civilian division.
  • Swiss Ordnance Enterprise (SW): SW's core business included the development of systems and structural components, the assembly and maintenance of battle tanks, weapons systems for artillery and infantry, as well as combat readiness improvements. SW is a market leader in the development of modern cannons and in systems integration.
In recent years, RUAG has developed into a major international technology group. The company still has a strong home base in Switzerland, but it serves a growing global customer base. RUAG focuses on two market segments: Aerospace (space and aviation) and Defence (security and defence technology). Group turnover is divided evenly between civil and military applications. RUAG operates on the market with five divisions: RUAG Space, RUAG Aviation, RUAG Technology, RUAG Defence and RUAG Ammotec. The group's head office is in Bern, Switzerland. It has production sites in Switzerland, Germany, Austria, Sweden, Hungary and the USA. RUAG employs around 7,800 employees in total, of which 5,000 are in Switzerland.

The Swiss Confederation is the sole shareholder. RUAG Holding's Board of Directors consists of seven members, the Federal Department of Defence, Civil Protection and Sport (DDPS) being represented by the Chief of the Armed Forces Planning Staff. The technology group manufactures military and civilian products and offers corresponding services. It is involved in the "Aviation & Space", "Defence & Security", and "Ammunition & Products" markets and operates production sites in Switzerland, Germany, Sweden, and Hungary.

When the federal armament enterprises began operations as RUAG in 1999, DDPS contracts amounted to 86% of its sales. Only 14% of sales totalling CHF 960 million went to third-party clients. In 2007, sales were CHF 1,409 million, of which only 34% went to DDPS. The sales growth is primarily due to the acquisition of enterprises in Switzerland and abroad. Today, RUAG employs 6,700 people, 3,800 of whom work in Switzerland.

In 2007, the National Councils Defence Committee commissioned an Administration-independent audit of RUAG's business activities. The matter was delegated to the parliamentary Finance Delegation, which mandated the Swiss Federal Audit Office to conduct the audit. The objectives for RUAG are defined in owner strategies covering four years. First of all, the RUAG companies must guarantee the Armed Forces' equipment; hence the companies constitute an integral part of the federal government's defence policy mandate. RUAG primarily ensures the maintenance of material, maintenance of combat readiness, upgrading of combat readiness and, to the extent necessary, disposal of weapons systems, devices and ammunition. RUAG is expected to be competitive both in the civilian and in the military field. A reasonable EBIT margin (earnings before interest and tax) of more than 6% should be achieved, without achieving "unreasonable" profits on DDPS monopoly orders. The expected earnings have not been achieved so far, however; in 2007, earnings were 5.4%.

On average, domestic DDPS orders had a slightly lower profit margin than third-party orders. Only at RUAG Land Systems is the profit margin higher albeit due to the structure maintenance effect. The dependence of RUAG subsidiaries on DDPS contracts varies. This is evidenced by the sales figures. At RUAG Electronics, the average sales share of DDPS contracts between 2003 and 2007 (five years) was more than 80% (CHF 710 million); at RUAG Land Systems, the share was nearly 50% (CHF 433 million); at RUAG Aerospace 40% (CHF 1,120 million); at RUAG Ammotec 12% (CHF 124 million); and at RUAG Components 5% (CHF 25 million). The question of cross-financing between DDPS and third-party contracts must therefore be examined in a differentiated manner for each subsidiary.

The RUAG companies in Switzerland had a higher profit margin than those abroad. Since foreign business, including several new business fields, is often still under development, it is understandable that lower margins must still be accepted, taking into account the product cycles. For the SFAO, cross-financing at RUAG is only relevant in cases where resources are fed to a business segment on a permanent basis to ensure its survival. The SFAO did not determine that this is the case. On the contrary: loss-generating activities were either sold or abandoned completely. The SFAO concluded that no cross-financing takes place for the benefit of third-party contracts.

In Oerlikon sold its space business in 2009 to the Swiss company RUAG AG. Oerlikon Space AG is Switzerland's leading space company. With more than 40 years of heritage in space, Oerlikon Space supplies the payload fairings for the European launchers Ariane 5 and Vega. The company is involved in numerous institutional and commercial space programmes around the world with its ultra-lightweight, high-stability structures, precision mechanisms, and innovative products such as laser terminals for optical communication between satellites.




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