RUAG Splits Into Two Separate Aerospace and Defense Firms

 In Defense, Cyber/ICT, Air, Space, Regions

(Source: Forecast International; posted Jan. 13, 2020)

RUAG is cap­ping off a dra­mat­ic change that has split the com­pa­ny into two inde­pen­dent firms, one focused on sup­port­ing the Swiss mil­i­tary and the other on com­mer­cial aero­space.

On January 1, 2020, RUAG Holding AG became a new hold­ing com­pa­ny with two sub­sidiaries: MRO Switzerland (rough­ly 2,500 employ­ees with man­u­fac­tur­ing sites in Switzerland), which will be respon­si­ble for pro­vid­ing ser­vices to the Swiss armed forces, and RUAG International (approx­i­mate­ly 6,500 employ­ees, with about two-thirds inter­na­tion­al), which will con­trol the busi­ness sec­tors in civil aerostruc­tures and space.

The split will help the new RUAG International grow on the inter­na­tion­al market, as it has been ham­pered in the past by Swiss law. More specif­i­cal­ly, arms sales out­side of Switzerland have been ham­pered by Swiss pro­hi­bi­tions on sell­ing arms to par­ties in con­flict, and the com­bined com­pa­ny made sales to regions such as the Middle East cum­ber­some.

The new RUAG International will ini­tial­ly con­sist of four units focused on space (RUAG Space), aerostruc­tures (RUAG Aerostructures), and the ammu­ni­tion man­u­fac­tur­ing oper­a­tions for the Hunting & Sports and Armed Forces & Law Enforcement seg­ments and for indus­try (RUAG Ammotec). Added to these are the civil and inter­na­tion­al activ­i­ties of the former Aviation divi­sion and the Defence division’s Simulation & Training unit, which have been con­sol­i­dat­ed into a new MRO International divi­sion.

In prepa­ra­tion for the split, RUAG has been divest­ing oper­a­tions it no longer con­sid­ers core to either oper­a­tion. According to the plan, RUAG International will con­tin­ue to manage the busi­ness sec­tions that are incom­pat­i­ble with the new ori­en­ta­tion of an aero­space group, and that cannot be inte­grat­ed in MRO Switzerland due to their net­work­ing with other coun­tries. Partners will be sought that offer better prospects for these sec­tions, which include Cyber, MRO International, and RUAG Ammotec. A joint ven­ture is planned for Simulation & Training.

Ultimately, the goal is to pri­va­tize RUAG International once its inter­nal restruc­tur­ings are com­plete. As it looks to the future, RUAG is bank­ing on the devel­op­ment of a new next-gen­er­a­tion nar­row­body air­craft. Here the com­pa­ny hopes to cap­i­tal­ize on the exper­tise it has gained in man­u­fac­tur­ing com­pos­ite struc­tures for space vehi­cles. In addi­tion, RUAG has opened new facil­i­ties in lower-cost regions such as Hungary and the United States (as com­pared to Switzerland) to handle labor-inten­sive activ­i­ties. With these strate­gies in place, the com­pa­ny hopes to cap­ture a greater share of work on any future air­craft devel­oped by Airbus, and per­haps even Boeing.

Meanwhile, MRO Switzerland will pro­vide all of the old RUAG’s defense-relat­ed ser­vices for the Swiss Department of Defense, Civil Protection and Sport (DDPS), which mainly focus­es on main­te­nance, repair and over­haul of mil­i­tary air­craft. The MRO of aging mil­i­tary air­craft is a key part of this company’s strat­e­gy, which focus­es on plat­forms such as the Northrop F‑5 Tiger, which is still in ser­vice with the Swiss Air Force as well as sev­er­al other air forces through­out the world. In addi­tion, the com­pa­ny is work­ing on two key pro­grams for the Swiss mil­i­tary, WE89 and Upgrade 25. The WE89 pro­gram involves the mod­ern­iza­tion of the Swiss Air Force’s TH89 Super Puma trans­port heli­copters. The Upgrade 25 pro­gram focus­es on the F/A‑18. Most impor­tant­ly, the cre­ation of MRO Switzerland aims to pro­vide the Swiss gov­ern­ment with more trans­par­ent and cost-effec­tive ser­vices.


Source: Defense Aerospace

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