Global armament, local slumps Swiss arms manufacturers are in crisis

While the global arms industry is booming, Switzerland is struggling with a decline in sales. Companies are reacting with redundancies and relocating production abroad, while politicians are hesitating.

The global armaments industry is currently experiencing an upswing, driven primarily by massive investment from the European Union (EU), which recently decided to invest 800 billion euros in armaments.

Shares in defense companies such as Italy's Leonardo and Germany's Rheinmetall are recording significant price gains. Since the Russian attack on Ukraine three years ago, the value of Rheinmetall has increased more than tenfold.

In Switzerland, on the other hand, the situation is quite different. Sales of armaments have collapsed. The reason for this: strict export restrictions.

Matthias Zoller, armaments expert at the Swiss industry association Swissmem, explains to theSonntagszeitungnewspaper that since the ban on the transfer of ammunition for the Gepard anti-aircraft tank to Ukraine, many countries have done without Swiss armaments. Germany has even stopped buying camouflage nets from Switzerland.

Companies react to the crisis

Swiss defense companies have therefore begun to take measures: Safran Vectronix in the St. Gallen Rhine Valley has introduced short-time working, while Swiss P Defence in Thun has laid off 22 employees.

The company B&T AG in Thun has opened a site in Germany in order to continue supplying the armed forces. The Geneva branch of Mercury Systems is now submitting its tenders from Spain, and Mowag has relocated the production of armored wheeled vehicles to Germany.

Auterion, a leading company in drone and robot control, has also relocated its headquarters from Zurich to the USA. However, this means that information must now remain under US lock and key.

The plastics manufacturer Carbomill in Seon AG had to hand over know-how to foreign competitors in order to be able to produce abroad. Lockheed-Martin is planning the licensed production of Amraam missiles in Europe, but is excluding Switzerland.

Politicians are aware of the problem

Discussions in the political arena on a possible easing of the rules for arms exports are continuing. The State Secretariat for Economic Affairs (Seco) will soon publish the figures for last year's exports, which will not yet show the full extent of the decline

The industry sees the problem in the joint procurement of armaments by European countries and the tighter export restrictions.

The industry is trying to adapt. B&T relocated production to the USA ten years ago. Although war material accounts for a small proportion of Switzerland's total exports, integration into global supply chains is crucial for the country's security. Parliament is working on a solution, but no progress has been made so far.

Politicians are aware of the problem, but opinions on the solution differ. While some are calling for an easing of export restrictions, others are backing neutrality. The Greens emphasize that Europe does not need more Swiss exports, but a faster rearmament.

The editor wrote this article with the help of AI.