The Swiss defense industry risks losing its export niches and facing losses due to strict restrictions on the supply of its products to other countries, primarily the EU, writes Bloomberg, citing industry representatives.
“Given the billions of European defense investments that we expect in the coming years, EU countries will most likely deliberately exclude Swiss products from their supply chains“, said Matthias Zoller, head of the Swiss Defense Industry Association. He believes the Swiss defense industry’s prospects will worsen as current supply contracts expire in the coming years and EU competitors are aggressively increasing investment in new developments.
Strict export restrictions prevent the country from sending products to conflict zones and also prohibit other countries from reselling weapons if they contain more than 50% Swiss components. Exceptions to these rules were removed in 2021. “Customers only placed new orders with us if we could guarantee that our products were not made in Switzerland,” said Peter Huber, CEO of Systems Assembling, whose company decided to move production to Portugal to circumvent the restrictions.
Swiss manufacturers will also miss out on the benefits of a large-scale rearmament program initiated by the EU. In the absence of strict control standards, Swiss companies producing armored vehicles, small arms, artillery systems and a wide range of high-tech components could actively join the process and occupy new niches. However, since 2022, arms exports from the country have fallen by 30%, to 665 million Swiss francs (about 66 billion rubles). Companies and governments in the EU have begun to avoid Swiss weapons. “Products from our Swiss production site are on the blacklist of many of our European customers“, said Giuseppe Killari, CEO of armored vehicle manufacturer GDELS-Mowag.
At the same time, as Bloomberg points out, the largest political force in parliament, the Swiss People's Party, intends to strengthen the country's neutrality. This would further tighten export rules, which could lead to Swiss manufacturers losing most of their overseas supply contracts, said Antonio Barroso, senior analyst at Bloomberg Economics.
On March 4, European Commission President Ursula von der Leyen announced that she had proposed an 800 billion euro rearmament plan that would involve EU countries borrowing up to 150 billion euros for defense. The EC would like to borrow this money on capital markets and then transfer it to countries in the form of loans, provided that they jointly purchase weapons from Europe. Under the Brussels plan, some of this money could go to produce weapons for Ukraine.