Lousy securing of 400 military jobs in Thun

Die Stadt Thun am Thunersee ist idyllisch
The federal government wants to secure 400 Ruag jobs on beautiful Lake Thun. (Image: M. Boxler / unsplash)

Switzerland is trying to save 400 Ruag jobs in Thun. But when it comes to selling Ruag International’s small-caliber ammunition division to Italians, the federal government is taking a rather amateurish approach.

The Federal Council launched a strategy to transform the Ruag defense company, and according to the plan, the small-caliber ammunition division of Ruag International was sold.

The decision was recently made in favor of the Italian Beretta Holding, which is taking over all 2,700 Ammotec employees at all production and sales locations.

Government only spectator

However, Beretta has committed itself to maintaining the Thun site with 400 jobs for at least five years, Ruag International announced in connection with the deal. But how is this to be done in concrete terms?

muula.ch asked Ruag International and was referred to the federal government because of its responsibility in this matter. This alone shows how difficult the constellation is, because the federal government, as the actual owner, was not a direct negotiating partner in the transaction.

However, in response to an inquiry from muula.ch, the Federal Department of Finance (FDF) stated that Beretta had contractually agreed to maintain the production site in Thun for at least five years.

Hoping for intentions

This period applies from the sale of Ruag Ammotec to Beretta, which was concluded at the beginning of August this year, it said.

In the event of non-compliance with this part of the contract, the federal government could then demand and sue for damages, a media spokesman for the FDF explained. 

In addition to the contractual guarantee for the next five years, it was also relevant for the Confederation, as the owner of Ruag International Holding AG, to recognize Beretta’s long-term intentions for the production facility in Thun, which went beyond the guaranteed period, the statement added.

Difficult to monitor

But how is the whole thing supposed to work if the Italian Beretta, which has been family-owned since 1526 and has hardly any reporting obligations to the public, for example, quietly cuts jobs in expensive Switzerland and relocates the jobs to cheaper Italy?

Ruag International said that the sale of Ammotec would be the end of the matter for the defense group. The guarantees in question had been given to “third parties”, i.e. the federal government, and that it was no longer any of Ruag’s business.

When the FDF was asked again, it was told that the federal government was not entitled to provide information on the specific content of the contract between Ruag International and Beretta.

Dismantling under secrecy?

Regarding the question of monitoring site maintenance, however, the FDF points out that a site closure would be associated with a mass layoff. According to the provisions of the Swiss Code of Obligations, such processes must be reported.

This means that the canton of Berne or the regional employment agency RAV, which receive the possible notification of mass redundancies, would have to remember and act on the fact that Ruag has negotiated a guarantee for the 400 jobs on behalf of the federal government.

Eliminating jobs earlier

However, if Beretta acts under the radar with mass layoffs, the whole thing would probably remain undiscovered and the interaction of the canton or municipality and the federal government would remain unclear in this situation.

What if employees quit and the Italians simply don’t fill the positions? After all, the job would still be there? And what if the 400 jobs or parts of them were eliminated after only four and a half years?

Experts shake their heads

muula.ch contacted several lawyers specializing in mergers and acquisitions and asked for their assessments of the negotiations for the 400 jobs in Thun based on the public information.

Numerous Swiss star lawyers are of the opinion that the safeguard construction with the triangular relationship of the federal government, Ruag and Beretta is rather unusual and difficult to implement.

In the answers of the lawyers, words such as amateurish, as well as bungling the negotiation result regarding the job guarantees have also been uttered.

It was said that Switzerland would have to file an elaborate lawsuit and probably even prove some concrete damage in the event of such a case, which it would also have to follow closely for many years inside a closed family business.

Learning for the future

For the federal government – which as a third party was not actually a negotiating partner – this was all very complex.

If those laid off quickly found another job, the matter would become even more complicated because the damage would be reduced. The job guarantee therefore had rather a symbolic character, even one of the lawyers interviewed said.

It would have been much better for Switzerland to write directly into the sales contract a concrete figure, perhaps 50,000 or 100,000 Swiss francs, that Beretta would have to pay to the federal government – per job – if the buyer company cut any jobs in Switzerland or did not fill them again.

For Thun the contracts are closed and the baby has been dropped down the well, so to speak. For the next deal, however, Switzerland can learn.


Lousy securing of 400 military jobs in Thun

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