Toolmaking Austria/Switzerland: Driven by exports

Author / Editor: Dr. Wolfgang Boos, Michael Salmen M.Sc., Thomas Kuhlmann M.Sc., M.Sc., Dipl.-Ing. Dipl.-Wirt.Ing. Max Schippers, Dipl.-Wirt.-Ing. Maximilian Stark / Barbara Schulz

During the course of 2016, WBA Aachener Werkzeugbau Akademie, Germany, presents spotlights of the most important international tool and mould markets. This edition focuses on Switzerland and Austria with their export-driven tooling markets.

Fig. 1: China's tool and mould production regions. The large share of the economic power concentrates on the east coast.
Fig. 1: China's tool and mould production regions. The large share of the economic power concentrates on the east coast.
(Source: WBA)

Switzerland and Austria are situated in the picturesque Alpine regions and share a part of their borders. Switzerland is a land of glacier-covered mountains and crystal-clear lakes. It is the global leader in the manufacture of high quality watches and has centuries of tradition in producing cheese and chocolate, while Austria brought forth composers like Mozart and Haydn and is the land of gentian and edelweiss, with a landscape that makes for an important part in tourism.

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Switzerland, located in central Europe, belongs with 8.06m citizens to the smaller European nations but is densely populated in the midlands. Austria, known as a transit nation in not only the north-south but also east-west routes, belongs to the world’s leading developed nations. It is a landlocked country in the middle of Europe with 8.22m citizens, which joined the EU in 1995. With 2m people, the percentage of foreigners in Switzerland is very high. Unlike most of its neighbors, Switzerland is not a member of the EU. Because of high immigration numbers, the UN assumes that the population will remain constant until 2050, despite a low birth rate. Austria was the 12th most popular immigration destination in 2012 according to the OECD. Both countries belong to the leading industrial nations in the world.

The Swiss economy and industry

Even though Switzerland is not a member of the EU, many regulations were designed in conformity to those of the EU. Trade restrictions are effective only in the agricultural industry, which makes for a small amount of the economic strength.

With 59%, the concentration of the economic performance in the four centres – Zurich, Geneva, Basel and Bern is in comparison to other countries very high. Measured in terms of the gross domestic product (GDP), Switzerland is one of the largest economies in Europe and the 20th largest economy in the world. With a GDP per capita of €78,000, the country leads the list of surveyed countries in the study “World of Tooling”.

The economy reached a growth of 1.7% per year for the last 4 years. With the end of the minimum exchange rate of the Swiss franc to the euro in January 2015 and the resulting appreciation of the franc, experts expect a decrease of growth in 2015 to 0.9%. Worldwide, Switzerland is currently the 23rd largest export and import nation. The country exported goods worth €308bn in 2012. The three biggest exports were high-tech products, weapons and pharmaceutical products. The service industry employs 75% of all employees.

The financial industry takes a key position in the service industry with 10.5% of the GDP. Switzerland is not endowed with natural resources, but covers 56% of its energy needs with hydroelectric power. The wage level of €45,197 in 2013 occupies the second position of all industrial nations.

On average, employees work 1,607 hours every year, which is 8% less than the average of the industrial nations. The labour laws are conducive for employers and allow for up to 50 hours per week and short notices of termination.

The Austrian economy and industry

Austria is, in terms of its gross domestic product, one of the mid to large-sized economies in Europe. With a GDP per capita of €45,726, the country occupies the third place within the surveyed countries of the study “World of Tooling”. Austria could only briefly recover from the economic crisis in 2008 and 2009. The rate of unemployment rose between mid-2011 and the end of 2014 mainly because of lower domestic demand. Nevertheless, the economy has grown by 1.1% per year for the last 4 years. However, the outlook for 2015 and 2016 is on a low but positive level and beneath the EU average. Economic experts feel that the public and private investments are too low.

Worldwide, Austria is the 29th and 26th largest export and import nation respectively. The country exported goods worth €126bn in 2013. The three largest exports were automobiles, machines and chemistry products. The country also has a large amount of different natural resources. The wage level with an average of €37,666 in 2013 was significantly above the average of all industrial nations. On an average, the Austrians work 1,673 hours every year, which is 4% lower than in the other industrial nations. The importance of tourism amounts to 5.5% of the GDP and is underlined by 131.9m overnight stays every year. Not only tourists, but also Austrians are satisfied with their country and the public services offered according to international surveys.

Swiss toolmaking industry

The image of Swiss precision in watch manufacturing holds true for the producing tool and die industry as well. Swiss tool and die manufacturers have a strong understanding of complex machine technology and highly precise workmanship. Due to high labor costs, which can be partially compensated by long working hours and smaller employer contributions, the Swiss tool and die manufacturers have to focus on upmarket tools. In 2013, tools and dies worth €422.93m were exported, of which €318.26m were for injection moulds, €87.06m for solid and sheetmetal forming tools and €17.62m for die casting moulds. Switzerland registered a total value of €283.9m, apportioned among €198.61m for injection moulds, €69.45m for solid and sheetmetal forming tools and €15.83m for die casting moulds.

The Swiss trade of tools with foreign markets for 2014 is illustrated in Figure 4. The largest trade partners for importing injection moulds are Germany, Italy and Austria. The value of German goods is nearly four times larger than that of Italy.

Injection moulds are mostly exported to Germany, Austria and USA. The largest trade partners for importing sheetmetal and massive forming tools are Germany, Italy (the value of German goods is more than six times larger than that of Italy) and Austria, while they are exported mainly to Germany, Austria and France. Many tool and die making companies use their diverse process knowledge to increase the productivity of their tools and dies for their customers.

The technological comprehension, together with the precise production of tools and dies, points to highly developed competences in Switzerland. Measured in absolute production numbers, Switzerland takes a mid-position compared to other tool and die markets. The relatively low number of companies is well suited for production and export of tools largely due to their know-how.

The appreciation of the Swiss franc and the subsequently increasing difficulties of an industry dependent on exports results in a low development rating for Switzerland as shown in the study “World of Tooling”. Switzerland in general has a high tool and die competence for a mid-market size.

Austrian toolmaking industry

The trade figures show that the tool and die industry focuses on the production of injection moulds, which are mostly exported. A higher volume of simple value chain products are imported from cost-effective markets and processed to high quality tools and dies. This can be explained by the geographic position of Austria, which has direct access to not only high quality and complex tools and dies from Germany and Switzerland but also to cheaper manufacturing goods from the Czech Republic and Poland.

The technological understanding and tool and die quality is at a high level. This is underlined by 437 patent registrations in the tool and die industry between 2000 and 2011. The production of tools and dies in 2013 was worth €504.18m. This value has increased by approx. 35% from €372.91m, since 2010. In 2013, tools and dies worth €485.75m and 2,106 tonnes were exported, of which €61.16m were for solid and sheetmetal forming tools, €411.39m for injection moulds and €13.2m for die casting moulds. Austria registered a total value of €247.70m in imports, split into €64.9m for solid and sheetmetal forming tools, €157.45m for injection moulds and €25.35m for die casting moulds.

The Austrian trade of tools with foreign markets for 2014 is illustrated in Figure 4. The largest trade partners for importing injection moulds are Germany, the Czech Republic and Switzerland. Injection moulds are mostly exported to Germany (the total value is more than four times higher than the US), the US and Switzerland. The largest trade partners for importing sheetmetal and massive forming tools are Italy, Germany,Switzerland, while they are exported mainly to Germany, the US, Switzerland.

As the development perspective of the industry appears positive but restrained and the tool and die industry is well established, the development potential is rated between medium and high as shown in the study “World of Tooling”. Austria has a high export rate and disposes of a high tool and die competence, which is on a level with Canada and the US.

Sources:

  • Istma International Special Tooling and Machining Association, 2014
  • Organisation for Economic Cooperation and Development OECD, 2012-2014
  • United Nations Comtrade Database, 2010-2014

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