Exclusive Interview Switzerland: “In difficult times, one must invest"

Editor: Susanne Hertenberger

In this exclusiv interview with SMM, Swiss President Johann Schneider-Ammann talks openly about the current economic situation of Switzerland as an industrial base.

“I think it is very important that the industry adapts to the next industrial revolution, known as industry 4.0,” says Swiss President Johann Schneider-Ammann
“I think it is very important that the industry adapts to the next industrial revolution, known as industry 4.0,” says Swiss President Johann Schneider-Ammann
(Bild: Thomas Entzeroth)

Mr. President, what is the significance of the industry for the Swiss economy as a whole?

From my point of view, it is crucial. Industry and real economy are the pillars of the Swiss economy and ultimately a lot of businesses in the tertiary sector benefit from the industry as well.

How do you assess the current situation of the Swiss machine industry?

In recent years, the Swiss MEM [mechanical and electrical engineering] industry has employed between 300,000 and 330,000 people. From many talks with entrepreneurs and trade association representatives, I know that the MEM industry currently faces its toughest test yet. I think it is very important that the industry adapts to the next industrial revolution, known as industry 4.0. Our clear focus must be on how to best handle digital processes. That will be the next big challenge.

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Talking about industry 4.0, do you think that education and training models in the industry are up to date for the coming digitalisation?

Education is a very important aspect of this issue. Today, many still do not know exactly what relevance industry 4.0 will have, but - and this is key here - they know that is both a challenge and an opportunity for them. The talks I had in the last couple of months with business owners have confirmed that our MEM industry is on the right path for the digital age.

Swiss industrial companies particularly feel the effects of the strong franc. Margins and revenues are declining and order intake numbers in 2015 were almost as critically low as in the crisis years of 2003 and 2009.

In difficult times, it is a key responsibility for business owners to invest. We must look ahead. The first quarter of 2016 saw a consolidation of the previous quarter’s sales trend, meaning that the downward spiral is stopped and the bottom should have been reached. However, I must agree with you: The industry is under pressure. Margins are sacrificed and the ability to invest has suffered. All the more reason for businesses to do everything they can to remain competitive. And policy must offer them the best possible framework conditions.

Declining margins can also compromise the capacity for innovation, though?

Yes, lower margins reduce the capacity for innovation. We are aware of that risk. Still, there will not be any interventionist innovation policy from the government, which in the long term has no effect, or even a negative one. We are only responsible for the framework conditions. Businesses alone must decide in which areas they want to innovate, because they know best in which direction they need to drive their innovations.

There is nothing to be done about the strong Swiss franc then?

With our economic policy not directly, no. And the National Bank, the guardian of our currency, is - and this is crucial - independent. The Swiss franc is strong, but it is also overvalued, and for good reasons. Switzerland is very stable, both politically and economically, is productive and has an excellent education system. And we have the best infrastructure. Switzerland is seen all over the world as a model country. All this is also an invitation to invest in our currency.

So you say the Swiss industry must learn to live with it?

I must answer that in the affirmative. The Swiss economy has already partially learned to cope with it. I have the highest respect for entrepreneurs that take on the challenges of the strong Swiss franc and still manage to keep their companies on track with innovativeness and efficiency. In response to the increased pressure, they have modernised and optimised their production.

In Eastern Europe, businesses receive EU subsidies for their capital goods, so that companies there profit from both cheaper means of production and labour than in Switzerland. What is the Federal Council's view on such subsidies?

I think it is key that we find the right response here in Switzerland. Subsidies are not the answer, because they relieve companies of the pressure to produce competitively. That is why our know-how is crucial. Thanks to our excellent expertise and strong innovativeness, we in Switzerland can offer a relevant high added value. Our chances are good, despite the current difficult currency effects.

And a final statement to Switzerland as an industrial base.

A key opportunity of our industrial landscape is the high number of owner-operated companies, which ensures that actions and investments are carried out with a long-term perspective. These are aspects that will contribute positively to the future of Switzerland as an industrial base.

Thank you for the interview.

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