Market insight Switzerland: Industry is working its way out of the crisis

| Author / Editor: Stéphane Itasse / Stéphane Itasse

Significantly rising sales, incoming orders and exports - the Swiss mechanical engineering, electrical and metal industries (MEM) can look back on a successful year 2017. However, the weak profitability of companies is a cause for concern.

Companies in the Swiss mechanical engineering, electrical and metal industries are doing well again.
Companies in the Swiss mechanical engineering, electrical and metal industries are doing well again.
(Bild: Reto Klink/Swissmem)

In 2017, sales increased by 9.4 % compared to the previous year; incoming orders increased by 7.5 % and exports of goods by 5.5 %. Only the earnings situation is still unsatisfactory for 44% of MEM companies, according to the Swissmem association. Business expectations, the more favourable exchange rate of the Swiss franc against the euro and the good economic situation in important markets point to continued positive business development in 2018. Both large companies and small and medium sized enterprises (SMEs) benefited from the positive development in orders and sales.

The high level of incoming orders in recent months has had an impact on capacity utilisation in the plants. According to the Economic Research Office of the Swiss Federal Institute of Technology Zurich (Kof), it was 90.6% in January 2018, which is well above the long-term average of 86.4%. The number of employees in the MEM industries also increased to 322,100, which represents an increase of 4,500 jobs compared to 2016.

Growing export figures

Exports of goods by the MEM industries grew by 5.5% in 2017, reaching a value of CHF 66.7 billion. All sales regions developed positively. Exports to the EU increased by 5.9% and exports to Asia by 3.4%. Exports to the USA recorded the highest growth (+7.4%). The positive export development covered all important product groups. Compared to the previous year, exports of metals grew by 12.6%, electrical engineering/electronics by 4.7%, precision instruments by 4.3% and mechanical engineering by 2.3%.

Overall, the situation of the Swiss MEM industry is better than it has been for a long time. If the recently improved exchange rate situation against the euro and the good economic situation in the most important sales markets continue, the association expects the positive development in the MEM sector to continue in the coming months. Companies in the MEM industries are optimistic in this respect. According to the latest Swissmem survey, 53% of entrepreneurs expect orders from abroad to grow in 2018. Only 10% fear a decline. This optimism is shared by both large companies and SMEs.

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