The actual situation of the Swiss Machinery, Electro and Metal Industry (MEM Industry)

The Covid-Pandemic has left markedly traces in the relevant segments of the Swiss Industry. In comparison to 2019 order intake in 2020 decreased by 6.5 %, turnover by 9.8 %  and exports by high 11.2 %. The global relaxation of Covid containment measures were leading in the second half of 2020 to a gradual recovery of the business situation. The delvelopment of the PMI and the expectation of the entrepreneurs are causing hope, that the recovery will find a continuation in 2021. Contrary exists the fear, that a possible third global wave could lead to another break-in. In addition the existing structural challenges, such as the strong CHF, trade conflicts and the unclear relationship to Europe are dampening the optimism. To hinder a further pandemic related downsizing of jobs the maximum duration of terms for short time compensation should  be extended to 24 months and the new edition of Covid-19 liquidity assistance should be prepared.

As a result of the Covid pandemic  and due to the negative business trend, also the capacity utilisation in the firms wa lower. Outgoing of the already low 83.0 % in the fourth quarter of 2019, the value sank in the third quarter of 2020 to 77 %. Up to January 2021 a recovery to 81.7 % followed. These figures are average values. Also the enterprises have to face different effects of the pandemic. Also the number of persons employed by the MEM Industry sank in the first nine months of 2020 from 324900 to 318300 (-2.0 %).

Exports with a volume loss of CHF 7.6 billion

The goods exports of the MEM Industry retracted in 2020 and in comparison to 2019 by high 11.2 % and reached a value of CHF 60.7 billion, thus resulted a volume loss of CHF 7.6 billion, resulting from all major sales regions. Exports to the USA dropped by 12.6 %, those to the EU by 11.9 % and the ones to Asia by 7.5 %. All major good groups were touched. As against 2019 the good exports of machinery dropped by 12.4 %, in the metal sector by 11.2 % and in the electrotechnic/electronics by 9.4 % andprecision instruments by 8.5 %.

Between encouraging signs and a new break-in

The business development 2020 was marked by a massive and pandemic relevant decrease in the second quarter in order intake, turnovers and exports. The global relaxation of the Covid containment measures allowed a contineous recovery. In the fourth quarter 2020 the order intake was reaching almost the level of 2019. There are encouraging signs that the recovery trend will persist also in 2021. The PMI is registering a partial strong growth in almost all sales areas. Also the expectations of the entrepreneurs for the coming 12 months are more positive as at the end of the third quarter 2020. In the latest Swissmem-Survey declared 45 % of the firms with growing order intake from foreign countries (Q3/20: 38 %). At the same time only 17 % expect sinking orders (Q3/20: 29 %).

This positive evaluation is influenced by the fear that a possible third wave of the pandemic could lead to a break-in. Additionally the continued structural challenges weigh. The worldwide trade conflicts are not removed, and this is negative for the investment climate. Also the future relationship of Switzerland and the EU, the foremost sales area is not clear. Due to the pandemic it is forgotten, that the CHF is overvalued against the EUR, and added its outside value also against the USD and against some currencies of the emerging countries. “We are in a situation between hope and fear,” declares Stefan Brupbacher, Director of the umbrella association Swissmem. “In order to reach a sustainable of the MEM sector needs a quick and nationwide vaccination, enough testing capacities and internationally recognised, forgery-proof vaccination certificates. Only this way technical and service persons and also the sales personnel is capable to travel. This is decicive, because around 80 % of the business of the Swiss MEM Industr is taking place abroad.”

The maximum duration of terms for short time compensation should  be extended to 24 months

Because of the already before the pandemic existing weak demand for investment goods, various MEM firms were already in terms for short time work schemes. These companies will reach in mid 2021 the maximal duration of 18 months. “It is absolutely necessary to avoid a further pandemic job loss in some of the hard hit companies”, underlines Martin Hirzel, President of Swissmem. “Therefore the maximal duration for short work compensation has to be increased to 24 months.” It is equally important for the MEM segment that a and the new edition of the Covid-19 liquidity assistance should be prepared tobeactivated quickly. Swissmem is supporting  the preparative work of the Swiss Federal Finance Department.

Free Trade Agreement and industrial duties

In the medium term also the framework of conditions have to be improved. The first opportunity represents the poll of March 7, 2021. A yes to a Free Trade Agreement with Indonesia would make the access to a promising future markedly easier. With the elimination of industrial duties also the Swiss parliament would empower the export industry targeted and sustainably.