Swiss machine industry remains fighting fit

Switzerland's machine industry is vital to the Swiss economy Keystone

The Swiss engineering industries remain competitive compared with rivals in the new European Union member states, a study finds.

But the report from the BAK Basel Economics research group says that Switzerland’s largest export sector must invest more in research and training.

The competitiveness of the machine industry has over the past eight to ten years even improved over the new EU members in eastern Europe, commented BAK’s deputy director, Hansjörg Blöchliger.

He told a news conference in Zurich on Tuesday that labour costs in the Swiss sector between 1995 and 2003 had remained constant, while they had risen by almost eight per cent in the new EU member countries.

Blöchliger added that productivity among Swiss employees was four or five times higher than that of workers in eastern Europe.

Wage costs

However, wage costs in Switzerland were six times higher, putting a certain pressure on companies to move production elsewhere.

He added that labour costs were converging, even if at present they were three to seven times higher in Switzerland.

Commenting on the study, the president of the sector’s umbrella organisation, Swissmem, said that the industry had to continue to reduce costs and increase productivity.

Johann Schneider-Ammann argued that innovation and training alone were not enough to ensure Switzerland’s competitiveness.

But the Swiss sector benefited more than its eastern European competitors in its ability to innovate, in the level of taxation of companies, and the regulation of product and labour markets.

Quality infrastructure

Switzerland, he commented, took advantage of its quality infrastructure and its highly qualified workforce.

But Blöchliger warned that the new EU members were catching up fast after taking sometimes radical fiscal reforms.

They were also investing in transport infrastructure, particularly in economic centres.

Blöchliger argued that the new EU states were not just competitors but markets in full expansion and potential customers for Swiss industry.

swissinfo with agencies

Key facts

Industries in Swissmem employed 300,392 people in Switzerland at the end of 2004.
The engineering industries generated 42 per cent of Swiss exports in 2004, totalling SFr59 billion ($46.24 billion).
65.1% of these exports went to the 25 members of the European Union and to countries of the European Free Trade Association.