Swiss engineering sector faces grim outlook

Swissmem has more than 1,000 member companies in Switzerland and abroad. © Keystone / Gaetan Bally

Growth in the Swiss engineering and metals industries deteriorated significantly in the first half of 2019 and forecasts are equally gloomy. The sector is calling for more certainty in ties with major trade partners.

New orders in the Swiss mechanical engineering, electrical engineering and metals (MEM) industries fell by 12.5% in the first half of 2019 compared with the same period last year according to the industry association SwissmemExternal link.

The decline was particularly pronounced in the second quarter of 2019, when orders fell by 19.5% year-on-year. Exports and sales also fell, albeit by a smaller share, in the first half of 2019. This was driven largely by the EU and Asia where exports dropped.

Large and small firms have been similarly affected by the negative development with firms running at an average 83.7% capacity, below the long-term average of 86.4%  

Swissmem says the outlook for the next couple of months is worse in light of currency conflicts, trade tensions, and a potential disorderly Brexit. The appreciation of the Swiss franc also has a negative impact on the price competitiveness of MEM companies.

The latest KOF Employment surveyExternal link indicates that further deterioration could affect employment growth. While employment numbers were up 2.6% in the first quarter of this year, Swissmem does not expect further growth in the coming months.

“The latest developments are cause for great concern. I anticipate a further contraction in demand,” Stefan Brupbacher, Director of Swissmem, said in a press release.

He added that the industry does not want subsidies but rather more certainty on the EU framework agreement and ratification of free-trade agreements with Indonesia and Mercosur  

“I therefore call on the Federal Council, parliament, the social partners and the administration to take the export industry’s needs seriously.”