Swissmem says EU no vote would be disaster

Will 2005 be as good as 2004 for Swissmem President Johann Schneider-Ammann? Keystone

The Swiss machinery sector, collectively the country’s largest employer, says 2004 was a "gratifying" year – and remains cautiously optimistic for 2005.

But Johann Schneider-Ammann of the industry umbrella group Swissmem warns against a “no” vote to a labour accord between Switzerland and the European Union.

Swissmem bosses told a news conference in Zurich on Wednesday that their 290 member companies in the mechanical and engineering industries had seen a 7.1 per cent increase in orders for 2004 as a whole.

Sales for MEM industries rose by 5.8 per cent year-on-year, exports rose by 8.3 per cent and overall employment remained stable, at 306,888.

Schneider-Ammann said major priorities for 2005 would be ensuring a yes vote in both EU-related nationwide votes, introduction of a new law on export risk guarantees and renewal of the industry-wide general employment contract.

The Swiss electorate is likely to decide in September on the extension of an accord governing access to the country’s labour market for the ten new EU member states.

In June voters will also have the final say on a treaty with Brussels aimed at closer cooperation on security and asylum issues under the Schengen/Dublin accords.

swissinfo: 2004 seems to have been a better year for your members. How optimistic are you for the future?

Johann Schneider-Ammann: I’m quite optimistic that this year will be as good as last year. We assume international competition will remain roughly at the same level and we will try to further improve our relative position; in other words, I expect volumes comparable to last year. Volume is one thing, the other thing is margins and profits, and here we have to do our homework – reducing costs, improving productivity, more innovation etc.

swissinfo: What will be the implications for the industry if the accord on free movement of people is not accepted?

J.S-A.: It would be an absolute catastrophe. When the Swiss people vote in September, they must know what is at stake. It is not just about whether Poles, Czechs or Hungarians can work in Switzerland. It is about the future access of Swiss MEM industries to their most important export markets. Two-thirds of all our exports went to the EU in 2004.

This accord is part of a package of seven issues and, should we vote against it, the EU would almost certainly retaliate. Without free movement of people there will be no free movement of goods. We would also suffer from not being part of European R&D programmes, from technical trade barriers and from discrimination on public procurement contracts. This means we would lose working places to abroad in large numbers. What responsible entrepreneur could invest in Switzerland if it cuts itself off from its main markets? I really don’t want to think about this scenario.

swissinfo: A related issue is the vote on Schengen-Dublin. Is that equally important?

J.S-A.: It’s not equally important because it is not part of the package. But we also need integration into Europe, so we – the industry – will fight for a yes vote on this as well.

swissinfo: Another issue you have highlighted is the new law on export risk guarantees. How important is this?

J.S-A.: It is very important. The current law does not correspond to international standards, because it does not cover risks involving private sector buyers [of Swiss goods abroad]. Swiss exporters today have a huge disadvantage – certain deals with private buyers cannot be concluded because of lack of coverage, or financial costs must be borne that are up to 80 per cent higher. The new law, once accepted by parliament, will close this gap.

swissinfo: What about renewal of the general employment contract, which runs out at the end of 2005. What is the significance of this?

J.S-A.: The social partnership in this industry and in this country is extremely important. In a high wage country without natural resources, optimal use of working time is a central competitive factor.

We have very high flexibility based on mutual trust, and we want to continue this collaboration with our social partners on this basis. It allows for longer working times, per week or per year, it allows for higher flexibility, it leaves the discussion about salaries on an individual level. It is this tailor-made approach that is one of the bases of the competitiveness of Swiss industry.

swissinfo–interview: Chris Lewis

Key facts

New orders: Up 7.1% to SFr89.5 billion.
Sales: Up 5.8% to SFr90.7 billion.
Exports: Up 8.3% to SFr59.06 billion.
Capacity utilisation: Up 7.4% to 88.2%.
Employees: 306,888 (as of end September – 305,972 at end 2003).
Unemployed: 10,843 (down from 13,184)
Part-time workers: 1285 (1829 in 2003).
Number of member firms: 290.