Low margins as a mortgage for the future of the MEM industries

Following a very difficult previous year, the Swiss mechanical and electrical engineering industries (MEM industries) embarked on a recovery in 2016. New orders rose by 9.5 percent compared to 2015. Although sales fell once more over the year as a whole by 1.8 percent, the fourth quarter of 2016 did see the beginning of a trend reversal. Goods exports remained on a par with the previous year (+0.1%), thereby halting the negative trend. In contrast to these positive developments, earnings are becoming a concern at company level. Almost a quarter (23%) of MEM businesses ended 2016 with a loss at EBIT level. In 2014, this figure stood at just 7 percent. This clearly indicates that the strong Swiss franc is still a challenge for a very large number of companies. The process of accelerated structural change therefore looks likely to continue, particularly given that 46 percent of industrial companies are contemplating relocating operations abroad within the next three years. How things will develop for the MEM industries going forward depends largely on exchange rates and business trends in the key markets