MEM industries: gratifying business trend
The Swiss mechanical and electrical engineering industries (MEM industries) are performing well. In the first half of 2018, new orders increased by 24.1% and sales by 16.4% compared with the same period of last year. Goods exports grew by 7.5% to CHF 34.8 billion in the first half of 2018. The positive business trend is expected to continue for another six to twelve months. Thereafter, a slowdown in the economy is a possibility. One of the biggest challenges the industry will face in the next few years is the growing shortage of skilled labour. The MEM industries' new collective employment agreement (GAV/CEA) includes a number of measures aimed at countering this problem. At the same time, it will be im-portant over the long term to maintain non-discriminatory access to the EU in-ternal market and the other world markets with as few barriers as possible. Swissmem thus urges the Federal Council to bring the negotiations on a frame-work agreement with the EU to a conclusion by the end of this year. Moreover, Swissmem rejects the Fair Food and Food Sovereignty initiatives that the elec-torate will vote on in September.
New Orders MEM industries (Base: 1st q. 2001 = 100)
New orders in the Swiss MEM industries increased by 24.2% in the second quarter of 2018 compared with the same quarter of the previous year. For the first half of the year as a whole, order intake went up by 24.1%. In the second quarter of 2018, sales in the MEM industries also climbed by 16.3% year-on-year. Overall, they rose by 16.4% in the first half of the year. On average, the index values for new orders and sales reached their highest levels for ten years in the first half of 2018.
The Swiss MEM industries employed 325,500 people in the first quarter of 2018 – 2.6% more than in the same period a year ago. The Federal Statistical Office (FSO) employment figures for the second quarter of 2018 are not yet available. Capacity utilization among MEM companies reached 91.9% in the second quarter, which is well above the long-term average of 86.4%.
Export growth in all markets
According to figures from the Swiss Customs Administration, exports by the MEM industries rose by 7.5% year-on-year in the first half of 2018. Total merchandise value was CHF 34.8 billion. Higher exports were achieved in all key sales markets and product sectors. Exports to the EU (+9.1%) and the USA (+7.3%) performed particularly well. The growth in exports to Asia was considerably weaker (+1.5%). Although exports to China increased by 10.8%, a fall in exports to the other Asian countries, and to the Middle East in particular, nevertheless dragged down the over-all result for Asia. Looking at individual product segments, metal industry exports rose by 11.1%, mechanical engineering exports by 9.2%, precision instruments ex-ports by 7.9%, and electrical and electronics exports by 7.0%.
Encouraging position overall
Overall, the Swiss MEM industries are in a very good position. This is also having a positive impact on employment. In just a year, the MEM industries have replaced two thirds of the jobs that were lost when the minimum exchange rate was scrapped. Hans Hess, President of Swissmem, says: «I am delighted that the situa-tion has improved again for the great majority of MEM companies. I am confident that the positive business trend will continue for another six to twelve months. After that, there is a possibility that the economy may slacken, particularly since early-cycle sectors are already noticing a slowdown in growth.» Swissmem members agree with this assessment. According to the latest survey, 51% of companies are expecting orders from abroad to remain much the same in the next 12 months. By contrast, the number expecting orders to increase fell by 12 percentage points be-tween the first and second quarters of 2018 (Q1/18: 48% / Q2/18: 36%).
Shortage of skilled labour and market access present challenges
One of the biggest challenges the Swiss MEM industries will face in the next few years is the shortage of skilled labour. Swissmem is therefore working intensively on its retraining initiative, which enables adults who have completed basic training in one occupation to undertake further training in another field of work. Moreover, the MEM industries' new collective employment agreement features a number of measures for staff development and training designed to enhance the sector's ap-peal as an employer. It also contains recommendations as to how young people, women and older employees can be given specific support and help in reconciling family and career. All this is aimed at ensuring that the MEM industries can rely on having sufficient qualified personnel in future too.
Furthermore, free trade is under great pressure for reasons of domestic and global policy. Given that the Swiss MEM industries export 80% of their goods, securing and expanding access to global markets with as few barriers as possible is a top priority for Swissmem. Swissmem is therefore opposed to the Fair Food and Food Sovereignty initiatives. They breach WTO rules, jeopardize existing trade agree-ments and make it harder to conclude new free trade agreements.
By far the most important market for the MEM industries is the EU. The current ex-cellent access to the European internal market must therefore be maintained and legal certainty improved. Switzerland needs a framework agreement with the EU in order to achieve this. Swissmem urges the Federal Council to bring the correspond-ing negotiations with the EU to a conclusion by the end of this year. As Hans Hess says: «The economy needs clarity on this question.»
For further information please contact:
Ivo Zimmermann, Head of Communications
Tel. +41 44 384 48 50 / Mobile +41 79 580 04 84
E-mail i.zimmermann @swissmem .ch
Philippe Cordonier, Communications Manager, French-speaking Switzerland
Tel. +41 21 613 35 85 / Mobile +41 79 644 46 77
E-mail p.cordonier@swissmem .ch