MEM industries: recovery trend confirmed :: Swissmem - Switzerland's Work Place and Think Tank

MEM industries: recovery trend confirmed

20.11.17

The recovery of the Swiss mechanical and electrical engineering industries (MEM industries) is continuing. In the first nine months of this year, MEM industry sales recorded a year-on-year rise of 8.2 percent. Rises were also recorded in the areas of new orders (+1.1 percent) and goods exports (+3.3 percent). The most important indicators point to further positive momentum over the next few months. This gratifying development is primarily attributable to a strong economic environment in key sales markets. However, a weaker Swiss franc is also providing a tailwind. The MEM industries now need a prolonged phase of growth with better margins so that they can compensate for the dramatic slump in margins and the asset erosion of recent years and invest more in the future again.

Sales in the Swiss mechanical and electrical engineering industries (MEM industries) rose by 8.2 percent year-on-year over the period January-September 2017. In the third quarter, the year-on-year increase in sales amounted to an impressive 12.1 percent. Large companies and SMEs benefited equally from this development. In the first nine months of 2017, new orders rose by 1.1 percent compared to the prior-year period. In the third quarter, the MEM industries recorded very solid year-on-year growth of 10 percent. The main driver of this pleasing development is the increase in order volumes from abroad. In the third quarter of 2017, the Swissmem new orders index rose to its highest level for a decade. Capacity utilization among MEM companies amounted to 86.9 percent in the third quarter of 2017, slightly above the long-term average of 86.4 percent. The latest KOF survey suggests an even higher value of 87.9 percent for October 2017. Company owners within the MEM industries are also optimistic regarding the future development of business. According to the Swissmem survey carried out in October 2017, 50 percent of companies are anticipating an increase in orders from abroad over the coming 12 months. Just 10 percent fear a decline in orders.

 

Exports: growth in all markets

According to figures from the Swiss Customs Administration, exports by the MEM industries recorded a year-on-year rise of 3.3 percent in the first nine months of 2017. Total merchandise value was CHF 48.7 billion. Exports grew in all key sales regions. Exports to the USA (+4.4%) and the EU (+3.8%) performed particularly well, but exports to Asia were also up (+1.7%). Looking at individual product segments, metal industry exports rose by 11.0 percent, electrical and electronics exports by 3.3 percent, precision instruments exports by 1.7 percent, and mechanical engineering exports by 0.6 percent.

 

Asset erosion needs to be reversed

MEM industry sales have now recorded year-on-year rises for four successive quarters. The new order situation is also developing pleasingly. This is above all attributable to the strong economic environment in key sales markets. The latest development in the Swiss franc-euro exchange rate is providing additional momentum. Moreover, the most important indicators are pointing to further positive business development going forward. The MEM industries now appear to have settled into a solid recovery trend.

 

However, it should not be forgotten that the companies of the MEM industries have endured significant – and in many cases huge – margin slumps in recent years. Almost a quarter of businesses recorded a loss at EBIT level last year, and were therefore eating away at their asset bases. Hans Hess, President of Swissmem, comments as follows on the current situation of the MEM industries: «I am pleased to acknowledge the positive recent developments. However, the MEM industries now need a prolonged phase of growth with better margins so that they can compensate for the asset erosion of recent years and invest more in the future again.»

 

 

Attachements:

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For further information please contact:

Ivo Zimmermann, Head of Communications

Tel. +41 44 384 48 50 / Mobile +41 79 580 04 84

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Philippe Cordonier, Communications Manager,

French-speaking Switzerland

Tel. +41 21 613 35 85 / Mobile +41 79 644 46 77

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Contact

Ivo Zimmermann

Head of Communications

 

Telephone +41 44 384 48 50

Mobile +41 79 580 04 84

i.zimmermannanti spam bot@swissmemanti spam bot.ch