In the second quarter of 2016, new orders received by the MEM industries grew robustly year-on-year, increasing by a full 18.5%. However, there was also a base effect behind this increase, as the prior-year quarter's result had been extremely weak due to the Swiss franc shock. All the same, looked at as a whole, the increase in orders for the first half of the year was an encouraging 9.6%. Sales also turned slightly positive in the second quarter of 2016. Compared with the same quarter of the previous year, they were up 1.8%, thus bringing to an end a long phase (seven quarters) of negative sales development. Looking at the first half of 2016 as a whole, however, MEM industry sales were 3.5% lower than for the first half of 2015. In the context of the incipient recovery in sales, we should additionally qualify that this is manifesting primarily among the larger companies. Due to the recent surge in new orders, however, sales seem likely to develop positively across the board in the second half of the year. Capacity utilization among MEM companies reached 86.7% in the second quarter of 2016, slightly above its long-term average of 86.3%.
Exports: Growth in the EU and USA – slowdown in Asia
According to figures from the Swiss Federal Customs Administration, goods exports by the MEM industries remained virtually the same (-0.1%) year-on-year in the first half of 2016, achieving a merchandise value of CHF 31.6 billion. In the second quarter, exports also saw the beginning of a trend reversal. After having to record a further year-on-year decline of 1.9% in the first quarter of 2016, exports in the second quarter were up by 1.8% year-on-year. The key sales regions showed mixed developments in the first half of 2016. Goods exports to the EU (+3.4%) and USA (+2.6%) picked up. By contrast, exports to Asia contracted markedly (-6.4%). Looking at individual product segments, precision instruments exports rose by 4.7%, electrical and electronics exports by 2.3%, and metal industry exports by 1.6%. Only in the mechanical engineering segment did exports continue to fall in the first half of the year (-2.1%).
Indications that employment is stabilizing
The effects of the challenges that the MEM industries have had to face during the last year are reflected in their headcount. The MEM industries employed 321,000 people in the second quarter of 2016 1.4% fewer than in the prior-year period. 9,200 jobs have been lost since the scrapping of the euro peg. However, employment in the second quarter of 2016 was up slightly on the first quarter figure of 319,400.
Cautiously optimistic outlook
Current figures for the MEM industries indicate that the nadir has been passed. Companies’ expectations are also cautiously optimistic. According to the latest Swissmem survey, 36% of companies are anticipating increases in orders from abroad in the next 12 months. Just 13% were worried about a decline in orders; the proportion of pessimists has thus been shrinking continuously for a year now. Nonetheless, the consequences of the strong Swiss franc are still having an impact on some businesses. The franc remains clearly overvalued against the euro. Companies – and especially SMEs – are still under considerable margin pressure.
No to popular initiatives – yes to Corporate Tax Reform III
The performance figures for the MEM industries in the first half of 2016 show that the majority of companies have adjusted to the extremely challenging conditions. This is worthy of respect and recognition. Now it is the turn of policymakers and the public to do the right thing too. Landmark political decisions are due to be made during the next six months. For the MEM industries, it is important that the four upcoming popular initiatives «AHV-Plus für eine starke AHV» (initiative to increase AHV pensions), «Für eine nachhaltige und ressourceneffiziente Wirtschaft» («For a sustainable and resource-efficient economy»), «Für den geordneten Ausstieg aus der Atomenergie» («For an orderly withdrawal from the atomic energy programme») and «Für Ernährungssicherheit» («For food safety») be rejected. These initiatives threaten to permanently impair the competitiveness of the industries and thus cost a considerable number of jobs. In addition, the «Corporate Tax Reform III» initiative, which is important for both large and small firms, must be adopted if and when a referendum is held. And last but not least, a solution needs to be found for the implementation of the mass immigration initiative. If this is not possible, the uncertainties over the future tax regime and our relationship with our most important trading partner, the EU, would be prolonged indefinitely. Furthermore, Switzerland would lose its association with «Horizon 2020», thus jeopardizing our capacity to innovate – our most important asset – palpably and for a long time to come.
The MEM industries need reliable and supportive economic conditions. More bureaucracy and additional, politically motivated costs would put their recovery, and thus a great many jobs, at risk.
Ivo Zimmermann, Head of Communications
Phone: +41 (0)44 384 48 50
Mobile: +41 (0)79 580 04 84
Philippe Cordonier, Communications Manager, French-speaking Switzerland
Phone: +41 (0)21 613 35 85
Mobile: +41 (0)79 644 46 77