The annual result for 2009 reflects the extremely low level of market activity in the various regions of the globe. New orders from abroad were 27% lower than in the previous year, while domestic orders declined by 17.7% Signs that the market situation was stabilizing at a low level emerged during the final quarter of the year. The 290 Swissmem reporting companies received 5.3% fewer orders from abroad during 2009, while domestic orders were down by 10.9%.
The reporting companies’ sales decreased by 20.3% year-on-year, with large falls being experienced in both the domestic (-16.6%) and foreign (-21.2%) markets. Business remained subdued throughout the fourth quarter, with domestic and foreign sales 13.7% and 19.7% below the previous year’s levels respectively. Quarterly sales were corresponding low, similar to the levels last seen in 2004.
Large drop in exports
Exports by the MEM companies were 20.8% down year-on-year as a result of the challenging market situation, although the fall in the fourth quarter of 2009 was rather more moderate at 13.1%. The strong decline in exports to the European markets (-23.3%), which account for some two thirds of all exports by the MEM industries, had a particularly heavy impact. The negative trend was reinforced by decreases in exports to the USA (-21.7%) and Asia (-11.4%). Exports to Asia in the fourth quarter of 2009 were at virtually the same level as in the previous year (-1.8%), while exports to European countries fell substantially short of 2008 levels (-15.1%).
Big differences between industries and markets
All product areas experienced a downturn in 2009. This downturn was particularly strong in the metalworking (-31.3%) and mechanical engineering (-25.9%) sectors, while the electronics and electrical engineering and precision instruments subsectors were less hard hit (-16.2% and -7.2% respectively). Since it followed on abruptly from a phase during which production was extremely high, the slump in the global economy caused markedly lower capacity utilization than in 2008. Having averaged 86% for many years, capacity utilization fell to around 77.5% in the fourth quarter of 2009.
Business outlook uncertain
The business outlook for the coming months is fraught with uncertainty. Even though many companies are assuming that most European markets will slowly recover and are expecting a slight increase in economic stimuli from other regions of the globe, it cannot be taken for granted that there will be a rapid, sustainable recovery. The persistently low level of business activity compared to 2008, the disparate financial situations of countries and companies and the heterogeneous development of submarkets continue to present major challenges that will demand entrepreneurial flexibility.
24 months and free movement of persons
In light of this situation, it may make sense for certain companies to continue to resort to short-time working. Swissmem therefore supports the demand that has been made to extend short-time work to 24 months. Being able to do so would enable certain companies to retain the staff and skills that they will need when the upturn comes. Swissmem does not believe that this conflicts with the agreement on the free movement of persons, which gives companies easier access to European markets and facilitates the exchange of knowledge that this brings. Studies show that the free movement of persons has neither pushed unemployment up substantially nor undermined the social security system. It is a key factor in Switzerland’s prosperity. Swissmem therefore regards the SVP’s demands for termination and renegotiation of the agreement as the wrong course of action.
A healthy social security system is essential to retaining Switzerland’s competitiveness and position as a centre of business activity. This is why Swissmen is recommending that people vote "yes" on the issue of a fair conversion rate on 7 March 2010.
Zurich, 23 February 2010
For further information, please contact:
Ruedi Christen, Head of Communication
Tel.: +41 (0)44 384 48 50 / mobile: +41 (0)79 317 24 09