The Swiss mechanical and electrical engineering industries (MEM industries) were able to capitalize on the general economic recovery in 2010. However, the differences within the sector are considerable. While the order situation at the vast majority of companies can be described as satisfactory, a few firms, especially late-cyclical businesses, are still in a difficult position.
Looking at the sector as a whole, order intake increased by 12.1% in the first nine months of 2010, with international orders (+11.9%) more or less keeping pace with domestic orders (+12.2%).
Although sales figures for the first nine months of the year came in below the previous year's levels (-3.4%), there are signs that the situation may be stabilizing. Domestic sales (+5.4%) performed better than international sales (-5.9%). Sales are currently ranging slightly above their 2005 level, and are thus still down by a quarter on 2008’s peak levels.
Capacity utilization in the MEM industries has improved over the course of the year, from 76% in the first quarter to 85% in the third, bringing it to a level only slightly below that of its long-term average of 86%.
Weakening pace of growth in the third quarter
Looking at the third quarter in isolation, sales surpassed their previous year's level by the thinnest of margins (+0.1%) – for the first time in seven quarters, it should be noted. Nevertheless, the growth in new orders (+5%) weakened considerably compared to the first half of 2010 (+15.7%).
Alongside slowing global growth, the main dampening effect on new orders for the MEM industries is likely to have been the strength of the Swiss franc. While the euro has not become any weaker in past weeks, the US dollar continued to lose value against the franc. Accounting for just under a fifth of export volumes, dollar-based markets are the second most important economic area for the MEM industries. By way of comparison: the eurozone is the sector's largest market, accounting for two-thirds of export volume. A striking aspect here is that our European competitors, for example in Germany, are reporting higher rates of growth in orders than the MEM industries in Switzerland. This circumstance highlights one component of the currency problem facing our exporters.
2011: cautious optimism
Swissmem's 290 reporting members are looking ahead to 2011 with cautious optimism. Almost half of the reporting companies anticipate an improvement in new orders generated abroad. Swissmem therefore expects to see a fundamentally positive trend for 2011. Nevertheless, there are signs that the pace of growth in new orders is set to decline.
Zurich, November 12th 2010
For further information please contact:
Peter Dietrich, CEO of Swissmem
Tel.: +41 (0)44 384 42 11
E-mail: p.dietrichnoSpam@swissmem.ch
Ivo Zimmermann, Head of Communications
Tel.: +41 (0)44 384 48 50 / mobile: +41 (0)79 580 04 84
E-mail: i.zimmermannnoSpam@swissmem.ch