Starting from a strong order situation in the first quarter of 2011, new orders over the last four quarters have declined in a year-on-year comparison. In the first three months of 2012, the 290 Swissmem reporting members posted a year-on-year decline of 19.1% in foreign orders, whereas domestic orders were down 9.6%. Given the limited willingness of customers in key markets to invest, the majority of companies are currently expecting continued stagnation in the development of new orders. Overall, sales in the MEM industries were some 2.1% up in a year-on-year comparison, with positive domestic sales (+10.6%) offsetting the negative development in foreign sales (-0.5%). If new orders stabilize at a lower level, this could lead to a continued downtrend in foreign sales over the months ahead. The low valuation of the euro – which was still trading at an average of CHF 1.29 back in Q1 2011 – is continuing to weigh on company margins. Swissmem therefore expects the Swiss National Bank to defend the euro exchange rate level of CHF 1.20 and to review further measures to counteract the overvaluation of the Swiss franc.
Fewer stimuli from Asia
Whereas strong stimuli from the Asian markets were still apparent at the beginning of 2011, these were largely absent in the first quarter of this year. Although exports to Japan remained stable in Q1 2012, developments in the key markets of China (-40.0%), India (-18.1%) and South Korea (-16.3%) were strongly negative. However, it should be noted that a marked baseline effect applies in the case of China, as export developments were extremely positive in this market a year ago. In a comparison over a number of years, exports to China were at an average level similar to that achieved between 2007 and 2009.
One positive development in the first quarter of 2012 was the robustness of the US market, where export growth of 6.6% was recorded. By contrast, companies exported 7.1% less to the EU – still the most important trading partner of the Swiss MEM industries by far, accounting for more than 60% of exports – than they did in the first quarter of 2011. Although a double-digit decline in exports was recorded in many European countries, exports to the key market of Germany (27.6% of MEM exports) developed in a relatively stable manner (-2.5%). The investment climate is proving restrained as a result of the austerity policies in place in many European countries. The outlook for the EU as the MEM industries’ key market is therefore muted. Capacity utilization in the MEM industries was a healthy 89.9% in the first quarter of 2012, but declined to 85.2%, which is below the long-term average of 86.4%, at the start of the second quarter.
Uncertain situation: need to avoid additional burdens
Stagnating markets and a significant overvaluation of the franc have greatly increased the pressure on companies from the MEM industries to adapt over the last two years. Dwindling margins that have culminated in losses are forcing companies to make extra efforts in the area of innovation. Additional efficiency gains, cost reductions and increased flexibility at operating level are essential if companies are to regain their competitiveness. Swissmem is therefore calling for the following steps to be taken to support this process:
- Innovation activity needs to be further strengthened at tertiary education level, and the budget of the CTI should be increased. In the future, this innovation agency needs access to at least CHF 150 million for development projects with industry alone. In addition, the CTI needs to be given a new organizational form that offers more flexibility and allows for a long-term and sustainable innovation promotion strategy.
- The first package of measures for the implementation of the Energy Strategy 2050 put forward by the Federal Council envisages an increase in the fiscal burden of various energy sources (CO2 levy, compensatory feed-in remuneration), to which Swissmem is resolutely opposed. The planned massive price increases for electricity would further hamper the Swiss export industry in its efforts to compete internationally.
- High priority should be given to concluding the planned free trade agreements with China and India. In view of the anticipated long-term economic weakness in Europe, ensuring that MEM companies have customs-free access to these growth markets is extremely important.
- Switzerland’s relationships with its key trading partners – including its European neighbours, for example, which have a key role to play for companies in the MEM industries despite the ongoing debt crisis – need to be carefully cultivated at a political level. In this context, the current initiative «State treaties before the people!» by the AUNS (Movement for an Independent and Neutral Switzerland) is having a counter-productive effect, as it threatens jobs, weakens Switzerland’s negotiating positions, and thereby damages the open Swiss economy. Swissmem rejects this initiative.
Zurich, 24 May 2012
For further information, please contact:
Ivo Zimmermann, Head of Communications
Tel.: +41 (0)44 384 48 50 / mobile: +41 (0)79 580 04 84