Home News Positive growth – waning demand
Contact Person  Ivo Zimmermann Ivo Zimmermann
Head of Unit
+41 44 384 48 50 +41 44 384 48 50 i.zimmermannnoSpam@swissmem.ch

Positive growth – waning demand

In the first half of 2008, the Swiss mechanical engineering, electrical and metal industry recorded continuing growth with sales up 10.5% and a 6.1% increase in export volume. Nevertheless, incoming orders fell by 9.2% in comparison to record year 2007. Aside from the difficult economic situation, increased commodity and energy prices also took their toll on companies. To reduce dependency on oil and gas and ensure both economical and climate-friendly electricity production, Swissmem is calling upon the Federal Council to give a clear political signal for the construction of new nuclear power stations.

Sales of the 290 reporting members of Swissmem increased by 10.5% in the first half of 2008, whereby domestic sales went up more sharply than sales abroad (13.6% and 9.7% respectively). In the same period, exports rose to CHF 40.7 bn (+6.1%). With a 15.1% increase, primarily the Asian markets continued to display good momentum, while deliveries to western European markets (+5.2%) and the USA (+5.1%) did not rise as steeply.

All subsectors benefited from the previous year’s good order intake, primarily electronics and electrical engineering (+8.6%) and precision instruments (+7.2%). Vehicle construction (+6.1%), mechanical engineering (+5.8%) and metalworking (+3.7%) developed slightly more moderately.

The growth phase of past years was connected with a significant increase in employment in the MEM industry. While the industry counted 304,828 full-time equivalents in the first quarter of 2004, this number had increased to 344,365 by the first quarter of 2008.

Companies are cautiously optimistic about development

While incoming orders last year were at a record high, a decline was recorded in the first half of 2008. Domestic order intake fell by 2.1%, while orders from abroad decreased by 11.0%.

The slowing momentum in demand will most likely lead to stagnating growth. Despite this, companies are cautiously optimistic about the next 12 months. The Swissmem member companies surveyed continue to expect sustainable growth stimuli to originate from Eastern European or Asian markets. For the European markets, expectations are primarily centred on sideways developments, while a slight decline in order intakes is forecast for the USA.

Swissmem − political demands

In recent months, increased commodity and energy prices have lead to a steep rise in procurement costs and have upped pressure on margins yet further. These price increases can be attributed firstly to the strong rise in demand of individual emerging markets, and secondly to the concentration on the supplier end. For this reason, Swissmem is urging the Federal Council to carefully observe the market conduct of these commodity conglomerates and of countries that export commodities, and to intervene appropriately should violations of free market principles be identified. Where necessary, proceedings must be initiated in conjunction with the EU and interventions made at the WTO.

To counter the developments on the commodity and energy markets, the dependency on oil and gas must be reduced in the long term by replacing these fossil fuels with electricity. For this purpose, not only promotion of energy efficiency and renewable energies is required but also new electricity production capacities. To ensure production of electricity is as economical and climate-friendly as possible, Swissmem is calling upon the Federal Council to give a clear political signal for the construction of new nuclear power stations.

Swissmem considers the general wage increase demands submitted by the trade unions inappropriate. Any wage adjustments must be in line with the relevant company situation and take economic developments into account. If manufacturers succeed in completely passing on price increases to consumers, the threat of a wage-price spiral looms, which could lead to stagflation.

Finally, Swissmem is calling for SUVA (Swiss National Accident Insurance Fund) to be able to offer both mandatory and supplementary insurance, as being excluded from supplementary accident insurance is leading to additional expenses and thus higher costs for companies. To prevent SUVA from being weakened and therefore higher premiums for the insured trade and industry sectors, Swissmem has now founded the SUVA Industries’ Platform (Plattform der SUVA-Branchen).

Zurich, August 27, 2008

For further information please contact:

Ruedi Christen,

Head of Communications

E-mail: r.christennoSpam@swissmem.ch

Tel. +41 (0)44 384 48 50, mobile +41 (0)79 317 24 09