The Swiss machinery, electrical equipment and metals (MEM) industry is in serious trouble.
While orders have collapsed and almost three quarters of the companies in the sector anticipate profitability problems for the current financial year, Swissmem is calling for better framework conditions.
“The coronavirus crisis will hit the MEM industry, which is heavily export-oriented, hard on the market only in the months to come,” the umbrella association said in a statement on Tuesday, recalling that the purchasing managers’ index (PMI) in the industry has reached a historically low level due to the pandemic.
It also points out that 72% of MEM companies expect by 2020 insufficient losses or margins. In addition to the difficulties known before the crisis – economic downturn, strong frankness – the containment measures taken to stem the pandemic resulted in order cancellations for almost one in two companies.
Over a third of industry players (38%) expect to end the year with a negative profit before interest and taxes (EBIT). Another large third (34%) expects an Ebit margin between 0-5%, “which does not allow these companies to invest in the future”.
Best framework conditions
Recalling that the MEM industry exports almost 80% of its products, Swissmem demands better framework conditions in order to give companies more room for maneuver and to support their capacity for innovation.
The umbrella company proposes in particular to abolish customs duties on industrial products from 2021, which would mean for MEM companies a reduction in costs of around 125 million francs per year and “significant administrative relief”.
Swissmem also advocates for greater participation by public authorities in innovation projects, to allow companies to preserve their liquidity without cutting corners on this type of investment.
The association also advocates better use of the room for maneuver conferred by the award criteria defined in the Federal Law on Public Procurement (LMP) in order to promote the Swiss industrial place, as well as the rules of the World Organization trade (WTO).
In addition to these improvements to the framework conditions, certain ongoing emergency measures must be extended, according to Swissmem. In concrete terms, the duration of compensation in the event of a reduction in the work schedule must be extended to 18 months and the deadline for submitting a Covid-19 credit application until the end of 2020.
ats, awp
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