According to the Swiss machinery, electrical and metal industries (Swissmem), the economic situation remains difficult. In the first quarter of 2024, goods exports fell by 8.5 percent compared to the same period of the previous year. However, the bottom of the trough is believed to be in sight.
According to the industry association, risks lie in geopolitical uncertainties and increasing protectionism, which is hindering the dynamism of the global economy. This will negatively impact the Swiss tech industry, which has an export share of 80 percent. Therefore, improving the relevant framework conditions is crucial. This includes a secure and competitive electricity supply: Swissmem is campaigning for the electricity law, which will be voted on June 9.
In the Swiss tech industry, revenues fell by 5.4 percent in the first quarter of 2024 compared to the same period of the previous year. The declines were less pronounced for SMEs than for large companies. Capacity utilization in companies fell below the long-term average of 86.2 percent for the first time since the third quarter of 2021, reaching 85.5 percent. New orders also declined in the first quarter of 2024, decreasing by 2.3 percent compared to the same quarter of the previous year. However, because the order situation was very strong in the same period of the previous year, this renewed decline in orders masks the fact that orders from abroad have now stabilized and domestic orders have even recovered. These are at least positive signs.
Swiss tech exports reached CHF 16.9 billion. Exports to the EU fell by 11.6 percent, to the USA by 2.6 percent, and to Asia by 0.9 percent. The significant decline in exports to Germany (-12%), the tech industry's largest single market, is particularly worrying. Only China and India offered a glimmer of hope, with export growth of 7.1 and 8.1 percent respectively. Exports of metals plummeted by 9.3 percent, mechanical engineering by 8.4 percent, precision instruments by 7.6 percent, and electrical engineering/electronics by 2.2 percent.
M. Hirzel. Photos: Swissmem
The declines in sales and exports are not surprising. They are a consequence of the massive drop in orders received in the second and third quarters of last year. Only 28 percent of Swissmem member companies expect an increase in orders from abroad over the next twelve months. The proportion of those anticipating a decline in orders has at least decreased from 37 to 28 percent. The remaining 46 percent of companies expect order levels to remain stable. Swissmem Director Stefan Brupbacher: "The positive trend in order intake supports our hope that the trough of the downturn will soon be reached."
However, the recent escalation of the trade war between the US and China carries considerable potential for damage. The massive increase in tariffs by the US directly affects Swiss steel exports.
For companies in the tech industry, it is crucial that a secure electricity supply is guaranteed in the short, medium, and long term, and that electricity remains available at economically viable prices. Electricity demand will increase massively in the future due to growing electrification. This will require a massive expansion of domestic electricity production in the coming decades. Swissmem President Martin Hirzel is convinced: "The Electricity Act is a first, necessary step to increase domestic electricity production from hydropower, photovoltaics, and wind energy. However, further steps will have to follow. These include lifting the ban on the construction of new nuclear power plants." Swissmem is campaigning for a YES vote on the Electricity Act on June 9, 2024.
