Wed, Mar 6th 2024
The Swiss Engineering Industry confronts ongoing struggles, with SMEs in the MEM sector facing a downturn without immediate recovery prospects.
Small and medium enterprises in the Swiss engineering industries facing do not have a positive outlook for the year. There are no signs of a turnaround.
The fourth quarter of 2023 witnessed the continuation of the declining trend in orders and sales for MEM SMEs, albeit at a slightly decelerated pace. The business climate index for these firms remains subdued at -28 points, reflecting ongoing challenges.
A significant factor contributing to the gloomy outlook is the absence of growth catalysts in the eurozone, with Germany’s economic performance notably impacting sentiment. The Chinese economy’s failure to replicate its past dynamism, leaving only the resilient US economy to offer some solace to the struggling sector.
The scarcity of orders intensifies, with 60% of member companies citing it as the foremost hurdle ahead, marking a 6% increase from the previous quarter. Over a quarter of these firms report an order backlog that would last a maximum of one month, exacerbating the situation.
This has led to a further decline in production capacity utilization, dropping to 83% from nearly 90% a year prior, and squeezing margins for almost half of the companies.
With more firms anticipating workforce reductions than increases. Moreover, nearly half expect a decrease in incoming orders in the first quarter of 2024 compared to the same period in the previous year.
The strengthening Swiss franc emerges as a significant concern for half of the companies surveyed, especially given the sector’s heavy reliance on exports. However, issues such as labor shortages and energy prices have become slightly less pressing, with energy supply fears no longer posing a significant threat.
©Keystone/SDA
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