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Swiss strong franc gloom deepens for exporters

Swiss strong franc gloom deepens for exporters

BERN: With the sky-high franc showing no signs of returning to earth, task forces at export-oriented Swiss companies are busily working out ways to tighten belts and stay competitive in the face of the currency crisis.

Baumann Springs is one such small and medium-sized enterprise (SME). Unless it makes changes, the firm calculates it will lose around 10% of its turnover this year while its Swiss operations, based in Ermenswil in canton St Gallen, will run at an operating loss. Baumann is not alone among exporters of all sizes that are facing the pinch. Swissmem, the umbrella lobby group for the electrical engineering, metalworking, machine building and precision tools industries, said turnover had fallen 7.1% for its 1,000-plus members in the first half of the year.

Margins and profits have also declined since the Swiss National Bank (SNB) abandoned its defence of the franc on January 15, and orders are drying up at the most alarming rate since the industry low point of 2009. Baumann is in many ways a typical Swissmem member. Employing 1,500 workers worldwide (500 in Switzerland), the company produces custom-made springs for cars, medical devices and electrical goods. It exports 88% of its products, mostly to the European Union, while many of its main competitors are based in lower-cost Germany.

Hansjürg Hartmann, a member of Baumann’s group management, told that trading conditions this year were harder to get to grips with than in 2009 when the world was in the throes of a post-financial crash economic crisis.