The Swiss MEM sector, which includes mechanical engineering, metal industries, and the electrical sector, has been hit hard by a two-year recession. Companies like Bystronic, Trumpf, Komax, and Liebherr have had to introduce short-time working to cope with the challenging economic conditions.
Industrial companies in Switzerland are used to fluctuations in orders and sales but the prolonged downturn is causing some unease among management. Despite seeing a slight increase in order intake in the final quarter of 2022, weak demand continues to negatively impact companies’ profitability. This has led to an increase in profit warnings in the MEM sector.
Machine manufacturer Komax recently announced a less-than-expected operating profit for the year and applied for short-time work for most of its employees. Similarly, Starrag-Tornos issued a profit warning due to significant losses in sales and EBIT.
The decline in demand for capital goods is affecting Swiss machine manufacturers as customers hold back on new purchases amidst weak economic development in Europe, China, and Japan. Many companies are waiting for further interest rate cuts to finance investments more affordably.
This poor order situation has led Bystronic, Trumpf, and Liebherr to implement short-time work for their employees. Component manufacturers are also affected with excessive inventory levels at customers impacting their sales.
As the season for presenting half-year figures approaches, expectations for the business performance of most Swiss industrial companies are low. Recent surveys show low values of mood among purchasing managers indicating a continued slump in the industry. As a result, there is growing unrest among bosses as they navigate through these challenging times.