Economic boom not yet in sight - industry suffers from "investment hole

A sigh of relief is sweeping through Switzerland: The franc has eased, Swiss exports are on the rise, an economic boom has returned internationally and the expectations of Swiss industry are good beyond all measure. "The Swiss economy is doing well again," is the general opinion. But as is well known, one swallow does not make a summer, because some things are not taken into account, as the association Swissmechanic writes in a new media release: Firstly, it is not at all certain whether the EURO boom will continue (danger of a new franc shock) and secondly, the economic consequences of the strength of the franc are far from over (convalescence of SMEs). Thirdly, the communication continues, the current soaring of the euro was partly created artificially. According to data from the Commodity Futures Trading Commission, large investors in particular are betting on continued euro strength against the dollar. The latest figures show that these speculative positions on a stronger euro have never been as high as they are now since at least the beginning of 2015.

The Franc Island and the Euro Flood

The value of the Swiss franc has therefore only been somewhat lower for a short time and can quickly rise again. If a crisis were only to emerge, Swiss companies would immediately be up to their necks in water again. International developments or the valuation of the euro represent a constant risk. Nevertheless, the franc remains a refuge for investors from all over the world in times of crisis. This results in constant appreciation pressure. Currently, the negative effects are being masked by the current economic upswing. However, in the context of low interest rates and the franc gaining in value, these should cause everyone to worry. If one does not want to see a "mass death" of the Swiss SME-MEM in the near future, the time has come to act - considering the risk of a new franc shock.

Rebound versus recovery

Already since the financial crisis in 2008 and then increasingly in 2015, the industry has had to struggle with the strong franc. Since then, there has been a margin problem for export-oriented SMEs, as they have to sell at the world market price. For many, this meant: The machinery was not renewed, but the capital reserves were nevertheless reduced and thus no new investment reserves were built up. For many small companies in particular, this is not a deliberate postponement of investment, but an investment hole and a huge problem. The negative interest rate has also not yet had a positive impact on investment in the manufacturing industry. A long-term upswing is needed for SMEs to convalesce. Just six months of upswing, which is by no means reaching all sectors and company sizes, is not enough. It would be illusionary and unrealistic to claim that the Swiss economy is doing well again.

Economic boom prevented by investment hole and credit drought

A new survey by Swissmechanic shows that over 70% of respondents would like to invest in Industry 4.0. However, the picture is split internationally with regard to financing. More than half of the established Swiss SME-MEMs manage without a bank loan. The proportion of companies with bank financing is accordingly significantly lower in Switzerland (35 %) than in neighboring countries: Italy (52%), France (49%), Austria (48%), Germany (45 %). A successful credit application needs a longer-term boost: in fact, it requires long-standing good business reports, modern infrastructure, collateral and future-oriented business models. Over 27% of the companies are therefore no longer getting loans and over 26% do not wish to comment on this. The larger companies also participating in this survey have other ways of raising money or simply relocate parts of their production abroad.

Swissmechanic has identified this investment gap as an important problem for Swiss SMEs and will discuss it with over twenty experts from politics, technology, research and business at the Business Day on September 14. Among others, they will include: Gerhard Pfister, Ruedi Noser, Prof. Dr. Peter Jaeschke, Otto Hofstetter a.o. Read more at. www.swissmechanic-businessday.ch.