Swiss tech industry looks back on positive year 2022

Sales in the Swiss tech industry increased by +9.4 percent in 2022 compared to the previous year. This was reported by the industry association Swissmem. In the fourth quarter of 2022, the increase compared to the same quarter of the previous year was +8.8 percent. The industry thus recorded the seventh consecutive quarter with higher sales in each case. Both SMEs and large companies benefited from this upturn, Swissmem added. Incoming orders also increased by +2.4 percent compared to 2021. In the fourth quarter of 2022, they increased by +2.4 percent compared to the same period last year. This was very encouraging, he said, because in the third quarter of 2022, new orders from abroad had slumped by over 20 percent compared with the previous quarter. Coupled with global recession fears, Swissmem then also feared a sharp downturn in industry. This did not materialize for either SMEs or large companies. Instead, capacity utilization in the fourth quarter was a high 89.6 percent, well above the long-term average of 86.2 percent. In line with this, the number of employees in the tech industry continued to increase. It rose to 326,500 in the fourth quarter of 2022 and was +2.7 percent higher than in the prior-year period.

But Swissmem puts this into perspective: These positive figures should not obscure the fact that all companies are suffering from rising costs for energy, raw materials and labor. Energy-intensive companies in particular are at a massive disadvantage in the market due to the industrial policy measures of the EU states. Their company locations in Switzerland are at risk.

Higher exports for all product groups

Exports of goods by the tech industry increased by +5.6% year-on-year in 2022, reaching a value of CHF 72.3 billion. All major markets developed positively. For example, exports to Asia increased by +11.7 percent, to the USA by 7.9 percent and to the EU by +4.3 percent. Exports of all major product groups increased. Compared with 2021, exports increased by +8.5 percent for metals, +7.4 percent for electrical engineering/electronics, +5.4 percent for mechanical engineering and +4.2 percent for precision instruments.   

Significant risks and uncertainties 

Commenting on the 2022 business figures, Swissmem Director Stefan Brupbacher says: "Overall, the situation of the Swiss tech industry is better than feared. After the third quarter of 2022, we expected a downturn. This has not yet occurred." Brupbacher also attributes the good sales figures to the fact that companies were able to work off and deliver the high order backlog. This was made possible because, with the exception of individual key and electronic components, supply chain problems have eased noticeably. "I am cautiously optimistic for the current fiscal year," adds Brupbacher. This is in line with the Assessments of the entrepreneurs and companies from Swissmem membership. According to the latest survey, one third expect higher order intake from abroad in the coming twelve months. Growth impulses are expected above all from the USA and non-European markets. Thirty-nine percent of respondents expect orders to remain unchanged. A decrease in orders is expected by 28 percent. However, there are still considerable risks and uncertainties. "In order to further reduce inflation, there are likely to be further interest rate steps by the national banks. This will cool the economy and thus demand for our products. In addition, there is still the risk of an energy shortage next winter," explains Stefan Brupbacher. However, the greatest risks for the global economy lie in a further escalation of the war in Ukraine and an intensification of tensions between China and the USA.

Challenges in the shortage of skilled workers and global market access 

Domestically, the shortage of skilled workers poses the greatest risk to the tech industry. A large proportion of Swissmem member companies complain of difficulties in finding suitable specialists. To counter this, Swissmem is investing substantial resources in the reform of industrial professions, in career marketing and in STEM promotion. However, Swissmem also sees the public sector as having a duty. The public sector has created massive numbers of new jobs in recent years. The administration must not be further bloated, because it is the companies that support the state and not the other way around.

The Swiss tech industry exports almost 80 percent of its products. However, barrier-free access to global sales markets is increasingly becoming a challenge. In the international environment, protectionism and competition-distorting subsidy offensives are on the rise. Examples include the Inflation Reduction Act in the USA, the Green Deal in the EU, and China's Dual Circulation Strategy. Martin Hirzel, President Swissmem is concerned: "This new protectionism poses a serious threat to the tech industry. Our companies are at a significant competitive disadvantage compared to subsidized and tariff-protected foreign competitors." To counteract this, Switzerland must facilitate market access for companies worldwide. For example, the free trade agreement with Mercosur must finally be finalized and ratified, and the negotiations with India must be brought to a conclusion. A free trade agreement already exists with China. However, most high-tech machinery is exempt from customs duties. Talks need to be initiated here for an extension of the agreement. "But the most urgent task is to put the bilateral relationship with the EU - by far the most important trading partner - on a new footing. In an increasingly tripolar world, this is a common sense imperative," Hirzel stresses. In this way, Switzerland can secure access to the European single market, create the conditions for full participation in European research cooperation and, by means of an electricity agreement, reduce the increased risk of an electricity supply bottleneck from 2025. In addition, it would be ensured that companies can recruit missing skilled workers in the EU without much bureaucratic effort. "It is high time to move forward in the European dossier. The goal must be to conclude the negotiations by spring 2024," Hirzel emphasizes.

Source: Swissmem