Swiss Competitiveness: A Problem?

From April 17 to May 7, 2023, the fourth "Swiss Managers Survey" asked companies about the business climate and specific challenges managers face in practice. In the representative survey, the Zurich University of Applied Sciences (ZHAW), the University of Applied Sciences Grisons (UAS Grisons), the Scuola universitaria professionale della Svizzera italiana (SUPSI) and the Haute École Arc (HE-Arc) interviewed alumni of their EMBA and MBA programs. 340 participants from all parts of the country and all relevant industries gave insight into their companies. Network partners of the project are the Zurich Chamber of Commerce (ZHK), the Winterthur Chamber of Commerce and Employers' Association (HAW) and the Swiss Chamber of Commerce - Central Europe (SEC).

Only a few expect business to deteriorate

This year's survey shows that companies are more positive about developments in the coming months than in the previous year (March 2022). Only a small minority expect business to deteriorate in the second half of 2023. When it comes to the current business environment, service companies give a very positive assessment - an improvement of 19.5 percentage points on the previous year. However, this is not shared by the industrial companies, whose situation is perceived to be worse today than last year.

Martin Hirzel, Chairman of the Advisory Board of the ZHAW School of Management and Law and President of Swissmem, comments on the results of the study as follows: "The results are in line with our information: Capacity utilization is still good thanks to last year's high order intake. However, the recent decline in orders and the low level of the global Purchasing Managers' Index PMI point to much more difficult times ahead."

Swiss competitiveness leads to strong dependence on immigration

The strengths of Swiss companies remain unchanged: Despite higher costs, they can prove themselves in international competition thanks to high quality and innovative strength. Among the challenges, the shortage of skilled workers on the Swiss labor market is cited: 51 percent of respondents say that strong competitiveness has led to labor shortages and wage pressure (higher wages). 63.2 percent of the companies surveyed rate the strong dependence on immigration as problematic. Losers in this situation are smaller companies in particular: 70 percent of the SMEs surveyed see themselves at a disadvantage in the fight for talent compared to large companies. "The reasons for these difficulties faced by SMEs could be the better conditions, such as higher wages or prospects, that large corporations offer their employees," says study author Prof. Dr. Florian Keller, Head of the Center for Global Competitiveness at the ZHAW School of Management and Law, assessing the situation.

Merger of UBS and Credit Suisse - and its impact on Swiss companies

Although the takeover of Credit Suisse by UBS is seen as a reputational risk for Switzerland as a business location, no negative consequences are expected for the company's own business. Only a small minority of the Swiss managers surveyed (13.6 percent) believe that the merger of the two big banks will have negative consequences for their own company. "We were surprised that the managers surveyed did not expect negative consequences for their business, such as more expensive loans, as a result of the takeover of CS by UBS," says ZHAW Professor Florian Keller. On the other hand, 61.8 percent of the participants are convinced that Switzerland as a business location has been damaged by this takeover.

Supply chain risk: Focus on Europe and larger storage capacities

For 56.2 percent of industrial companies, their supply chains are currently the greatest risk. The companies concerned see promising counterstrategies above all in procurement from Europe and in building up storage capacities. When it comes to domestic procurement, the managers are not in agreement: "It turns out that for some companies, domestic procurement is a successful strategy - for others, where this option does not exist, access to the European procurement market is central." Study leader Prof. Dr. Keller (ZHAW) adds further: "The survey also shows that access to foreign markets is essential for Swiss competitiveness: Only 5.7 percent of participants do not see this as significant."

While industry struggles with supply issues, other risks are relevant for other companies: More than 85 percent of companies that cite cyber risks as their biggest threat have fewer than nine employees. Among mid-sized companies, two-thirds say that financial risks such as exchange rate fluctuations, inflation or rising interest rates are most pressing for them.

Source and further information: ZHAW