SMEs in the MEM sector focus on training
Sentiment among SMEs in the mechanical, electrical and metal engineering (MEM) sector clouded over in the second quarter. According to the latest survey by Swissmechanic Switzerland, order intake, sales and margins are under pressure. The association of more than 1,200 companies is countering what remains the biggest challenge, the shortage of labor, with basic training that is strongly anchored in the region.
SMEs in the MEM sector are no longer optimistic in July 2023 for the first time this year: A slim majority of 54 percent consider the current business climate to be rather or very unfavorable. "This means that the Swissmechanic SME-MEM business climate index slips slightly into the red for the first time this year," Swissmechanic director Jürg Marti notes. The 182 SMEs that participated in the latest quarterly survey report declining orders, sales and margins. Only the increase in personnel is continuing at a slower pace. The shortage of labor again emerged as the biggest challenge in the second quarter, ahead of the exchange rate, the lack of orders, energy prices and supply chain problems (see chart).
Weak exports, slowing monetary policy
A number of negative factors on both the demand and supply sides have led to the current low in sentiment. The most important aspects are the weak external economic environment, geopolitical uncertainty, still relatively high energy prices, the strong Swiss franc and monetary tightening, which is leading to higher interest rates and more restrictive lending, which is hampering investment.
Because the most important trading partners Europe, the USA and China are themselves suffering from an economic slowdown, exports from the MEM sector fell in the second quarter of 2023 compared with the same quarter of the previous year for the first time in more than two years. This negative trend was confirmed in July.
Strongly committed to training
"Even though our companies were able to stabilize production capacity utilization in the second quarter, the challenges facing the MEM sector are considerable," comments Swissmechanic Director Jürg Marti. The shortage of labor was mentioned most frequently in the survey, namely by 54 percent of the companies (see figure). Around three quarters of these companies were unable to fill their vacancies in the last three months. This shortage is most pronounced in the technical professions, especially among employees with the training profile "Berufsbildung Sek. II".
Swissmechanic is countering this labor shortage with its strong commitment to basic education. The more than 1,200 member companies, which employ an average of 55 people, currently train around 6,000 apprentices. "The regional anchoring of our 13 sections, which in turn operate 14 of their own training centers for inter-company courses, is one of the great strengths of our association," Jürg Marti emphasizes.
No recession expectations
On a positive note for SME-MEM, the realignment of energy supply, for example, is making rapid progress following the discontinuation of Russian raw material supplies. Global supply chains have also normalized and there are increasing signs that inflationary pressure is easing significantly.
Even though the coming months are likely to remain challenging, BAK Economics therefore does not anticipate a recession in the MEM sector. BAK Economics expects the MEM economy to be merely subdued in the current year, as in the economy as a whole. Job creation in the MEM sector is likely to continue (at a slower pace). The outlook for next year is slightly better.
Source: Swissmechanic
