Bureaucracy and technology adaptation efforts challenge SME-MEM
The economic situation remains challenging for SMEs in the MEM industries. Despite slight improvements in the business climate index, economic burdens remain due to a lack of orders and high financing costs. In addition, there are structural burdens such as bureaucracy and technology adaptation costs. These are considerable, as the latest industry survey by Swissmechanic shows.
The Swissmechanic SME MEM business climate index shows a slight improvement in spring 2024, but remains clearly in negative territory for the fourth time in a row with a value of -20. The lack of orders, high energy prices and supply chain bottlenecks are hampering growth in the MEM industries. In the first quarter of 2024, the majority of SMEs recorded a further drop in turnover, resulting in staff reductions.
SMEs expect further decline in orders, sales and margins
For the second quarter of 2024, more companies expect a further decline in incoming orders, sales and margins instead of an increase. Despite the challenging situation, there is a glimmer of economic hope: the economic research institute BAK Economics, which also accompanies Swissmechanic's quarterly survey, is forecasting a further reduction in key interest rates over the course of the year. This could boost demand for capital goods. The strong US economy could also provide positive impetus. However, this momentum will not become apparent in Switzerland until 2025 at the earliest.
Every fourth SME finances investments with equity
In the current quarterly survey, SME MEMs were asked about the economic situation as well as the topics of "investment and financing" and "bureaucracy and digitalization costs". Almost 40% of the companies stated that they intend to expand their production capacities due to the lower key interest rates. Compared to the fourth quarter of 2023, the proportion of financial restrictions due to a lack of external financing has increased significantly. Overall, 21% of companies are currently not investing due to a lack of financial resources. For 25% of companies, investments were made exclusively through equity. Cantonal banks and big banks play a central role, as together they finance more than half of all investments. However, the CS/UBS merger has hardly had any impact on SME-MEM to date.
Bureaucracy ties up 15% of human resources
The survey also revealed that around 15% of personnel resources currently have to be used for a variety of bureaucratic processes. Two thirds of the SMEs surveyed have to spend more resources on bureaucracy compared to ten years ago. The burden of technology adaptation costs has even increased for 85% of the companies. Although 38% of the companies consider these costs to be manageable, the majority consider them to be high.
Source: www.swissmechanic.ch
