Navigating the Storm: Swiss Machine Manufacturers Face Uncertainty as Recession Drives Business Struggles

In recent years, Swiss industrial companies have been struggling to secure orders due to two years of recession. Despite fluctuations in orders and sales being common among owners of these companies, the prolonged downturn is causing some unease among management.

The Swiss MEM sector, which includes mechanical engineering, metal industries, and the electrical sector, has seen a decline in order intake quarter after quarter. Although there was a slight increase in the final quarter of 2022, demand remains weak and is negatively impacting companies’ profitability. This has led to an increase in profit warnings in the MEM sector.

Machine manufacturers like Komax and Starrag-Tornos have recently announced less-than-expected operating profits for the year due to significant losses in sales and EBIT. Komax even applied for short-time work for its employees as a result of these challenges. Similarly, Bystronic, Trumpf, and Liebherr have also implemented short-time work for their employees due to the challenging economic environment.

The decline in demand for capital goods is affecting Swiss machine manufacturers as customers hold back on new purchases amidst weak economic development in Europe, China, and Japan. Many companies are waiting for further interest rate cuts to finance investments more affordably. The excessive inventory levels at customers are also affecting component manufacturers by impacting their sales negatively.

As the season for presenting half-year figures approaches, expectations for business performance among most Swiss industrial companies are low. Recent surveys show low values of mood among purchasing managers, indicating a continued slump in the industry. As a result, there is growing unrest among bosses who must navigate through these challenging times while trying to keep their businesses afloat during this difficult period of economic uncertainty.