Press release: The MEM industry is growing less dynamically

Swissmechanic Switzerland

2 papers

Press Release / Embargo: Tuesday, May 24, 2022, 10 a.m

Weinfelden, May 24, 2022

Swissmechanic economic barometer May 2022: review – current situation – outlook

The MEM industry is growing less dynamically

After a rapid recovery in the second half of 2021, the MEM industry started the first quarter of 2022 with momentum. The war in Ukraine and China’s zero-Covid policy dampened this momentum and, above all, margins. However, according to the latest survey by Swissmechanic Switzerland, catch-up effects will ensure above-average growth. The procurement program for new combat aircraft could provide important impetus.

The positive trend among small and medium-sized companies in the MEM industry continued in the first three months of the year. Although most indicators are pointing to a slowdown, there is significant catch-up potential. This is the result of the latest quarterly survey by Swissmechanic, the association of SME employers in the MEM industry.

The high utilization of customer capacity increases the need for investments in equipment. Exports and prices rose accordingly. For the fourth time in a row, the companies were able to increase sales and order intake compared to the same quarter of the previous year, although the momentum in order intake and sales slowed down. Only the EBIT margins stagnated.

Ukraine and China are weighing on the business climate

The war in Ukraine affects the Swiss MEM industry more than the economy as a whole. On the demand side, the decline in exports to Russia and Ukraine is hardly significant. The growing geopolitical uncertainty weighs much more heavily. We are noticing that companies are less willing to invest and that the Swiss franc has appreciated against the euro. In addition, the main customer countries of the Swiss MEM industry, above all Germany, are particularly hard hit by the crisis.

The increase in energy prices is noticeable on the supply side. The current quarterly survey shows that these costs are weighing on MEM SMEs – margins are stagnating. Supply chain problems have continued to worsen, partly because Ukraine is a major steel producer. Even more serious are the exit restrictions in China, which have a negative impact on the production and logistics of intermediate products.

Declining momentum

The quarterly survey shows that the pressures of the war in Ukraine and China’s zero-Covid strategy are significantly slowing down the MEM industry in 2022, but could outpace long-term growth due to catch-up effects. The Swissmechanic business climate index for SMEs in the MEM industry has been clearly positive for the past year. Around 70 percent of the medium-sized companies surveyed continue to assess the business climate as favourable, with increasing capacity utilization and a growing order backlog.

This expansion should continue in the second quarter, especially in terms of personnel, with somewhat less dynamics in terms of incoming orders and sales. In terms of margins, on the other hand, we anticipate stagnation in the industry average.

Strengthening the industrial base and creating new skills

Against this economic background, securing and promoting Switzerland as an industrial location remains an important concern. Important impulses can come from the planned acquisition of combat aircraft. The purchase of 36 new combat aircraft is associated with orders for the industry and enables the development of new competencies, the transfer of know-how and the creation of highly qualified jobs over decades. Such investments in Switzerland as a technology location and future-oriented jobs are very welcome. The F-35A procurement program not only serves Switzerland’s military security, but also strengthens its industrial base.

For more information:

SWISS MECHANIC is the leading employer organization for SMEs in the MEM industry. The 1,400 member companies employ over 70,000 people, including 6,000 apprentices, and generate annual sales of around 15 billion Swiss francs. The organization is divided into 15 regional associations and one branch organization.

SWISSMECHANIC Suisse
Felsenstrasse 6
8570 Weinfelden
 
Tél. 071 626 28 00
 kommunikation@swissmechanic.ch

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