Dental implant specialist Straumann has asked staff to forgo a slice of their bonusesexternal link and wants to pay cross-border workers in euros to counter the negative effects of the soaring Swiss franc.
The Basel-based medtech firm, which employs 2,200 people worldwide, said a range of recently implemented measures to cut costs are not enough to cope with the Swiss National Bank’s (SNB) decision to end its franc-euro exchange rate cap last month.
“Almost overnight, we were thrown back to where we were in 2012 in terms of revenue and profits,” chief executive Marco Gadola said in a statement on Tuesday. “If our key strategic initiatives, restructuring and cost reductions over the past 18 months had not been effective, the new situation would have meant severe job losses.”
Some 95% of the company’s sales are generated outside of Switzerland, with the eurozone accounting for 40% of turnover. However, 45% of costs are booked in Swiss francs, the company said.
With Straumann’s share price sliding 28% in the last two weeks, the firm fears that full year revenues could be down CHF75 million ($81 million) and profits dented by around CHF40 million.
In 2012, the company announced that it would cut 150 jobs to cope with the strong franc. To insulate the company against further job cuts, Straumann initiated a hiring freeze and travel restrictions two weeks ago, but now feels that further measures are necessary.
Leading from the front
Gadola has vowed to take a 35% reduction in pay while board directors have agreed to a cut of 28%. The company has appealed to other staff to write off a chunk of their bonuses, corresponding to a 5% reduction in overall compensation, to help keep the firm afloat through the difficult passage ahead.
Perhaps more controversially, the company wants cross-border workers who commute from the eurozone to accept salaries in euros “at a fixed rate that will balance their interests with those of the company”. Straumann would not comment on what that rate might be.
The issue of paying cross-border workers in euros has been present since the SNB’s January 15 decision sent the franc soaring 20% against the euro. The debate has so far centred mainly on canton Ticino that borders Italy. Unions have warned companies that the practice of paying some workers in euros may well face a legal challenge.
Straumann, which announces its full year earnings on February 27, achieved a 3% growth in revenue in the first nine months of last year to CHF523 million.