The financial crisis has hit the worldwide motor industry. Switzerland, although not a vehicle manufacturer, is also affected.

Over 300 Swiss enterprises are involved in the production of parts for motor vehicles and some of them are now in deep trouble.

At the beginning of November it was announced that Nexis Fibers in Emmenbrücke near Lucerne was facing bankruptcy.

The company blamed the market situation in its main areas of production, which include vehicle components: yarns for airbags and for tyres as well as various plastic compounds for the automobile industry.

Other component manufacturers include major companies active in such areas as textiles or engineering, which have specialised automotive divisions or daughter companies. Other suppliers are much smaller offices working in engineering.

The total turnover of component suppliers in Switzerland is SFr16 billion ($14 billion), and they employ some 34,000 workers.

A study by the Federal Institute of Technology in Zurich found that only 17 per cent of the companies producing vehicle components work exclusively for the branch.

"It's difficult to get an overview of the branch, because many suppliers are so diversified," industry analyst Patrick Laager of Bank Vontobel told swissinfo.

The proportion of component manufacture as part of their overall business varies widely. In the case of Feintool of Biel, for example, it accounts for 85 per cent of its turnover, whereas for the engineering giant Sulzer it is only five per cent.

Export industry

Since the suppliers produce components for export, they are dependent on the exchange rate. The strong franc puts them at a disadvantage, making their products more expensive.

Laager describes the prospects of the industry as "very bleak", with no positive changes in sight before 2010.

His pessimism is not shared by everyone. Ruedi Christen of Swissmem, the umbrella organisation of the engineering industry, told swissinfo that the situation varies from one enterprise to another. The main problem is that worldwide the purchasers of the components cannot get credit on acceptable terms from the banks.

"The banks prefer to pay dividends with the rescue packages they have received from the state. But the upturn is coming," he said.

He sees the current state of affairs as part of a cycle.

"The downturn always affects textile machinery first, then the vehicle suppliers are hit – looked at like this, what's happening now is what has happened before." The only difference is that this time the collapse was more sudden and more drastic than in the past.

Added value

The component suppliers are becoming more and more important in the motor industry, according to Laager, who explains that some 70 per cent of the added value of motor vehicles comes from the suppliers.

Vehicle manufacturers themselves are under pressure from their investors to cut costs. As a result, the development of such environmentally friendly technologies as hybrid vehicles and more efficient batteries comes from the component makers.

The trend towards specialised production and innovation will help most Swiss suppliers get through the recession, Laager believes. He thinks that all the main Swiss enterprises will survive, whereas in other countries there are likely to be takeovers.

But not everyone in Switzerland agrees. Edgar Oehler, chief shareholder of the Arbonia Forster group, told Swiss television that the fall in share prices meant that the share capitalisation of enterprises like his had halved.

"It no longer even reflects the real value of the business," he said, adding that were he not the majority shareholder, crafty financiers could buy up shares and thus buy the firm out.

swissinfo, based on an article in German by Alexander Künzle

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