Swiss precision machine maker Mikron has laid off 25 workers, citing weak demand for its products from the global car industry. The news reflects pessimistic sentiment from Swiss manufacturers and the wider economy.This content was published on November 19, 2019 - 13:34
Mikron announced on Tuesday that it would have to reduce headcount at a plant in southern Switzerland from its present level of 370. “Management does not anticipate any early recovery in demand from the automotive sector,” the company said in a statement.
Mikron said the automotive decline will not affect other parts of the group and expects earnings to remain on track to meet targets. The group employs 500 staff in total.
The job cuts reflect export-oriented Switzerland’s reliance on supplying manufacturing output in other countries. Last week, an association of the manufacturing and electrical engineering sectors, Swissmem, painted a gloomy picture for its 1,100 member companies.
“In the first nine months of the year, new orders received declined by 13.2%, turnover by 3.7% and exports by 1.4%,” Swissmem announced. While employment levels were not so far affected, Swissmem said that a “significant” number of companies were putting workers on shortened hours.
On Monday, Deloitte released a survey of 103 Swiss chief financial officers across a variety of sectors, which found that “expectations for margins, investments, and staffing levels have all turned negative.” The majority of CFOs surveyed expected a recession in the euro-zone.
Companies are finding themselves caught between the threat of the Swiss franc appreciating and the negative interest rate policy that the central bank has in place to prevent currency inflation.
Swissmem is adamant that the Swiss National Bank should keep ultra-low interest rates in place. But the Deloitte study also points to potential risks arising from this monetary policy.
“The long-term effects on the economy and society of this unprecedented situation are becoming increasingly unpredictable," stated Michael Grampp, chief economist at Deloitte Switzerland.
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