Engineering industries report sluggish progress

Sales are up but orders are down in the engineering industries Keystone

The Swiss mechanical and electrical engineering industries have announced a slow first half, with orders down 0.2 per cent from last year's comparable figures.

But sales were up by 3.3 per cent as a result of a rise in new orders in previous quarters and the industry – Switzerland’s largest exporter – is “cautiously optimistic” for the coming months.

The industries’ umbrella organisation, Swissmem, reported that exports reached SFr29.8 billion ($23.38 billion) or 2.8 per cent higher than for the same period in 2004.

Swissmem said in a statement on Wednesday that orders received by 290 reporting members picked up slightly in the second quarter (+2.1 per cent) after a poor first three months (-2.6 per cent).

Export orders rose by 1.4 per cent in the first half but domestic orders remained weak (-6.7 per cent). Orders from abroad rose by 2.2 per cent in the second quarter.

The industries said that domestic orders had edged back into positive territory in the second quarter for the first time in eight consecutive quarters.

Exports

Exports accounted for 78.9 per cent of sales in the first half.

Swissmem reported that the most important export market, Europe, continued to recover. There was a rise in exports to the key markets of Germany and Italy, while fewer goods were delivered to the two major markets of France and the Netherlands.

Exports to the “new” European Union countries of importance to the industries – the Czech Republic, Hungary and Poland – turned in “pleasing” growth rates.

But there was a 3.9 per cent drop in exports to Asia, Swissmem’s second biggest export region with 14.8 per cent of the total.

Although the industries sold less to China, Taiwan and Japan, exports to India rocketed by 48.2 per cent.

Exports to the United States increased by what was termed a “pleasing” 8.3 per cent.

Outlook

Swissmem said that its reporting members were cautiously optimistic about the outlook.

Over the next few months, reporting members expect growth to be driven by orders from abroad with little progress likely on the domestic market.

They were particularly positive about China, Hong Kong, eastern Europe, Russia, the US, Canada, Mexico and Germany.

But the association warned that despite the encouraging prospects, it should not be forgotten that growing competition was leading to lower margins.

There were additional problems from the “huge” increases in raw materials, little of which could be passed on to the customer.

swissinfo with agencies

Key facts

Swissmem industries January-June 2005:

Orders were down by 0.2 per cent compared with first half last year.
Sales were up by 3.3 per cent.
Exports were up to SFr29.8 billion ($23.38 billion), a growth of 2.8 per cent.
At the end of March 2005, the industries employed 300,000 people.
Capacity utilisation in the second quarter stood at 86.7 per cent.

In brief

Swissmem is strongly in favour of a “yes” vote on the extension of the free movement of persons to the new members of the European Union.

It says the vote, on September 25, is linked to the industries’ ability to gain access to their most important export market, the EU.

The association adds that it is concerned that a “no” vote would provoke the EU into cancelling all the bilateral agreements Switzerland has with Brussels.