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Machine industry facing tough times

Studer's troubles are symptomatic of the sector. Studer

Switzerland's machine industry saw new orders drop by 13.2 per cent in the first half of 2002 as companies struggled with the effects of a strong franc.

This content was published on August 22, 2002 - 13:33

One of the many companies feeling the pinch after posting record results last year is the Fritz Studer grinding machine company, near Thun.

The number two worldwide in its field, Studer is bracing itself for a tough time as the order books are not filling up as fast as before.

"Last year was an extremely good year for the company. We had a record high order book and turnover. What we've seen roughly over the past 12 months is a decrease in order intake...," Studer managing director Rainer Röder told swissinfo.

The company's machines produce goods for a multitude of industrial requirements, for example injection valves for cars, control valves for aircraft, moulds for PET (recyclable) bottles, axes for disc drives, artificial joints, tool holders and other high-precision components.

Missed target

Studer, which was founded in 1912 and employs about 700 people, produced 213 machines in the first six months of the year, well short of its target figure of 270 units.

Although turnover in the first half at SFr106 million ($70.8 million) is on target to exceed last year's total sales of SFr207 million, some larger contracts have been cancelled and sales in the standard machine sector are harder to secure.

Röder, who is in charge of sales, believes that the bottom of the depression has now been reached for the company but the outlook is uncertain.

"If we look towards the next two to three months, we see that the order book should be a little higher again in machines... but after that we really have no idea what we can expect," Röder commented.

"It will be very interesting during the autumn this year. This will show how we can go into the next year," he added.

Strong Swiss franc

Studer exports more than 90 per cent of its products, which means that like many other Swiss companies, it's been feeling the effects of the strong Swiss franc.

"The high value of the franc against the euro makes our products more expensive, mainly in Germany. This isn't so good for us but on the other hand we have an important supplier from Japan and this makes our imports cheaper than before," Röder explained.

Faced with the current downturn, the company has not been idle in reacting to the situation. It has been on the lookout for more customers worldwide and, as a firm celebrating its 90th anniversary, it says it has put together a wide range of products at attractive prices.

"And in the near future we have very important fairs in the United States, Germany, Italy and Sweden. We want to focus on these to find out really where the market stands," Röder said.

Tougher times ahead

Another company managing director, Fred Gaegauf, believes that in the machine industry as a whole, there will be tougher times ahead, with more jobs being lost.

"It may be different for our company because we have some strengths right now with regards to the products and our systems... we're really more and more trying to sell solutions and we can provide them because we have the background and the people to support our customers," he said.

"I think we have to stay pragmatic but of course we need to be optimistic too," he added.

There may be room for some optimism, says Swissmem. New orders declined by only 3.1 per cent in the second quarter, according to data released on Thursday.

And the decline in orders could bottom out during the third quarter of 2002.

However, Swissmem director Thomas Daum is cautious. "We said in February that the recovery would not come before December this year but now we are saying that there is a risk that it will be delayed till next year," he told swissinfo.



by Robert Brookes

Key facts

New orders in machine industry declined by 13.2 per cent in first half 2002.
In second quarter, new orders dropped by 3.1 per cent.
Swissmem says the decline could bottom out in third quarter.

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