Machine tool industry feels Tornos's pain
News that the Swiss toolmaker, Tornos, is to slash a third of its 1,200-strong workforce comes at a worrying time for the machine tool industry.
On Friday, the Moutier-based company, which is struggling with severe liquidity problems, declared a loss of SFr28.4 million ($18.22 million) for the first four months of 2002.
Tornos says it is negotiating a SFr10 million cash injection - or bridging loan - and has asked creditors to "substantially" reduce their claims in order to guarantee its survival.
But it is not just Tornos that is feeling the pinch. Since last September's terrorist attacks in the United States, the whole machine tool sector has been forced to tighten its belt.
Figures released a fortnight ago by Swissmem, which represents the Swiss mechanical and electrical engineering industries, showed a 22 per cent drop in orders for the first three months of the year, compared with the same period in 2001.
Turnover has slipped by 15 per cent and exports have fallen by more than 17 per cent. With three-quarters of production destined for foreign markets, some, such as Swissmem spokeswoman Dorothea Tiefenauer, are quick to point the finger at the strong Swiss franc.
"At around 1.46 for a euro, the franc rate is too strong for our industry," she said.
Tornos's financial woes and its decision to restructure have prompted fears that other firms will shortly follow suit. However, Patrick Huber, an analyst at Darier Hentsch private bank, insists this is unlikely to happen and that Tornos is simply a "special case".
"Most of the other firms have already carried out restructuring, by reducing production and adapting to weaker demand," said Huber. "I don't expect to see such a dramatic situation [as Tornos]."
Huber says Swiss firms have worked hard on efficiency. In addition, they have not trimmed research and development budgets and have continued to come up with new products, he adds.
He believes the industry should be well placed as soon as the economy picks up. When that is likely to happen still remains a mystery, but Swissmem's Tiefenauer believes things should start to improve by the end of the year.
"We are seeing some positive signs from the United States, but we don't believe it will pick up straightaway," she said.
Patrick Huber at Darier Hentsch takes a rather more pessimistic view. "In my opinion, the recovery won't take place this year. First, the machine tool industry's customers need to earn some money themselves, before they start placing orders."
Shares in Tornos were suspended by the Swiss stock exchange on Friday, after they dropped 8.73 per cent to SFr11.50 on Thursday. They were trading slightly above a recent low of SFr9.75, but light years away from their 52-week high of SFr97.75.
A general shareholders meeting will be held on June 28 in Moutier. The company said it would seek shareholder approval for a capital reduction of 90 per cent to SFr11.5 million by cutting the nominal share value.
A second step involves asking shareholders to inject fresh capital into the company of SFr73 million.
swissinfo/Pierre Gobet, Zurich
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