Up to now, the Swiss economy has been stable – but economists are now warning us of a slowdown. The reason is due to the increase in the value of the Swiss franc. These new conditions are challenging for Swiss industry. However, by implementing creative and innovative solutions, manufacturing companies can still continue to keep pace with their competitors, despite the difficult situation.
The Swiss Central Bank removed the exchange rate cap of 1.20 francs to the euro in mid-January. As a result, the euro almost immediately dropped by 20 percent and is currently being traded at just over one franc. The longer-term effects on the Swiss economy remain to be seen in the coming months.
In a survey (in German) of 140 Swiss top managers by the consulting firm Horváth & Partner, almost three quarters (72 percent) confirm that the removal of the exchange rate cap will have a significant impact on their companies. They say that adapting their strategies, as well as their organisational and cost structures, will probably be unavoidable. This seems contrary to the expectations of the Swiss Central Bank, which assumed that Swiss industry – across the board – had already been preparing itself against the threat of a stronger franc for several years.
The removal of the exchange rate cap affects companies to a greater or lesser extent depending on the industry. It affects small, export-oriented companies the most, because they don’t have the option of buying materials and semi-finished goods abroad.
Swiss exports are generally destined for other European countries. According to figures from the Swiss Statistics Office for 2013, 39.3 percent of Swiss exports went to Germany, followed by the USA and the euro countries France and Italy. The strong franc makes exports more expensive and weakens companies’ competitiveness.
So what can be done? What’s the best way for Swiss industry – and that includes us – to react to this new situation and stay competitive over the long term?
At Rockwell Automation, we’re keeping the situation under observation and trying to help our customers use our solutions to achieve one thing in particular: increased productivity. Manufacturing and logistics need to become more efficient in Swiss companies to help them keep pace with foreign competitors.
The time has come to leverage the potential offered by the Internet of Things and Big Data to accelerate innovation and to push ahead with initial and further training for staff to help achieve all this.
With the help of advanced technologies, such as automated control systems, intelligent track-and-trace solutions, IP-based networks and powerful data analysis, companies will find it easier to cope with external influences affecting productivity. You can find some additional approaches to improving productivity in this blog post.
Our vision of the future is The Connected Enterprise with its seamlessly integrated production and business systems. The majority of the technology required for this revolution already exists today – it includes IP-enabled networks (industrial Ethernet and Wi-Fi), an information infrastructure and intelligent, networked devices. Several companies (including Rockwell Automation) have already experienced quantified success in their ongoing pursuit of The Connected Enterprise, and, more are preparing to begin their journeys.
The strong franc doesn’t have to be a disadvantage for us – quite the opposite.
Beyond the Eurozone, the USA is again becoming an important export market for Swiss machine builders. The US economy is recovering rapidly and forecasts show that the dollar will strengthen against the franc. There’s great potential in other markets too, from Scandinavia to Asia.
So despite the current situation, Swiss companies are optimistic about the future. Almost 90 percent of the managers surveyed by Horváth & Partner believe that the Swiss Central Bank has done the right thing and that its move will benefit Switzerland in the long term. They also think decoupling the exchange rate will bring more flexibility as well as the chance of new opportunities.
Please visit our web site to learn more about The Connected Enterprise.