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How can the Swiss manufacturing industry remain competitive in the long term?

Deloitte and BAKBASEL explored the current challenges and growth opportunities for Swiss industrial companies

Zurich, 11 November 2015

The Swiss manufacturing industry is currently moving sideways. According to a survey of 393 MEM1 companies, a large majority (89%) view the prospects for their industry as negative. The strong Swiss franc and the volatile economic development in key global sales markets remain crucial risk factors. To overcome these challenges, Swiss MEM companies have recently implemented diverse measures rather short term in nature. However, for the Swiss manufacturing industry to remain internationally competitive in the long term, MEM companies should pursue systematic growth strategies. Deloitte and BAKBASEL have defined six key strategies.

Deloitte and BAKBASEL, in cooperation with Swissmem, surveyed almost 400 Swiss MEM companies on their current challenges and growth prospects. Almost all (89%) of the companies rated the prospects for the industry over the next twelve months as negative.

Dr. Ralf C. Schlaepfer, Manufacturing Industry Leader at Deloitte in Switzerland, on the current risk factors faced by the MEM industry: "The rather stable period between the introduction of the euro-franc cap in September 2011 and its unpegging in January 2015 gave many MEM companies some breathing space and, in the interim, secured jobs in the Swiss manufacturing industry. The ongoing strength of the franc and the current volatile global economic environment are now forcing MEM companies to make further operational changes to avoid margin losses. To address their revenue situation in the long term, companies have to implement new and even farther-reaching measures."

1 MEM = engineering, electrical and metal, see

Growth Opportunities - Strategies for Swiss Industrial Companies

Combatting the strong franc and other risk factors

Since January 2015, Swiss MEM companies have already implemented various operational precautions to counteract the persistently strong franc and other risks. Sourcing overseas has become more important (77%) and efficiency increases, rigorous product cost management (both 70%) and price cuts (69%) have also proven to be significant measures.

"Measures such as price cuts often bring only short-term success as far as remaining competitive is concerned – but in the long run, they reduce margins and the ability to invest. In the long term, Swiss MEM companies thus have to find a balanced strategy for innovation. Successful companies drive long-term changes and thereby secure future potential even in hard times", states Ralf Schlaepfer.

When asked about envisaged or planned measures, Swiss MEM companies put the relocation of entire or individual value-creation steps to the euro region in first place (24%). Together with the 22% of MEM companies who have already implemented this measure since the start of the year, a considerable relocation trend can be noted as a response to the strong franc. In addition, the second most important planned measure is the investment in and the development of new business overseas (22%).

Michael Grass, Member of the Executive Board at BAKBASEL says: "The whole manufacturing industry is currently moving sideways. However, the framework conditions for mid to longer term development over the coming decades are more favourable than the current ones. The opportunities for the Swiss manufacturing industry are thus intact. However, to maintain international competitiveness going forward, Swiss manufacturers must pursue the ‘right’ long-term growth strategies."

Growing sustainably and remaining competitive

Based on the survey results, expert discussions and economic analyses, Deloitte and BAKBASEL have identified six growth strategies with which Swiss industrial companies can continue to grow in a sustainable way in the current environment:

  1. Promote customer involvement: Cultivating existing customers remains key, but attracting new customers by means of individualisation is becoming increasingly important. Two thirds of those surveyed (67%) want to grow by retaining their existing customers over the next three years. Even more (83%) want to intensify their efforts to attract new customers. 63% see a new opportunity for growth in customer involvement via the individualisation of products and services.
  2. Go global: There is still potential for growth in the core sales markets for Swiss MEM firms – above all in Germany, the US and China. On the flip side, 57% of those surveyed think that expansion into new geographical markets will have a major impact on growth.
  3. Develop new services: Almost half of respondents (47%) specified the further development of service activities (next to the core production activities) as an important growth strategy. The grouping together of higher-margin services with industrial products and/or the introduction of new, exclusive services can create a competitive advantage. Especially industry 4.0 solutions have great potential.
  4. Innovate beyond the product itself: Almost half (45%) of MEM companies think that the development of new value propositions will make a significant contribution to growth. Product and process innovation are named as the first priority. However, innovation amongst Swiss MEM companies are not yet focusing on Industry 4.0 and exponential technologies, though these are believed to be the future of the manufacturing industry.
  5. Grow inorganically: A quarter of respondents (24%) see growth based on mergers and acquisitions as important for the future; a further 40% back alliances and partnerships. M&A activities serve in particular to capture missed innovation opportunities and to grow in related business areas.
  6. Draw on operational excellence: In a difficult economic environment in which it is costly to manufacture in Switzerland, the optimisation of company processes proves essential for enabling further growth.

About the study Growth Opportunities – Strategies for Swiss Industrial Companies

The joint study by Deloitte and BAKBASEL discusses the opportunities and strategies for growth for Swiss industrial companies. During the summer of 2015, Deloitte and BAKBASEL, with the help of Swissmem, surveyed 393 companies from the Swiss engineering, electrical and metal (MEM) industry about their opportunities for growth. The results of the survey were then explored in detail through personal meetings with representatives from the MEM industry and authorities, and growth opportunities were analysed at the macro and micro-economic levels. The resulting strategies are answers to the tougher economic framework conditions and global competition that Swiss MEM companies currently face, and serve as a starting point to shape the business of the future.

This year's study is a continuation of the Deloitte studies Deloitte White Paper on Swiss Manufacturing Industry (2012), Innovation Reinvented (2013) and Industry 4.0 (2014).

The full results of the Deloitte and BAKBASEL study Growth Opportunities – Strategies for Swiss Industrial Companies is available on our website.

About Deloitte in Switzerland

Deloitte is a leading accounting and consulting company in Switzerland and provides industry-specific services in the areas of audit, tax, consulting and financial advisory. With more than 1,400 employees at six locations in Basel, Berne, Geneva, Lausanne, Lugano and Zurich (headquarters), Deloitte serves companies and institutions of all legal forms and sizes in all industry sectors. Deloitte AG is a subsidiary of Deloitte LLP, the UK member firm of Deloitte Touche Tohmatsu Limited (DTTL). DTTL member firms comprise of over 225,000 employees in more than 150 countries.


BAK Basel Economics AG (BAKBASEL) is a private and independent economic research institute based in Basel, Switzerland. Since 30 years BAKBASEL has been providing analyses, forecasts and consulting services on an empirical and quantitative level to clients all over Europe. The research focus lies primarily on macroeconomic as well as industry- and region-specific issues, from both a cyclical and structural perspective. BAK Basel Economics Ltd. was established in 1980 as a spin-off from Basel University and currently employs 30 persons.

Note to editors

In this press release references to Deloitte are references to Deloitte AG, a subsidiary of Deloitte LLP, which is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

Deloitte LLP and its subsidiaries are leading business advisers, providing audit, tax, consulting and financial advisory services through more than 14,000 exceptional people across the UK and Switzerland. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel.

Deloitte AG is an audit firm recognised and supervised by the Federal Audit Oversight Authority (FAOA) and the Swiss Financial Market Supervisory Authority (FINMA).

The information contained in this press release is correct at the time of going to press.

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