Swiss Industry Can’t Catch Break With Rest of Economy Improving

(Bloomberg) --

The economic slowdown isn’t over for Switzerland’s industrial sector, with spinning machine-maker Rieter the most recent to announce job cuts and factory closures.

While Switzerland’s economy overall is growing at a moderate pace, the export-reliant industrial sector is getting walloped by the strong franc, the German automakers’ travails and the global trade war.

After suffering a 29% drop in sales last year, Rieter is bracing for a drop in earnings for 2020. To trim costs, it’s shuttering sites in Switzerland, Germany, the Netherlands and the Czech Republic.

Last year “was characterized by the trade conflict between the U.S. and China, excess capacity in the spinning mills as well as political and economic uncertainties in regions of importance,” the company said on Wednesday.

A survey showed capacity utilization in the manufacturing sector plummeted last year, and Swissmen, the industry association, warned there were few signs the slump was about to reverse.

The situation is likely to be compounded by a further strengthening of the currency, which hit a 3-year high against the euro this month, building on its roughly 4% appreciation last year.

A survey by Credit Suisse Group AG and the CFA Society Switzerland on Wednesday determined that exports would continue to contract in the next six month.

The manufacturing sector’s malaise contrasts with better overall prospects for the country on the back of a thaw in U.S.-China relations and signs of a stabilization of growth momentum in the euro area.

The Swiss National Bank forecasts a pickup of growth to between 1.5% and 2% this year, following an estimated expansion of about 1% in 2019.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, Alaa Shahine

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