The strong franc hurts Swiss companies, as it made their products more expensive in foreign markets and reduced the franc value of repatriated earnings. Bühler AG, which makes industrial food-processing machines in northeast Switzerland, exemplifies the problem.
The 153-year-old family-owned company builds many of its
flour-milling machines and pasta presses in Switzerland, where its costs
are in francs, but 98% of its 2.3 billion francs in sales is generated
abroad.
The firm has asked its employees to work an additional unpaid five hours a week and has frozen wages. In return the company pledged not to lay off workers because of the economic situation.
The appreciation of the franc has pressured small companies much stronger than it has on the country’s corporate titans. Margins get clipped because company costs are mainly in francs but much of their revenue is in euros. At the same time, many big companies, such as Novartis AG , Roche Holding AG and ABB Ltd., are raising dividends.
To date, only several companies have announced layoffs, however,
the number is likely to grow if the strong franc persists.
Julius Baer Group AG , the big private bank, said it would lay off about 200 employees, about 4% of its staff, to reduce costs, The Wall Street Journal reports. SR Technics Group AG, an aircraft maintenance company, is considering the elimination of 250 jobs at its airport centers in Zurich, Basel and Geneva because of the strength of the franc.
Firm which are represented abroad find themselves in a better situation. They are using their international presence to shift parts of their operations abroad but are trying to keep their manufacturing in Switzerland so they can keep the legally defined Swiss Made label they use in marketing.
Watchmakers
Swatch Group
AG
and
Cie. Financière Richemont
SA,
which also need to keep their manufacturing in Switzerland, plan to hike prices in euros
to maintain their income in francs.
As Swatch announced, it would charge up to 10% more for brands such as Omega and Longines in Europe, while Richemont is tacking on an additional 5% for its Cartier watches and jewelry.
