Numerous listed Swiss industrial companies report their annual turnover in January. The companies only represent a relatively small but significant part of a sector of the economy, but that segment continues to play an important role in the country's employment and GDP.

Around 7% of all 4.5 million employees in the country earn their daily bread in the traditional mechanical, electrical and metal industries (MEM). This sector generates 80% of its turnover from exports and thus plays a disproportionately large role in the country's prosperity.

For example, the aggregate export revenue of MEM companies totalling 72 billion francs (2022) finances a fifth (22%) of all goods imported into Switzerland or the entirety of all car, clothing, food and luxury food imports and, on top of that, almost half of all pharmaceutical imports.

Of course, such comparisons should not be overstretched, especially as the industry also imports many primary products in order to process them for re-export. But it is clear: If the industry is doing poorly, the country cannot do well either. At the moment, the outlook is once again bleak.

The massive international boom following the pandemic has levelled off. Weak demand in critical sales markets such as Germany and China is causing problems for many companies. And on top come the exchange rate situation.

A "dramatic" rise in the Swiss franc exchange rate against the dollar (+4.5%) and the euro (+2.7%) in the last four weeks of the year prompted the industry association "Swissmem" to issue a kind of emergency call at the end of December. The currency was "jeopardising" the industry, the association warned. The communication was obviously aimed primarily at the Swiss National Bank.

Over the past twelve months, it had rushed to exchange extensive foreign currency reserves for Swiss francs. Although this brought inflation under control and reduced the balance sheet volume, it also exacerbated the notoriously challenging exchange rate situation for Swiss exporters, whose products have also become more expensive in real terms on the international market as a result of the recent appreciation of the franc.

However, the "markedly weak development", as also noted by the SNB in its quarterly report published just before Christmas in parts of the textile industry as well as in mechanical and metal engineering and in particular among many suppliers to the automotive industry, contrasts strikingly with the actual and expected sales figures of most listed companies in the Swiss MEM industries.

The sometimes almost paradoxical, strong sales growth rates often reflect less the actual demand than the financial power of companies that can expand their business with the help of acquisitions (SFS, Autoneum, Komax). Nevertheless, the figures also testify to the resilience of the Swiss industrial sector, which rarely surprises after decades of getting used to them.

Empirical analyses, such as those conducted by Christian Rutzer and Rolf Weder, two economists from the University of Basel, in their book "De-Industrialisation of Switzerland?" (Springer Gabler, 2021) show that the number of employees in the traditional Swiss industrial sector has fallen by around 20% over the past 30 years. However, in the same period, labour productivity in this industry has risen far more sharply, by around 50%. Despite the notoriously strong Swiss franc and wage levels that are well above average by international standards, the industry has retained its huge importance for the country's overall economic performance.

A key reason for this phenomenal development is the extreme specialisation of the Swiss industry, which naturally has a positive effect on productivity. The steady appreciation of the Swiss franc is undoubtedly a strong incentive for export-oriented companies to specialise.

Rutzer and Weder, on the other hand, see "rather the global increase in demand for very specific products as the reason for the concentration movement of the Swiss industrial structure". In any case, the fact is that many Swiss industrial companies have been able to successfully hold their own for years in the face of sometimes extremely unfavourable conditions – which is to be expected again in the current crisis.

In many cases the sometimes sharp corrections in share prices are not so much a sign of investors' doom and gloom, but rather an expression of presumably excessive optimism, which investors allowed to infect them again immediately after the end of the pandemic due to the many positive experiences from previous times. This is not to play down the current challenges facing the industry. However, the industry has been experiencing hardship time and again for decades and has had to prove its fighting qualities. This also includes Swissmem's calls for help.