Mar 05 2009

Some good news for Swiss businesses and workers during hard economic times

Two items consisting of good news from the local English language news in Switzerland. The first article says that small and medium-sized enterprises, in other words family owned businesses, are likely to come out of a global economic slowdown relatively unscathed and healthy.

Swiss SMEs are well placed to survive the economic recession. – swissinfo

Family-run firms in Switzerland are well set to survive the global recession having put long-term growth before quick profits in the good years, a report concludes.

Such small- and medium-sized enterprises (SMEs), which account for more than 88 per cent of all Swiss companies, are also cushioned by an aversion to taking on too much debt but still face succession problems.

The survey of 300 Swiss family-owned SMEs found that 68 per cent of companies are less motivated by making money than in maintaining the good name of the firm.

Some 83 per cent of owners put the healthy state of their company down to risk aversion and 39 per cent said long-term planning was crucial to success.

Swiss family business consultant Hakan Hillerström contributed to the study by Barclays Wealth and the Economist Intelligence Unit.

“Often, without a stock market listing, family businesses are insulated from the need to meet the short-term demands of investors and so are better placed to ride out volatility than their listed peers,” he said.

Second is a story about the mobility of skilled labor in Switzerland. When global demand for one of Switzerland’s most famous exports, watches, falls, Swiss watch makers are snatched up and employed by other industries in which demand is actually increasing during the recession: namely, rail car engineering and construction. Similar skills are required of workers in both industries, watches and rail cars. I suspect demand for rail cars has increased because of the multiple fiscal stimulus packages being initiated around Europe, many of which include funding for infrastructure expansion, including upgrading and expanding rail networks.

I am impressed by the flexibility of labor markets in Switzerland in times of economic hardship. Such labor mobility as demonstrated below helps Switzerland weather economic woes more easily than it would if workers laid off from one industry could not easily find employment in others, such as is the case in many countries.

Enterprises in Vaud to exchange workers to beat redundancies. – swissinfo

Skilled workers from the Swiss watchmaking industry could soon find themselves building locomotives instead.

A new project to meet the challenges posed by the financial crisis has been launched in the French-speaking canton of Vaud, with the backing of the major trade union and employers associations, as well as the cantonal government.

The idea is that businesses experiencing a temporary shortfall in orders will be able to lend their workers to others facing a shortage of labour.

“It’s pretty ridiculous to pay people to sit around and do nothing,” Yves Defferrard of the Unia trade union told swissinfo. “But when they have no work for them, employers can often think of nothing better than to lay them off. That’s the wrong way to manage a crisis. It’s what happened in the downturn of 2000.”


About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

4 responses so far

4 Responses to “Some good news for Swiss businesses and workers during hard economic times”

  1. Justuson 05 Mar 2009 at 4:47 pm

    I've been always very critical of family owned companies, because they are usually the ones that rectlessly try to make as much profits, as possible. I'm also pretty sceptical about this that family owned companies here in Switzerland will come out better than other fims. They might do better at the start, because they have alot of money to compete, but soon the crisis will hit them as well. An example is a German family owned company called Schaeffler. They too mad profit at first from the crisis, because as unemployment rose, alot of people went to Schaeffler and got a job, rising output. However now Schaeffler is facing big problems, because they baught "Continental". As the crisis increased the costs for Continental rose as well and now Schaeffler is making big lossses and is trying to get rid of them again.

    Of course it depends on what decicisos these firms make. They might be well thought of, or not. I deffinately don't agree that any family owned company in the world will come out better, than the normal firms.

  2. Simon Strongon 06 Mar 2009 at 10:11 am

    I think Justus that you are missing the point of the article. You seem to have this prejudice and idea that all family run businesses are out to make money even though the article states that "The survey of 300 Swiss family-owned SMEs found that 68 per cent of companies are less motivated by making money than in maintaining the good name of the firm." Which would then go far enough to contradict your point of Schaeffler as only 68% want this, not 100%. In Schaeffler's case I would propose that if it had been run by one of these 68% of family owned businesses then it would not be in it's current predicament. It's poor management is a contradictory example yes, and worthy of explanation too, but it is an example, so it depends.

  3. Laura Nanette Gon 10 Mar 2009 at 3:10 am

    I agree with Justus and Simons statement.

    Justus is right with his example facing Schaeffler, as well as Simon who states the main point of maintaining the good name of the firm. Personally I think it was a mistake from Schaeffler to take over Continental, as they knew the costs would increase. With the ecnomic crisis affecting almost all large firms it was a high risk. Most large companies that seem to buy up smaller companies at the moment are suffering from high cost and fall into depts. Governments have been giving out more subsidies than ever.

    Getting back to the article, I believe the situation will stay balanced as long as the rest of switzerland does. Already banks such as the UBS are struggeling with the media that are making their name bad, and having to keep up with the large amounts of losses. However this does not affect small private businesses in Switzerland so far. If a bank such as the UBS would go bankrupt there would be a definete problem for Switzerlands economy; including small family businesse.

    “It’s pretty ridiculous to pay people to sit around and do nothing,” Yves Defferrard of the Unia trade union told swissinfo. “But when they have no work for them, employers can often think of nothing better than to lay them off. That’s the wrong way to manage a crisis. It’s what happened in the downturn of 2000.” – The article also explains itself why Switzerland is working on their business and are not trying to cut down their costs too far. It is important to keep the customers and the balance between profits and losses. Keeping the customers would seem the most important for a firm; they keep the firm alive.

  4. Markus von der Marwion 12 Mar 2009 at 2:41 am

    It makes sense that family owned businesses would do better in am economic downturn. They have much fewer costs to cover and most of the businesses in switzerland seem to be more interested in keeping a good name for their firm, rather then making money. This most likely results in a loyal group of customers, who are probably willing to pay slightly more in a name that they trust, instead of purchasing goods from a large corporation. They are not looking for every lowest cost method.