Is "Swissness" the Key to Staying Competitive?
Swiss export has been hit particularly hard by the strong franc. Can "Swissness" prove to be an entrepreneurs' trump card? An economic expert and two businessmen told us why they think it is essential particularly in times of crisis.
"Swiss Made" pays off. At least in the consumer goods segment. Although some Swiss products are considered expensive, customers are more than willing to pay for certain items such as watches or chocolate, generally because "Swiss Made" is synonymous with quality, precision, and innovation. A good example is the Swiss Army knife by Victorinox, one of the country's top brand ambassadors for decades.
So, is "Swissness" a success factor for the B2B industry too? Can it help the Swiss export industry overcome a strong franc? One thing is certain: when the Swiss National Bank (SNB) dropped the euro exchange rate floor in January, the subsequent soaring of the franc immediately dampened the outlook for 2015.
As the Credit Suisse industry monitor shows, the decision has been tough on industry, trade, and hospitality, and is affecting the prices, margins, and the competitive edge of Swiss companies.
The export industry has been hit particularly hard, but growth opportunities can still be found. If we disregard the exchange rate developments for the time being, the global economy, and with it the potential demand for Swiss exports, were stable at the beginning of the second quarter.
Lukas Gehrig, an economist at Credit Suisse, is optimistic: "The US will remain a key growth market. Moreover, the economic expansion in the eurozone is likely to somewhat soften the negative impact of the strong Swiss franc."
"Swissness" Stands for Quality
Alberto Silini, Head of Consulting for Switzerland Global Enterprise (S-GE) advises small- to medium-sized Swiss enterprises (SMEs) from various industries every day.
While he also initially associated "Swissness" with such characteristics as quality, precision, and innovation, he thinks the term is much broader, especially in the B2B segment.
"'Swissness' means quality built on a clear mindset, reliability, efficiency, punctuality, availability, and order." Silini feels that this mindset also includes agility during times of crisis. Those companies that learned their lessons from the crises in 2009 and 2011 and expanded to remote markets such as North America or Asia Pacific, for instance, are doing better today.
"We feel that diversifying the export markets is very advisable, because it spreads risk and increases growth opportunities," he says.
One such example is Burckhardt Compression AG in Winterthur, a mechanical engineering firm for piston compressors.
'Swissness' means quality built on a clear mindset, reliability, efficiency, punctuality, availability, and order.
Alberto Silini, Head of Consulting for Switzerland Global Enterprise (S-GE)
Despite suffering a loss of between six and eight million Swiss francs, the company's competitiveness remained intact thanks to diversifying markets and customer segments. Moreover, the measures it has taken since the euro crisis of 2011, such as productivity enhancements and increasing procurement volume in euro and US dollar regions, have proven effective in the current situation.
Assembly plants that the company is building in South Korea and the US, as well as its additional expansion into the local service and components business, are making it less vulnerable to currency fluctuations.
The mechanical engineering industry is also a particularly good example of "Swissness" as a symbol of top quality and high-level innovation.
"Our piston compressors are used mainly for gas transport and storage," says company CFO Rolf Brändli, "They weigh up to 400 tons, while the tolerance of each component is sometimes in the range of a few hundredths of a millimeter. So quality and service must be top-notch. If a machine breaks down, it could quickly mean a loss of a half a million francs per day for the customer."
Focusing on Customers' Needs
Rychiger AG, another mechanical engineering firm, builds machinery for global companies such as Nestlé and Mondelez, to pack coffee capsules.
The company, winner of the 2015 Prix SVC Espace Mittelland, is keen to help its customers to improve the efficiency of their manufacturing operations.
"Our strength lies in continually improving our methods," explains Axel Förster, CEO and majority shareholder: "Our customers deserve machines that help them to lower production costs, while making production process more energy-efficient. A customer-oriented approach is critical."
Rolf Brändli agrees: "It's worthwhile to have well-structured innovation that meets customers' needs, rather than just inventing random things."
A Culture of "Swissness"
"Swissness" is therefore not just an advertising slogan, but something that is ideally put into practice within corporate culture. "We expect our employees to be punctual, efficient, and reliable, and we are a model for this," stresses Rolf Brändli.
In terms of customer service, such as how we answer the phone, we Swiss are certainly not in the lead," he adds.
"I imagine the world doesn't always perceive us as particularly friendly. This is somewhere we can definitely improve."
However, when it comes to quality of training and professional skills, Switzerland is considered a leader.
"A key argument in favor of Switzerland as a business location, and another characteristic of "Swissness", is our specialized and highly trained professionals. We owe this to our dual education system, which we absolutely must maintain," stresses Alberto Silini from S-GE.
In the context of the strong franc, he concludes: "We recommend that Swiss SMEs emphasize "Swissness" now more than ever. It's a symbol of top quality that must be advertised not only in relation to the product, but also in relation to services and corporate culture."