The Added Value of Swissness

Generating added value with Swissness

The Swiss export industry is greatly affected by the potential competitive disadvantage that a stronger franc poses. However, the “Swissness” factor should not be underestimated as a coun-terweight. An economic expert and two entrepreneurs told us why it is critical to implement this counterweight in times of crisis.

“Swiss Made” pays off. At least in the consumer goods segment. Around the world, Swiss prod-ucts are considered expensive, but customers are more than willing to pay for certain products such as watches or chocolate. “Swiss Made” is synonymous with such values as quality, precision, and innovation. The best example of this is the number one brand ambassador for decades: the Swiss Army Knife by Victorinox. So what about “Swissness” as a general term and success factor in the B2B industry? Can Swissness help the Swiss export industry overcome even a strong franc? One thing is certain: The termination of the euro exchange rate floor and the subsequent appreciation of the franc immediately dampened the outlook for 2015. As the Credit Suisse industry monitor shows, the decision of the SNB on January 15 has been tough on industry, trade, and hospitality, and is affecting the prices, margins, and competitive edge of Swiss companies. The export industry has been particularly hard hit, 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 in the second quarter. Lukas Gehrig, an economist from Economic Research at Credit Suisse, is optimistic as a result: “The US will remain a key growth market. Moreover, the economic expansion in the euro zone is likely to somewhat soften the negative impact of the strong Swiss franc.”

Swissness Synonymous with Value

Alberto Silini, Head of Consulting for Switzerland Global Enterprise (S-GE), works with Swiss SMEs from various industries as a business advisor every day. While he also initially associates Swissness with such characteristics as quality, precision, and innovation, he thinks the term is much broader, especially in the B2B segment. “Swissness is synonymous with value, which is based on a clear mindset with additional values such as 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 faring better today. “We feel that diversifying the export markets is very advisable, because it spreads risk and increases growth opportunities,” says the expert with conviction. Burckhardt Compression AG in Winterthur, a mechanical engineering firm for piston compressors, is a successful example of this. While it posted a loss of CHF 6–8 million to its balance sheet, the company’s competitiveness is largely unchanged because it diversified its markets and customer segments. Moreover, the measures taken since the euro crisis of 2011, such as productivity enhancements and increasing the procurement volume in euro and US dollar regions, have proven effective in the current situation. The assembly plants under construction in South Korea and the US, and the additional expansion to the local service and components business, are making the company less vulnerable to currency fluctuations.

In Line with the Customers’ Needs

The mechanical engineering industry offers a particularly good example of Swissness as a symbol of value. Rolf Brändli, CFO of Burckhardt Compression AG, offers a striking real-life example: “Our piston compressors, which are used mainly for gas transport and storage, weigh up to 400 tons. The tolerance for each component is sometimes in the range of hundredths of a millimeter, but the life cycle is 45 to 50 years. So the quality and service must be top-notch. If a machine breaks down, it could quickly mean a loss of a half a million per day for the customer.” Swissness as a symbol of value also means a high level of innovation, which clearly pays off in conjunction with quality. Just ask Rychiger AG of Steffisburg, another mechanical engineering firm. The winner of the 2015 Prix SVC Espace Mittelland builds machinery for global companies such as Nestlé and US company Mondelez to pack coffee capsules. For the third generation of the Dolce-Gusto capsule machines, Nestlé capital expenditure has been reduced by 45 percent for each coffee capsule produced. “Our innovative strength lies in continually improving the methods and the details,” explains CEO and majority shareholder Axel Förster, adding: “Our customers should have a machine that lets them manufacture their products more cheaply than before, while using less energy.” Customer proximity, he says, is a critical factor. Burckhardt Compression agrees. “In our industry, it’s worthwhile to have well-structured innovation that meets the customers’ needs, rather than just inventing random things,” says Rolf Brändli emphatically.

A Corporate Culture of Swissness

“Ideally, Swissness is not just advertised as added value, but is put into practice within the corpo-rate culture. We expect our employees to be punctual, efficient, and reliable, and we are a model for this,” stresses Rolf Brändli while noting: “In terms of customer service, such as how we answer the phone, we Swiss are certainly not in the lead. I imagine the world doesn’t perceive us as particularly friendly. We definitely can improve there.” The firm has learned its lessons from its own experience abroad. When servicing non-Burckhardt compressors in other countries, the latest service strategy is to use local staff, who have the necessary service skills and can proactively contact customers. “Knocking on doors and continuing to visit customers without any direct orders – that’s tough for the Swiss people,” says Brändli. However, when it comes to training quality and professional skills, Switzerland leads the pack. “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. He is clear on how to handle the strong Swiss franc: “We recommend that Swiss SMEs bank on Swiss attitudes now more than ever. Swissness as a symbol of value must be advertised not only for the product, but also for related services and for the corporate culture.”