© Reuters. FILE PHOTO: An employee prepares chocolate Easter bunnies with protective masks in the Baeckerei Bohnenblust bakery in Bern
By John Revill
ZURICH (Reuters) – From expensive watches to chocolates to cement, the coronavirus epidemic has hit Swiss industry, as data showed on Wednesday. The country's PMI survey dropped to its lowest level in more than a decade.
The Swiss purchasing manager index for March fell to 43.7 points, the lowest level since July 2009, and is likely to continue falling, according to the authors. (S8N2B2006)
A score of less than 50 points indicates a shrinking manufacturing sector, which accounts for around 19% of the country's economic output.
The value of the services sector was even worse, dropping to a record low of 28.1 points.
"I still think that the PMI for manufacturing is a little further away, while the reading in the services sector, although very worrying, will stabilize at this level," said economist Claude Maurer Credit Suisse (SIX :), who compiled the survey with dataprocure.ch.
"Many service companies, like most shops and restaurants, are not allowed to sell and also have problems with delivery or purchase. They were hit harder at first, but can recover faster."
The companies welcomed the government's $ 42 billion ($ 43.6 billion) government support package to provide emergency loans and expand the short-term work compensation system.
These measures should keep Swiss companies on hold until a recovery begins, said Maurer.
"If (the partial shutdown in Switzerland) comes to an end in the next few months, it will have no impact on companies in the second round. If it takes longer, it will be much more serious," he said.
To cope with the situation, Swatch Group (S :), the world's largest watchmaker, has introduced shorter working hours in most factories, while Hublot, owned by Moet Hennessy Louis Vuitton LVMH (PA :), has closed one factory.
"We hope that the situation will allow us to reopen the factory in early May. But of course we are waiting for the official guidelines … on the length of detention," said Ricardo Guadalupe, CEO of Hublot.
Swiss companies, including the chocolate manufacturer Lindt & Spruengli (S :), the cement manufacturer LafargeHolcim (S 🙂 and the mechanical engineering group ABB (S :), have also started to warn of profits.
Smaller companies were also injured despite their efforts to adjust.
The Berner Bohnenblust bakery made chocolate Easter bunnies with face masks made of sugar and marzipan to cheer customers during the crisis.
"They were an absolute hit," said manager Ruth Huber. "People said they were very funny and put a little humor and smile on their faces in this difficult time."
But the bakery also had to work around a third of its 70 employees on short-term jobs because deliveries to schools, restaurants and business canteens were discontinued, which reduced the demand for bread.
"We have high fixed costs like rents, but less sales," said Huber. "It is very difficult."
($ 1 = 0.9642 Swiss Franc)