A wave of Swiss industry relocations is looming: Why every third Swiss tech company is now packing its bags for Germany

### Red alert for Swiss industry: This double blow forces companies to flee ### Trump's 39% tariff hammer: The dramatic consequences for Swiss jobs and the business location ### The perfect storm: How the strong franc and US tariffs are breaking the backbone of the Swiss economy ### "Dangerous downward spiral": Top manager warns of a historic crisis for Swiss companies ###

Sell-off of Switzerland as a manufacturing location? What lies behind the biggest crisis in years?

The Swiss machinery, electrical, and metal industries (MEM), the country's technological heart and most important export sector, are facing one of their deepest crises in decades. A toxic mix of two main causes has dragged the industry into a dangerous downward spiral: the persistent, oppressive strength of the Swiss franc and the draconian US import tariffs of 39 percent, in effect since August 2025. This combination is hitting an industry that relies on exports for 78 percent of its revenue with full force and is massively distorting competition – especially compared to competitors from the EU, who are subject to tariffs of only 15 percent.

The consequences are already visible in company books, even before the US tariffs have taken full effect. Order intake is plummeting, factory capacity is underutilized, and thousands of jobs have already been lost. The reaction of companies is alarming: According to a survey by the industry association Swissmem, almost one in three firms is preparing to relocate business operations and jobs to other European countries to avoid the tariffs. This article examines the precise causes of the crisis, illustrates the drastic effects with concrete company examples, and analyzes the potential long-term consequences of this looming drain on Switzerland's innovative and economic landscape.

What are the main causes of the current problems facing the Swiss tech industry?

The Swiss machinery, electrical, and metal industries are currently facing their greatest challenge in years. The problems stem primarily from two main causes: the persistent strength of the Swiss franc and the drastic US import tariffs that have been in effect since August 7, 2025. This combination of currency-related and trade policy burdens is hitting an industry that is 78 percent export-oriented and therefore particularly dependent on international markets.

The 39 percent US tariff on Swiss goods is one of the highest rates imposed by US President Donald Trump on imports from any country. In comparison, the tariff on goods from the European Union is only 15 percent, which represents a massive distortion of competition to the detriment of Swiss companies.

The strength of the Swiss franc exacerbates this problem. In the past, periods of pronounced overvaluation of the franc have accelerated deindustrialization. From 2011 to 2016, around 20,000 jobs were lost in Swiss industry, primarily due to the strength of the franc. The current situation threatens to repeat these negative experiences.

What specific effects are already evident in the business figures?

The figures speak for themselves: In the first half of 2025, the industry's order intake fell by 2.3 percent compared to the same period of the previous year. The development was particularly dramatic in the second quarter, where order intake plummeted by 13.4 percent compared to the previous quarter. This massive decline occurred even before the US tariffs came into effect on August 7, underscoring the seriousness of the situation.

Sales in the tech industry fell by 2.5 percent in the first half of 2025, while goods exports declined by 0.9 percent. Particularly worrying is the development of exports to the United States, which plummeted by 3.1 percent in the period from April to June, following a strong increase of 5.3 percent in the first quarter.

Capacity utilization in companies reached only 80.9 percent in the second quarter, significantly below the long-term average of 86.2 percent. This underutilization reflects weaker demand and the uncertain market situation. The number of employees in the tech industry fell by 3,100 to 324,600 in the second quarter, highlighting the beginning of structural change in the sector.

How are companies responding to these challenges?

Swiss companies are reacting to the deteriorating business environment in a variety of ways, some quite drastically. According to a Swissmem survey of 385 companies, nearly one in three Swiss companies in the mechanical engineering and electrical engineering sectors is planning to relocate business activities to the European Union.

Martin Hirzel, president of the industry association Swissmem, describes the situation as a “delicate phase” in which “numerous companies are preparing downsizing and relocation plans.” Particularly alarming is the fact that 37 percent of companies are already planning layoffs. The extent of the job losses will depend on how quickly policymakers can ease the tariff burden.

There are already several concrete examples of planned relocations. Packsys Global from Rüti ZH, a manufacturer of multi-ton packaging machines, is considering outsourcing operations to the EU, for example to Slovakia. The company has already received initial cancellations of orders for machine spare parts from the USA. CEO Beat Rupp fears that half of the production hall could be empty if US orders collapse.

Thermoplan, based in Weggis, Lucerne, which exclusively supplies Starbucks with coffee machines, is facing similar considerations. Managing Director Adrian Steiner explains that with a 39 percent tariff, the company is no longer competitive in Switzerland. Relocating to Germany is considered more realistic than moving to the USA, as the necessary infrastructure is already in place there.

What role does the industry association Swissmem play in this crisis?

Swissmem, the leading association of the Swiss tech industry, represents the interests of around 1,400 member companies, 85 percent of which are small and medium-sized enterprises (SMEs). The association employs approximately 100 people and offers its members effective advocacy, tailored services, and targeted networking opportunities.

Under the leadership of President Martin Hirzel, who has been in office since January 2021, and Director Stefan Brupbacher, who has headed the association since January 2019, Swissmem has implemented various measures to address the crisis. Brupbacher, who has extensive experience in economic and trade policy, is particularly committed to an open and internationally oriented trade and research policy.

The association is working closely with the government and authorities to negotiate new concessions from Switzerland to persuade the US administration to lower its tariffs. At the same time, Swissmem is urging the Federal Council and Parliament to take swift domestic action to improve the framework conditions for the export industry. To this end, the association has launched a petition to exert political pressure.

How are the most important export markets for the Swiss tech industry developing?

The export structure of the Swiss tech industry shows a strong concentration on a few markets. Of total exports, 55 percent go to the EU, 15 percent to the USA, and 20 percent to Asia, including 7 percent to China. This distribution makes the sector particularly vulnerable to trade policy disruptions.

Developments in the various markets differ. Exports to China were already declining in the first six months of 2025. Germany, the most important single market, which receives around a quarter of Swiss tech industry exports, has slipped into recession. In the first half of 2024, Swiss exports to Germany had already fallen by 8.4 percent.

The US, previously considered an important growth market, is becoming increasingly unattractive due to the high tariffs. This is particularly problematic because American customers have to pay higher prices due to the tariffs, and Swiss companies have to reduce their margins to remain competitive.

Stefan Brupbacher, director of Swissmem, nevertheless sees a possible turnaround in 2025. According to an association survey, 32 percent of companies expect an increase in orders from abroad. Growth impulses are expected primarily from markets outside Europe, especially from India, where the new free trade agreement offers opportunities.

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What structural problems are exacerbating the current crisis?

The current crisis in the Swiss tech industry is exacerbated by several structural factors. A key problem is the ongoing recession in important European sales markets. The Purchasing Managers' Index for the manufacturing sector remains at a very low level in European markets, which significantly reduces demand for machinery and equipment in these countries.

Geopolitical tensions and the increasing politicization of trade are causing additional concern for the export-oriented industry. Martin Hirzel, President of Swissmem, sees the formation of blocs and the introduction of different technological systems as a threat to the mutual recognition of industrial standards. This could severely complicate imports and deliveries and represent a worst-case scenario for the industry.

Another structural problem is the strong dependence on a few markets and the high export ratio of 78 percent. This concentration makes the industry particularly vulnerable to external shocks such as trade conflicts or currency fluctuations. The strength of the Swiss franc has already led to a erosion of margins in the past, as companies have had to lower their selling prices to remain internationally competitive.

What long-term effects can be expected?

The long-term effects of the current crisis could permanently alter the structure of the Swiss tech industry. Swissmem anticipates an accelerated decline in orders in the coming months. Stefan Brupbacher warns of a “dangerous downward spiral,” the pull of which is further intensified by the US tariffs.

The planned production relocations could lead to a permanent loss of jobs and expertise in Switzerland. If a third of the companies actually relocate their business activities to the EU, this would not only reduce direct employment in the sector, but also affect upstream and downstream industries.

The changing global production structures could also weaken Switzerland's position as an innovation hub. If production and development become geographically separated, there is a risk that research and development activities will also be relocated abroad in the long term. This would challenge Switzerland's role as a leading technology location.

However, the crisis could also lead to positive structural adjustments. Companies that successfully diversify and tap into new markets could emerge stronger from the crisis. The new free trade agreement with India, for example, offers opportunities for the Swiss tech industry.

How is politics responding to the challenges facing the industry?

The political reactions to the tech industry crisis are multifaceted. Since the US tariffs came into effect, the Swiss government and authorities have been working with the private sector on new concessions. The goal is to persuade the US administration to lower the tariff rate and reduce the significant disadvantage compared to EU companies.

Swissmem is calling on policymakers to take concrete measures to support the export-oriented economy. This includes the swift ratification of the free trade agreement with India and the rapid conclusion of negotiations with the Mercosur countries and the EU for the Bilateral Agreements III. Last but not least, Switzerland should resume talks on a free trade agreement with the USA.

The challenge for policymakers is to reduce tariffs in the short term while simultaneously improving the framework for export-oriented businesses in the long term. This requires a skillful balance between economic concessions and preserving Swiss sovereignty in trade policy matters.

Strengthening domestic competitiveness is also an important aspect. Martin Hirzel emphasizes the need for consistent investment in research, development, and new technologies. Policymakers can support this through appropriate funding programs and favorable conditions for innovation.

What role does vocational training play in the current situation?

Vocational training plays a special role in the current crisis. The MEM (mechanical, electrical, and metalworking) industry offers around 20,000 apprenticeships in Switzerland, making it a key pillar of the dual education system. The majority of employees in these companies have learned their trade through vocational training and, thanks to experience and continuing education, form essential pillars of society.

Stefan Brupbacher emphasizes the particular importance of vocational training for the success and stability of the country. The highly qualified specialists from the dual training system are a key competitive advantage for Swiss industry and enable companies to specialize in high-quality products and processes.

However, the planned production relocations could put the proven vocational training system under pressure. If companies move their production abroad, the number of apprenticeships available in Switzerland will also decrease. This could lead to a shortage of skilled workers in the long term and weaken the innovative capacity of Swiss industry.

Swissmem therefore continues to invest heavily in future-oriented training and further education for young people. The aim is to train dedicated professionals at all levels, even in challenging times, and thus contribute to an innovative, internationally competitive industrial location.

What opportunities arise despite the current challenges?

Despite the challenging situation, there are also positive developments and opportunities for the Swiss tech industry. The sector holds a strong position in niche markets and highly specialized applications. Many of Swissmem's 1,350 member companies are global technology leaders in their respective fields and are therefore able to maintain their position even in difficult times.

Market diversification offers new opportunities. The free trade agreement with India provides access to one of the world's largest and most dynamic markets. India is among the countries from which Swiss export companies expect growth impetus. The ongoing industrialization and the increasing demand for high-quality machinery and equipment offer considerable potential.

The challenges of climate change and the energy transition are creating new demand for innovative solutions. Swiss companies are developing technologies to address problems such as energy generation, energy efficiency, and environmental protection. These future markets offer opportunities for growth, regardless of current trade policy disruptions.

Digitalization and automation are opening up new business opportunities. Swiss companies are traditionally strong in precision engineering and can transfer these skills to new fields of application such as robotics, artificial intelligence, and Industry 4.0.

How do experts assess the medium- and long-term prospects?

Experts' assessments of the medium- and long-term prospects for the Swiss tech industry are mixed. Stefan Brupbacher sees a possible turnaround in 2025, with 32 percent of companies expecting an increase in orders from abroad. This cautiously optimistic assessment is based on the hope for a stabilization of international markets and a relaxation of trade tensions.

Martin Hirzel emphasizes the need to look ahead and consistently invest in research, development, and new technologies. He sees the current situation as a challenge, especially for small and medium-sized enterprises, but also recognizes the opportunities arising from the changing landscape of mobility and new technologies.

BAK Economics' forecasts for the MEM (mechanical, electrical, and metalworking) industries are cautiously optimistic. Value added growth of 0.7 percent and employment growth of 0.4 percent are expected for 2025. Similar figures are projected for 2026. The main drivers of this development are the electronics, optics, and watchmaking sectors, which are particularly in demand for skilled workers.

However, due to the ongoing weakness in the industrial sector, employment is expected to remain stable in 2026. Unemployment, which is projected to rise slightly over the next two years, will also affect the MEM (mechanical, electrical, and metalworking) industries. This indicates that the sector's recovery will take time and may involve structural adjustments.

Long-term prospects depend significantly on how successful companies are in diversifying their markets and developing new business models. The traditional strengths of Swiss industry – high innovation, precision, and quality – will remain important competitive advantages in the future. The key will be applying these strengths to the challenges of digital transformation and sustainable business practices.

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