A wave of Swiss industry migration threatens: Why one in three Swiss tech companies is now packing their bags for Germany

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

Sell-off of Switzerland as a manufacturing base? What's behind the biggest crisis in years

The Swiss mechanical, electrical, and metals industry (MEM), the country's technological heartland and most important export sector, is facing one of its deepest crises in decades. A toxic mix of two main causes has dragged the sector into a dangerous downward spiral: the persistent, crushing strength of the Swiss franc and the draconian US import tariffs of 39 percent, in effect since August 2025. This combination hits an industry that relies 78 percent on exports with full force and massively distorts competition—especially against competitors from the EU, which are subject to only 15 percent tariffs.

The consequences are already visible in the company books, even before the US tariffs have had their full effect. Incoming orders are plummeting dramatically, factory capacities are 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 companies is preparing to relocate business activities and jobs to other European countries to avoid the tariffs. This article examines the precise causes of the crisis, illustrates the drastic effects using specific company examples, and analyzes the long-term consequences this impending bloodletting could have for Switzerland as a center of innovation and business.

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

The Swiss mechanical, electrical, and metals industries are currently facing their greatest challenge in years. These problems have two main causes: the continued strength of the Swiss franc and the drastic US import tariffs, which have been in effect since August 7, 2025. This combination of currency-related and trade policy pressures is hitting an industry that is 78 percent export-oriented and thus particularly dependent on international markets.

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

The strength of the franc further exacerbates this problem. In the past, phases of pronounced overvaluation of the franc have already led to an acceleration of deindustrialization. Between 2011 and 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 concrete effects are already evident in the business figures?

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

Tech industry revenues 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 fell by 3.1 percent between April and 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. At 324,600, the number of employees in the tech industry fell by 3,100 in the second quarter, highlighting the beginnings of structural change in the sector.

How are companies responding to these challenges?

Swiss companies' reactions to the deteriorating economic conditions are diverse and, in some cases, drastic. According to a Swissmem survey of 385 companies, almost one in three Swiss companies in the mechanical engineering and electrical engineering sectors is planning to relocate their 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 that 37 percent of companies are already planning layoffs. The extent of the job cuts 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 heavy-duty 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. Company CEO Beat Rupp fears that half of the production hall could be empty if US orders collapse.

Thermoplan, based in Weggis, Switzerland, 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 relocating to the US, as the infrastructure already exists 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 approximately 1,400 member companies, 85 percent of which are small and medium-sized enterprises. The association employs approximately 100 people and offers its members effective advocacy, needs-based services, and targeted networking.

Under the leadership of President Martin Hirzel, in office since January 2021, and Director Stefan Brupbacher, who has led 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 develop new concessions from Switzerland that will encourage the US administration to reduce the tariff rate. At the same time, Swissmem is calling on the Federal Council and Parliament to take swift action domestically to improve the framework conditions for the export industry. The association has launched a petition to build 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 in a few markets. Of total exports, 55 percent go to the EU, 15 percent to the US, and 20 percent to Asia, including 7 percent to China. This distribution makes the industry particularly vulnerable to trade policy disruptions.

Developments in the various markets vary. Exports to China already declined in the first six months of 2025. Germany, the most important single market, which accounts for around a quarter of the Swiss tech industry's exports, has slipped into recession. In the first half of 2024, Swiss exports to Germany already fell by 8.4 percent.

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

Stefan Brupbacher, Director of Swissmem, nevertheless sees a possible turnaround for 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 India, where the new free trade agreement offers opportunities.

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Which structural problems are exacerbating the current crisis?

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

Geopolitical tensions and the increasing politicization of trade are causing additional concerns for the export-oriented industry. Martin Hirzel, President of Swissmem, sees the formation of blocs and the introduction of different technology worlds 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 small number of 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 eroded margins in the past, as companies 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 change the structure of the Swiss tech industry. Swissmem expects an accelerated decline in incoming orders in the coming months. Stefan Brupbacher warns of a "dangerous downward spiral" whose pull will be further amplified by the US tariffs.

The planned relocation of production could lead to a permanent loss of jobs and know-how in Switzerland. If one-third of the companies actually relocate operations to the EU, this would not only reduce direct employment in the sector but also affect upstream and downstream industries.

The change in global production structures could also weaken Switzerland's position as a center of innovation. If production and development are 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 center.

However, the crisis could also lead to positive structural adjustments. Companies that successfully diversify and enter 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 responses to the tech industry crisis are complex. Since the US tariffs came into effect, the government and authorities have been working with the private sector to secure new concessions from Switzerland. The goal is to persuade the US administration to lower the tariff rate and reduce the massive discrimination against EU companies.

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

The challenge for policymakers is to reduce the tariff burden in the short term, while improving the framework conditions for the export industry in the long term. This requires a skillful balance between economic concessions and maintaining Swiss sovereignty in trade policy matters.

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

What role does vocational training play in the current situation?

Vocational training occupies a special position in the current crisis. The MEM 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 learned the trade through apprenticeships and, thanks to their experience and continuing education, are central pillars of society.

Stefan Brupbacher emphasizes the special importance of vocational training for the country's success and stability. Highly qualified specialists from dual training programs are a key competitive advantage for Swiss industry and enable companies to specialize in high-quality products and processes.

However, the planned relocation of production could put pressure on the proven vocational training system. If companies relocate 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 strength of Swiss industry.

Swissmem therefore continues to invest heavily in future-oriented training for young people and in continuing education. The goal is to train committed professionals at all levels, even in difficult times, and thus contribute to an innovative, internationally competitive workplace.

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 enjoys a strong position in niche markets and highly specialized applications. Many of Swissmem's 1,350 member companies are global technological leaders in their fields, enabling them to maintain their position even in challenging times.

Market diversification offers new opportunities. The free trade agreement with India opens up access to one of the world's largest and most dynamic markets. India is one of the countries from which Swiss export companies expect growth impulses. Advancing industrialization and the growing 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 for 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 areas. Swiss companies have traditionally been strong in precision engineering and can transfer these competencies to new application areas 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 for 2025, with 32 percent of companies anticipating increasing orders from abroad. This cautiously optimistic assessment is based on hopes for a stabilization of international markets and an easing 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 presented by the shift in mobility and new technologies.

BAK Economics' forecasts for the MEM industry are cautiously positive. Value added growth of 0.7 percent and employment growth of 0.4 percent are expected for 2025. Similar figures are forecast for 2026. The main drivers of this development are the electronics, optics, and watchmaking sectors, which are particularly in need of workers.

However, due to the ongoing weakness in the manufacturing sector, employment is expected to remain at the same level in 2026. Unemployment, which will rise slightly over the next two years, will also affect the MEM industry. This indicates that the sector's recovery will take time and may involve structural adjustments.

The long-term prospects depend largely on how successfully companies diversify their markets and develop new business models. The traditional strengths of Swiss industry – high levels of innovation, precision, and quality – will remain important competitive advantages in the future. The key will be to apply these strengths to the challenges of digital transformation and sustainable business practices.

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