Swiss firm Zeochem's factory sits on the shore of Lake Zurich. The company has been producing chemicals since 1818, and today almost all of them are manufactured for the export market.
With the Swiss franc surging in value over the past two weeks, is factory manager Moritz Walter worried about losing his job?
“We will certainly have to fight,” he said. “Thought is already being given to how we can save money.”
The rising Swiss currency has the potential to weigh heavily on the profits of the country’s exporters, but Mr. Walter remained relatively calm.
“There is a certain amount of fear among the workforce, but no panic,” he said. “On the other hand, because of the strong franc, we can also buy our raw materials at a lower price.”
Switzerland faces uncertain times. After the surprise decision of the Swiss National Bank earlier this month to abandon its exchange rate cap of 1.20 francs per euro, the Swiss franc has surged in value. On Tuesday it was trading at 0.95 francs per euro.
Growth forecasts and business plans are being radically revised across the country. Instead of the Swiss economy growing at 1.8 percent this year, it is now expected to slip into recession, according to economists.
The currency’s sudden appreciation in value is worrying many Swiss citizens. But they aren't scared — they trust in their diligence and adaptability.
Overnight my cars went down 1.2 million francs in value. Wilfried Graf, Supervisory board president, BMW dealership
BMW dealership Auto Graf is on a road that leads from the Zeochem factory to Zurich, the country's financial capital. The dealership’s parking lot is full of cars, and a sign hangs in the showroom: “We have much joy in stock.” Another sign, “3,000 franc inventory bonus,” is supposed to lure impulse buyers.
“But at the moment, no one is purchasing a car. People prefer to wait and see,” said Wilfried Graf, president of the dealership’s supervisory board.
The business employs almost 60 people and sells about 600 cars annually. Mr. Graf has 150 cars in stock at an average price of 50,000 Swiss francs (€47,492 or $53,723). Through the removal of the exchange rate cap, the Swiss franc has risen 16 percent in value.
“That means that overnight my cars went down 1.2 million francs in value,” said Mr. Graf, who bought the vehicles at the old exchange rate. “We'll digest that, we're not dependent on the banks.”
Negotiations are underway between dealerships and BMW Switzerland about whether the German automaker will cover some of the dealers’ losses.
Mr. Graf expects that by mid-year the situation will have calmed down, so layoffs aren’t an issue for him. He is not afraid of the competition from imports inexpensive cars from euro zone countries and expects prices to equal out over time.
Industrial associations and politicians are not quite as calm about the situation. Every day new proposals surface about how the Swiss economy can be helped in its struggle against the strong franc.
The country's economics minister, Johann Schneider Ammann, knows what he doesn't want: a stimulus package. He is holding round-table discussions about what can be done and is proposing to extend store hours in order to counter a surge in cross-border shopping by his countrymen.
When I heard the news of the unpinning of the franc, I first had to drink a vodka. Maren Müller, co-owner, Hotel Fletschhorn
To reduce labor expenses, some companies intend to follow the example of Jaquet Technology and pay employees that commute from E.U. countries their salaries in euros. And Swissmem, an association of the metalworking and electrical industries, beliebes the key to avoiding a crisis is still in the hands of the Swiss National Bank, which it says could intervene in the market again if things get out of hand.
Coolly calculating heads of companies, employees with a wait-and-see attitude, but an overheated political process? Michael Hermann, political expert at the Swiss Federal Institute of Technology in Zurich, isn’t surprised by all this dynamic.
“The working population has had much experience in this regard,” he said. In 2010, at the height of the euro zone's debt crisis, the exchange rate went from about 1.50 to 1.20 francs per euro, he noted. “All in all, this upward valuation and the consequences of the financial crisis were met and mastered. And that gives people self-confidence today.”
Maybe so, but a currency revaluation of 20 percent within seconds? Switzerland has never experienced something like this.
“When I heard the news of the unpinning of the franc, I first had to drink a vodka,” said Maren Müller, co-owner of the luxury hotel Fletschhorn in Saas-Fee.
Tourism will be hit hardest by the revaluation of the Swiss franc. The industry can't flee from the homeland currency.
“The whole affair reminds me of the 2008 crisis that we still haven't recovered from,” Ms. Müller said. Back then, she had to eliminate jobs. The hotel has less than 25 employees. “All of us here pitch in and polish the silverware ourselves,” she said.
Even if the Swiss franc was already overvalued at €1.20, she and her partners recently expanded and took over a restaurant on the peak of the Mittelallalin mountain. At 3,500 meters, it's the highest rotating restaurant in the world.
“We won't let ourselves be intimidated,” Ms. Müller said. “We have to maintain quality, come hell or high water.” She doesn't plan to lower prices: a double room costs 350 francs. “But when bookings allow it, the guests get a bigger room at no extra charge.”
Ms. Müller said she intends to fight for every single guest. She hopes “there is a public in Switzerland that is willing to pay for quality.”
Holger Alich has been Handelblatt's Switzerland correspondent since 2011; he covers the financial industry. To contact the author: [email protected].