Exchange rates have a decisive influence on companies’ price competitiveness on foreign markets. High commodity prices mean shrinking margins for the MEM industries, which are heavily dependent on raw material imports. The Swiss arms industry is an integral component of an effective and credible security policy.
Exchange rates, particularly against the euro and the dollar, are key factors for the highly export-oriented MEM industry. They have a decisive influence on companies’ price competitiveness in foreign markets.
Large, rapid exchange rate movements represent an especially serious challenge for exporting industry.
There is tension between the aims of price stability and stable exchange rates.
Raw materials policy
The MEM industries are heavily dependent on imported raw materials. Prices are being driven the by high demand for raw materials in the BRIC countries, as production capacities, at least for some commodities, have expanded only moderately.
The price trend is exacerbated by oligopolization on the supply side (market power) and by implementation of export restrictions for selected commodities that are produced in only a few countries, such as rare metals in China.
There is a risk that companies in the MEM industries will suffer declining margins and competitiveness if higher procurement costs cannot be overcome. Resource efficiency and finding substitutes for rare metals will reduce the MEM industries’ dependency on raw materials.
Security and armaments policy
According to the armaments policy of the Swiss Department of Defence (DDPS), the Swiss defence industry is an integral component of an effective and credible security policy.
New security technologies are often suitable not only for military, but also for civilian applications. It is crucial for Swiss companies to be able to participate 100% in compensation transactions for the federal government’s armaments procurement activities as part of the Industrial Participation Strategy. This makes it possible to retain and regenerate know-how in businesses. The export of defence goods by Swiss companies should continue to be monitored in accordance with coordinated international norms.
Dr. Jean-Philippe Kohl
Head of Economic Policy
Telephone +41 44 384 48 15