Building bridges between science and economy 

KPMGnews: The Swiss franc has climbed to previously unknown heights – much to the dismay of the export business. Does the government have to intervene or should the market regulate itself here, too?

Hans Hess: While the strong franc is indeed putting a huge strain on the export industry, some of which is suffering from massively declining margins, direct government subsidization would be the wrong way to go. Enterprises have to overcome this challenge on their own through compelling innovations and competent global purchasing. The government, however, must create conditions that are favorable for industry.

With regard to the export industry, the government has two key tasks in my opinion: First it has to build bridges between universities and enterprises which will enable a successful transfer of knowledge and technology in accordance with the principles of a market economy. Bridges such as these form the basic infrastructure for a high-price country with a strong currency whose export economy can only remain competitive via innovation. Second, the government must ensure that the procurement and sales markets are and remain accessible without discrimination.

Qualified staff are also indispensable in industry, however these are increasingly migrating into the 3rd sector. Is industry still able to find sufficient qualified staff?

Hans Hess: It is indeed becoming more and more difficult to find qualified specialists in Switzerland. Demographic changes have brought about an increasing shortage of new talent. Young people have a multitude of diverse careers to choose from. Industry needs to emphasize its attractive job and career opportunities.
Industry depends heavily on qualified specialists at all levels. If companies are unable to find the right staff in Switzerland, they have to have the opportunity to recruit them abroad. Consequently, we vehemently oppose all political efforts to limit the free movement of persons with the EU.

Does the highly praised dual education system still work or are changes desperately needed, particularly in light of this situation?

Hans Hess: In my opinion, dual professional training is still the ideal solution. I’m convinced that this system, with its great practical relevance, is best able to meet the needs of industry and can offer young people the best opportunities to get their careers off the ground. Some two thirds of Swissmem’s nearly 1000 member companies have trainees. Until 2009, the number of apprenticeships rose continuously to a total of almost 10,000. That is the best proof that companies agree.

How is the situation surrounding management positions? Are there enough Swiss candidates or do these jobs increasingly have to be filled by people from abroad?

Hans Hess: If new Swiss talent alone isn’t sufficient to fill positions at all levels, then management positions, too, will also have to be filled by foreigners. We support an open job market in principle. What counts are a person’s qualifications and skills, not their nationality. In addition, social skills as well as an understanding of foreign cultures, including Swiss culture, are gaining importance among management positions.

In your opinion, which do you consider to be industry’s key innovative forces?

Hans Hess: Primarily these are the companies, themselves. The energy and determination of SMEs and corporations to produce innovative solutions surprises me over and over again. Switzerland’s excellent universities and research facilities also play a role. Our country regularly appears among the best in relevant innovation rankings. Yet we’re still not making the most of our potential. The bridge between science and business has to be expanded considerably in a number of ways. The distance between the two cultures is still too great and government funding cannot be allowed to become a bottleneck.

Do the Swiss mechanical engineering, electrical engineering and metal industries have the access they need to the world’s emerging markets or are there still barriers to trade which play a role?

Hans Hess: Unfortunately, tariff and non-tariff trade barriers are still a part of everyday life. Especially in times of economic turmoil, protectionist practices gain steam. Italy is just one of many examples. Particularly important is also the fact that exporters are finding themselves confronted with customs duties, some of them quite high, when doing business with the key emerging markets of China, India and Brazil. That makes it vital for the planned free trade agreements with China and India to be concluded swiftly.

Who are currently Swiss industry’s main competitors?

Hans Hess: Swiss companies are especially successful in high-tech niches. These are frequently markets that are either too small or too specialized for them to be interesting for truly large competitors. In order to survive as a high-price country, we have to be the unrivalled leaders in these niches. With their capacity for innovation and productivity, the Germans are definitely a good benchmark on today’s market. In the future, our Asian competitors will also gain in importance. And the weak US dollar has made American firms 20% more competitive within the space of a year.

What would you call the greatest single challenge?

Hans Hess: Finding a sufficient number of highly qualified specialists at all levels. Because when all is said and done, it’s the people with their ideas and creativity who produce the innovations that, time and time again, make the difference for Swiss industry.

Is Switzerland as a business location still attractive for the manufacturing industry?

Hans Hess: Without a doubt. Of course there are factors that aren’t particularly advantageous for the manufacturing industry. What the strongly export-oriented MEM industry is currently experiencing with changes in exchange rates, however, is very rare and presenting a major challenge to businesses. Fact is that investments are still being made in Switzerland as a manufacturing location and the number of employees has remained more or less constant over the past 10 years. Yet some Swiss companies, even SMEs, will have to align themselves even more globally and shift a portion of their production abroad to recoup some of the competitiveness they have lost as a result of the strong Swiss franc.

Do you wish Switzerland had an actual industrial policy or at least more active support from the federal government and cantons?

Hans Hess: We don’t need an industrial policy. I do, however, expect the government to preserve the good framework and a flexible job market instead of burdening industry with new taxes and restrictions. One particularly important concern is that the transfer of knowledge and technology from universities to the business community be improved. The goal is to transform Swiss universities’ immense potential for innovation more quickly and more efficiently into marketable products. This is a challenge faced by the federal government and cantons alike.

Interview: Simone Glarner, Marketing & Communications