Marc Jorns has a small manufacturing business in the Swiss town of Lotzwil (pop. 2800). Employing 75 co-workers, Jorns AG makes sheet-metal bending machines used in construction. 85 percent of the product is exported world-wide, almost a third to the United States. The strong Swiss currency makes business difficult.The high additional tariffs of the Trump Administration are an additional blow to the gut.
Mr. Jorns, how is business?
Difficult, very difficult, for quite a time already. Since I took over the company twenty years ago, the American tariffs are the fifth major crisis I have to deal with. Each time, we undertook optimizations, changine processes and product lines to stay competitive with foreign competitors, but with each crisis it got more and more difficult. In the beginning, there was meat on the bone, but less and less over time.
What is your product and how many people are working in your company?
We manufacture bending machines used in bending sheet metal into profiles for roofing or cladding buildings. We are 75 co-workers, among them 10 apprentices. We constantly employ over 10 apprentices in order to ensure the supply of scarce specialized labor.
How much of your product is produced in Lotzwil/Switzerland?
Practically everything. We weld, mill, shape, paint, assemble and are building the control units ourselves.
Who are your customers?
We sell our products worldwide. The share of exports is over 85 percent. 25-30 percent of our production go to the US, 50 percent to Europe, 10-15 percent to customers in Switzerland and the rest to the rest of the world.
You are not in a dying market. Everywhere, buildings are better insulated and improved.
The construction sector is fairly stable because interest rates are still low worldwide. But we are losing ground against out European and Asian competitors.
Who is your competition?
The main competitors are in Germany, recently also in Asia. There are new competitors from Turkey and Portugal. Their basic conditions are totally different from ours because of the currency situation, and they are subsidized, partly by governments.
The Germans too? This would be against the competition rules of the European Union.
We don’t know for sure. If so, it’s certainly the least likely with the Germans. In aother European countries there is support. We know it from the Turks and from the Chinese at any rate. And they have much different wage structures. One of our customers in Romania has his machines subsidized at 60 to 80 percent by European funds. And his workers are not any longer from Romania but from Asia and the Middle East. They live in containers behind the plant and toil for 800 Swiss Francs a month way longer than 8 hours a day. This company sells its products all over Europe. They are not a competitor but a customer, but I guess that it will work similarly with a mechanical manufacturer.
The US tax hike against imports from Switzerland has been taken back from 39 to 15 percent, the same level as the European Union of which Switzerland is not a member. What change does this make?
First of all: I don’t know whether it will be 15 percent. We got the 39 percent punitive tariff plus the 4,8 percent we had to pay before. Our last projects that were shipped to the US went out at a tariff rate of 43,8 percent. To be on the same footing like the EU mitigqates the problem, but does not solve it. We still face 15 percent more US tariff than before. There still will be less orders from America because many companies cannot afford our machines any more. Many will buy their metal profiles from larger producers instead of making them themselves.
When did your last products go to the US?
They were delivered about three weeks ago (second half of November, ed.). These were orders from before April. Since April the orders from America are zero. Even worse: Two projects were cancelled because of the tariffs.
How much did you ship to the US before?
Normally 20-30 machines. This year it was 8.
Do you know who the cancelled orders were for?
The cancelled orders were machines that were ordered for warehousing by our agency. But we know that we lost several projects to companies from Germany, Portugal and Australia. There is one competitor in Australia. He only pays 10 percent US-tariff because he is from the United Kingdom. In addition, the currency makes a big difference for him. The Australian dollar collapsed even more against the Swiss franc than the Euro or the US dollar.
The franc is strong. Too strong?
The American tariffs are not the only problem. It is the strong Swiss Franc too, that gives us incredible pains. Some time ago, before the Euro crisis, we could be sure to close 7 to 8 of 10 possible deals in Germany. Today, it is 1 or 2, the rest goes to the German manufacturers. Some time ago there were 6 or 7 manufacturers like us in Switzerland. Today there are two of us, and we are the only Swiss-owned. The other company was taken over by a Swedish congomerate.
You operate on «Kurzarbeit» – the Swiss program to keep workers in jobs where companies don’t have enough work to fully employ them. Since when?
We only had to implement the program in November. When the US tariffs were announced in April we had a good volume of orders, and a little something came along.
«Kurzarbeit» means that the government pays the wages despite non- or underemployment?
I don’t agree with the characterization. The government decides to open up the option to «Kurzarbeit». But the payments are with the Swiss unemployment insurance. We pay premiums each month.
How many of your 75 employees can still work in your operation?
In the months of November, December and January we work with about 40 to 50 percent of the workforce. The rest goes on paid vacation or «Kurzarbeit». For the time that a co-worker works, he or she gets 100 percent, for the time of unemployment 80 percent of the normal salary. The employer pays this on the regular payday. The periods of unemployment are then invoiced to the Swiss Unemployment Insurance. It does not pay all of the salary losses but only 80 percent of it.
How long can you hold out?
We have good stamina, also because of «Kurzarbeit». Another question is whether the staff will stay. Of course, there will be insecurity. But this is not imminent as long as other companies are in the same situation.
Do the public and the politicians take note of the problems of businesses like yours? Are you understood?
The currency is hardly an issue any more. It has become normal that the exchange rates of dollar and Euro are under 1 Swiss Franc. I sometimes have the impression that it is only about how cheaply you can go on holidays abroad. Of course there are two sides to the coin. On the one hand it is less expensive for a Swiss to travel abroad and to buy things from abroad. But on the other hand, the situation of the exporting industry has become difficult after around 2009. Our region used to be a good manufacturing cluster. But most of these companies don’t produce here any longer. They make their machines elsewhere in Europa because cost-effective production in Switzerland has become impossible. Just recently a manufacturer, Piffner in the town of Utzenstorf, has stopped production altogether and outsourced it to its subsidiary in Germany. Such actions open the door for companies that are thinking about outsourcing. I am questioning whether in 40 or 50 years anything at all will be produced in Switzerland.
People see that it always worked somehow.
As I said, in the beginning we had a greater potential to do something, and we can buy less expensively abroad. But this also means that today we will buy our components, the cylinders, hydraulic parts, control components that we used to produce ourselves, in Europe.
According to the textbooks of the economists you did everything right: Small business, innovative, export-oriented. Now you have your back to the wall.
It is bitter. We have different products. With fully automated machines we have few competitors and still are market leader. Only we and the other Swiss producer can work thicker metal sheets up to 3 millimeters. But with the simpler, manual machines that are most widely produced, we have many competitors and prices have become brutal.
The theorists are providing helpful suggestions in abundance. It is often advised to scale down in America and to look for other markets. What do you say?
I can only laugh. It’ s not that we are saying that we would not want to export to some market. We are exporting to the whole world. But it is very difficult with the Swiss franc because we are much more expensive than other products.
Are there alternative markets? Everybody recommends Asia.
We have an agent in China, one in Indonesia. If there is something to catch there, we will catch it. But it is not that simple because we are too expensive because of the Franc again has become 10-15 percent stronger. At some point, you become uninteresting. The exchange rate, the wages, the cost of energy here are much higher than abroad
Another helpful hint is to increase productivity or to invent something new.
Of course we are challened to have another look at all machines and all components and to look what can be bought or produced less expensive. We are running several analyses. One of them is about hydraulics. We will exchange our Swiss provider with a German one who is 30 percent cheaper. But unfortunately we don’t see a lot of potential for savings in order to compensate the currency- and cost differential.
In Germany, high energy costs for manucaturers are a big issues. Do you see movement in Switzerland?
I would be surprised. Energy ist not the biggest problem. We have our own photovoltaic system and self-produce a large part of our energy. For me, the currency is the biggest problem, next to the tariffs in America.
How about wages? Would lowering wages do anything?
To make a difference, they would have to go down substantially. It’s not that our people get too much in terms of wages. They use that for living. At the end of the month they don’t have much more than a German, because everyhing is more expensive in Switzerland. The problem is the currency differential. Some time ago it all was more or less balanced and kept equal. Now we see an imbalance. In Swiss Francs, a German service technician costs maybe 4-4500 and here it is 6000 Francs. If I lower that by 5 percent for example, I don’t achieve anything.
With 75 employees you are a small business. Is small business listened to?
My impression ist that we are not heard very much
Are you in a trade association?
Swissmechanic.
Is this the same thing as Swissmem which is regularly in the news?
No. Swissmem is more the larger industry. Swissmechanic is rather small mechanical SME manufacturers like we are.
Does government help?
Certain things have been initiated, but it is difficult to achieve snything. What do you want to do against the heavy currency? The export industry is shrinking, its share of the economy probably will do down even more
You don’t get any support by governmental agencies in the search for ways out of your predicament?
We have worked with Swiss Global Enterprise when looking for agents for working new markets. This did not amount to anything. I got worse contacting proposals for agents and new customers than when searching myself in the internet, because these people do not understand our niche market. The economic promotion agency of the canton of Berne had good programs during the pandemic allowing for the continuation of development projects thanks to their financial support. But this does not exist any more. Now they talk about supporting «research and development». We don’t do basic research. We pursue projects in further developing existing products. For this, most of the time you don’t get support. It is about to be modified, but it will be quite comlicated, I would have to show gigantic data compilations, plans and such things, so that in the end it almost does not pay off.
You could relocate to cheaper locations, Germany or elsewhere in the EU. Are you considering this?
Such relocations are taking place right now. I am upset that no one seems to take notice. Sometimes, the thought of scaling down production here and to manufacture elswhere, or selling out to someone and let them manufacture, strikes me. To realize this would require rather long-term deliberations.
Your difficulties are nothing new. You said that you see the fifth major crisis. What made it possible that Jorns AG still could export to the world market? What is your decisive advantage in staying competitive?
We are more precise. Our machines offer more flexibility in their application, they give the user the freedom to bend sheet metal into the greatest veriety of shapres. This is where we are very strong. We have a top-rate customer service, like no one else in the world. We can be a little pricier because we are better, but not 20-30 percent more. That’s where it becomes impossible.
How come you can be better? Is it the better training of your employees?
We certainly have very well trained people. We only employ workers with a completed apprenticeship degree, no short-trained ones. I notice this difference
If you relocate to Germany or Portugal, you would not have this qualified workforce.
Germany has similarly well-trained people. They too have apprenticeship programs. In Asia not necessarily, but there, they mploy mechanical engineers. That’s an altogether different level. There, the operators of our machines sometimes are better trained than our workers in Switzerland. Our «dual system» of state-regulated apprenticeships in working enterprises of the private secto certainly is good. But we have to say goodbye a bit from the idea that we in Switzerland are the only ones who are able to do something well. That’s over. German manfucaturers make products that are qualitatively as good as ours, Austrian manucafturers likewise. And the others, Turkey for example, have large manufacturing clusters that are getting better and better. Press brakes that are used to bend thicker metal sheets for example, now mainly come from Turkey or China. If I look at the Turkish and Asian products, I see unbelievable progress over the last ten years. They have a manufacturing sector that’s almost equal to ours.
What are your wishes for the new year?
That the Swiss Franc gets weaker. Und that those conflicts stop. They are not good, these conflicts in Israel and in the Ukraine. They produce great insecurities among the customers.
Do you hear this?
Oh yes. They say that they now want to wait and see. If the paper writes that Europa soon will be attacked as well, everybody decides to continue working with his old machine before thinkging of spending 100000 or 2000000 francs for a new one.
Jorns AG in Lotzwil BE
Marc Jorns (born in 1975) leads the company of his father in the second generation. The elder Jorns in 1973 took over a small business that produced manual bending machines. He started to apply hydraulics and electronics to the product. Son Marc finished an apprenticeship as a mechanic and followed up with a business degree from the advanced technical college Fachhochschule Solothurn Nordwestschweiz in Olten. Since he took over the cimpany, the volume of business was enlarged nby 50 percent, The turnover of Jorns AG today is 22-25 million Swiss Francs.