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 The company blames the Swiss National Bank's decision on Jan. 15
freeing the franc to rise against the euro for finally bringing
climbing rope margins to the breaking point.
"The recent strengthening of the Swiss franc increased the pressure
to improve the business economics by relocating," said Christian
Thalheimer, spokesman for Mammut parent Conzzeta <CONC.S>, of the
move that means 24 Swiss job cuts.
Mammut's shift illustrates why the franc's stubborn strength despite
negative interest rates and SNB intervention has the government and
business leaders fearing for Switzerland's perch at the peak of the
world's most competitive economies.
Economy Minister Johann Schneider-Ammann said he was worried about a
"creeping de-industrialisation", with small firms as well as big
ones shipping jobs abroad.
The SNB precipitated the "frankenshock" with a sudden move to lift a
three-year-old 1.20 franc per euro cap, which Chairman Thomas Jordan
decided had become "unsustainable."
While the franc has since retreated from a 30 percent spike, it
remains 10 percent higher, at about 1.08 francs per euro.
That left skidmarks on Switzerland's economy, from companies like
Mammut shuttering factories and offshoring production to Swiss
shoppers flocking to suddenly cheaper Germany for deals.
Third-quarter economic growth stagnated and the government expects
growth of less than 1 percent for 2015. The manufacturing sector
contracted in November.
"Without growth momentum such as a marked depreciation of the franc,
the downturn in industry looks set to last longer," the Swiss Supply
Managers Association wrote on Dec. 1.
CROSS-BORDER SHOPPING SPREES
Swiss unemployment as measured by the International Labour
Organization reached a four-year high of 4.9 percent in the third
quarter.
In the metals, electronics and machinery industry alone, 4,500 jobs
were axed this year through July, as the franc makes exports of
precision equipment more expensive for buyers in Europe. The
industry accounts for about 9 percent of Switzerland's 642 billion
Swiss franc ($626 billion) gross domestic product.
Holidays in the already pricey Swiss Alps look even less attractive
to European visitors, hurting a tourism sector whose share of GDP
has stagnated at 2.8 percent since 2011.
Overnight stays in Swiss hotels through September fell 0.5 percent,
as more visitors from China, Gulf countries, India, South Korea and
the United States couldn't offset plunging visits from Germans,
Dutch, Russians, Belgians and Italians.
"We'd have many, many more guests in Switzerland if it were cheaper
here," said Urs Wagenseil, professor at Lucerne University of
Applied Sciences and Arts' tourism institute.
Swiss retailers will miss out on some 11 billion francs in sales in
2015, Credit Suisse estimates, as thousands of Swiss residents make
shopping pilgrimages to cheaper Germany or France. Swiss retail
sales have fallen five of the six months through October, according
to the Federal Office of Statistics.
Guido Hoegger regularly drives from his northern Swiss village to
low-cost Constance, 45 minutes away in Germany. Cosmetics for his
wife and disinfectant for his bathroom cost 40 percent less, he
said. Hearing aid batteries are a tenth of Swiss prices. Germany
refunds its 19 percent value added tax at the border.
A retired manager at a mill machinery company, Hoegger knows some of
his neighbors say it is unpatriotic to shop abroad.
"I don't feel guilty," Hoegger said. "We've been getting ripped off
by high prices in Switzerland. And Swiss people's sensitivity to the
exchange rate has only intensified since Jan. 15."
Six years ago German couple Frank and Mandy Klein started a package
reception service on Constance's main shopping street. Swiss
residents have mail-order products from Europe shipped to the Kleins,
who charge 5 euros to hold packages for a week.
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"Constance lives from shopping tourism, and lives very well," says
Mandy Klein.
German farmers in the countryside have joined them in the
package-reception business, using barns once used to store tractors
to store packages from Amazon.com.
SHOPPING MILE, "IN THEORY"
Across the border in Switzerland, the neighboring town of
Kreuzlingen has empty storefronts and a nearly deserted main street.
"The truth is, this is a shopping mile," said Nicole Esslinger, head
of Kreuzlingen's tourist office. "But that's in theory only.
Unfortunately."
Bankruptcies have risen 8 percent across Switzerland since January,
said the consultancy Bisnode B&D, while new business filings fell 3
percent in the first 10 months of 2015.
"People are deciding now is not the time to open a business," said
Bisnode's Christian Wanner.
Switzerland's economic and political stability have driven high
demand for the franc in the past, and the SNB says the Swiss economy
can benefit over the long term from the rigor imposed on business by
the strong currency.
"Companies are under constant pressure to cut costs and innovate and
this strengthens the economy's adaptability, flexibility and
productivity," Deputy Chairman Fritz Zurbruegg said in October.
Roche, the world's biggest cancer drug maker, has announced plans to
spend 300 million francs on a new Swiss facility, saying it can make
some drugs more efficiently at home than abroad, even if the franc
dents results.
Swiss Tools, a tool and medical instrument maker near Lucerne whose
products include vanilla-scented screwdrivers, said the strong
currency forces firms to adapt.
Chief Executive Eva Jaisli said she has responded by raising prices
in Europe while increasing the standard work week for her 150
workers by two hours without boosting pay. Exports had actually
risen as a share of production since Jan. 15, she said.
In tourism, the Bernese Highlands surrounding Interlaken responded
to a sharp decline in European visitors by luring more Middle
Eastern and Asian travelers, more willing than French or Germans to
pay a premium for Alpine scenery.[ID:L8N13Q3S0]
This summer, the region hosted a concert by Chinese popstar G.E.M.
at 3,454 meters (11332 ft) atop the Jungfraujoch glacier. Local
officials and show sponsor Tag Heuer watches hope a broadcast in
China boosts Swiss appeal.
"We've seen a tremendous change of markets," Interlaken tourism head
Stefan Otz said, predicting European countries like Germany will
never again count among the top-five home countries of visitors to
Interlaken.
($1 = 1.0274 Swiss francs)
($1 = 0.9412 euros)
($1 = 1.0263 Swiss francs)
(Additional reporting by Tom Miles in Geneva and Angelika Gruber in
Zurich; Editing by Peter Graff)
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