August 28, 2018 / 8:00 AM / 8 months ago

Swiss machinery makers fear trade barriers pose growth threat

ZURICH (Reuters) - Swiss machinery makers’ orders rose 24.2 percent in the second quarter, they said on Tuesday while raising concern that an trade spat with the European Union could pose a threat to growth.

Sales by members of the Swiss mechanical and electrical engineering (Swissmem) industries rose 16.3 percent in the period, it said. Employment was up 2.6 percent to 325,500 people, as capacity utilisation among Swissmem companies reached nearly 92 percent, above the long-term average of 86.4 percent.

“The positive trend is expected to continue for another six to 12 months,” Swissmem said in a statement, adding that the economy may slacken after that.

While a recent collective employment agreement will help address a shortage of skilled labour expected for coming years, Swissmem called out lingering uncertainty over continued access to Europe as a potential threat to its members.

They include giant companies like power equipment maker ABB (ABBN.S) but also hundreds of smaller companies that form the backbone of Switzerland’s export-oriented economy.

The European Union wants Switzerland to forge a new framework treaty cementing trade ties between the partners, but a deal has been blocked so far. Opponents from the right-leaning Swiss People’s Party (SVP) fear loss of sovereignty, while the left including Swiss labour unions worry an agreement could undermine wages and working conditions.

The combination has some calling a deal “dead as a doornail,” a prospect that worried Swissmem President Hans Hess.

“The economy needs clarity on this question,” Hess said, urging the Swiss government to bring talks with the EU to a conclusion before the end of 2018.

Amid a brewing trade conflict between the United States under President Donald Trump and China, Hess’s group said free trade was under “great pressure”.

“Given that the Swissmem industries export 80 percent of their goods, securing and expanding access to global markets with as few barriers as possible is a top priority for Swissmem,” it said.

Reporting by John Miller; Editing by Michael Shields

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