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Companies contemplate bleak coronavirus outlook

Companies are feeling the effects of dislocated supply chains and invoices not being paid. (Keystone / Alessandro Crinari)

Swiss companies are reporting slumping sales, cashflow problems and bottlenecks in the supply of crucial materials as the coronavirus crisis hits the economy. However, a survey also found that three out of four firms are satisfied with a CHF42 billion ($43 billion) state bailout package.

The 84 respondents to the Swiss Business Federation (economiesuisse) survey paint a grim picture of trading conditions. They expect the situation to get worse and last at least six months before seeing any signs of improvement.

For example, textiles manufacturers are unable to sell their current inventories while the declining European automobile industry is hitting Swiss suppliers to the sector.

Non-essential high street shops and services have been told to close their doors, while some cantons are clamping down on construction sites and canton Ticino, bordering Italy, has told some industrial production lines to cease operating.

The government has announced a CHF42 billion emergency funding package, including CHF20 billion of cheap loans. Some economists expect the total bill to soar beyond CHF100 billion if the pandemic conditions do not ease until the end of the year.

Respondents to the economiesuisse survey expect sales to slump by a third in the coming weeks. Several report that they are not being paid by companies that they supply. A third of firms are already experiencing cashflow problems, with that proportion expected to soon reach a half of all businesses.

Companies also report delivery bottlenecks, particularly for flavors, vitamins, packaging materials, building materials, alcohol, glycerin, medical goods, rare earths and magnets. Economiesuisse expects that up to 85% of all export companies will be affected by supply bottlenecks within the next two months.

Two-thirds of survey respondents are looking at reducing working hours for their staff and nearly a third are contemplating lay-offs among their workforce.

But 75% of companies believe the government’s financial bailout will be sufficient to pull them out of the crisis. The number of positive responses rose from the 50% that were satisfied with a previous government pledge to provide CHF10 billion.

Full story here
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