ZURICH, March 2 (Reuters) — Sonova Holding AG (SIX:SOON), the world’s largest maker of hearing aids, will shift jobs out of Switzerland and freeze pay for Swiss staff as it cuts costs to cope with a surge in the value of the franc.
Switzerland’s central bank scrapped the cap on the franc against the euro Jan. 15, an unexpected decision after more than 3 years of holding down the value of the Swiss currency.
Many companies that rely on Swiss-based manufacturing, including medical technology firms – a niche area where Switzerland excels – are feeling the pain as a stronger franc means costs rise and export revenue shrinks.
Dental implant maker Straumann said last month it would reduce bonuses for Swiss-based staff and management.
Sonova said today that 100 jobs would be lost in Switzerland, with some manufacturing roles shifted to China and client services positions to Britain in the coming year. It will also freeze pay for its Swiss workforce, which numbers around 1,000.
CEO Lukas Braunschweiler told Reuters this could save the company around 5% of its annual Swiss costs through the move, or about 15 million Swiss francs.
It also said it would buy German hearing aid retailer Hansaton Akustik for an undisclosed price. The acquisition of the firm, which had revenue of €42 million ($47 million) last year, will bolster Sonova’s presence in the world’s 2nd-largest hearing aid market after the United States.
Shares in Sonova were up 1.8% at 134.50 francs as of 10:15 GMT, bucking a 0.4% decline in the European healthcare index.
Domestic economy hits Swiss firms
Sonova’s move is emblematic of the difficulty the franc poses for firms in Switzerland’s export-reliant economy and highlighted the effect of the Swiss National Bank’s decision on the country, which is predicted to enter a recession this year.
It comes ahead of national elections slated for October, with some politicians calling for a debate on the workings of the central bank.
But not all exporters are equal. Many big multinationals are helped by their global footprint, which means their sales and costs are spread out over a variety of currencies.
Some, including drugmakers like Novartis and luxury goods producers like Richemont, are also expected to be somewhat cushioned by their fatter margins.
But analysts at Credit Suisse said in a recent report that the export-oriented machinery, electrical engineering and metals industry were likely to "react particularly sensitively".
They forecast those areas would shed 0.9% of jobs this year, compared with 2014.
Aircraft maintenance firm SR Technics said last week that it would cut as many as 250 jobs.
Smaller companies that tend to produce a higher proportion of their goods in Switzerland could be hit hardest. The economic implications could be grave, since small and medium-sized companies employ 2.3 million of the country’s 8 million people, a study by consultancy OBT has estimated.
Watchmakers are exposed, since under legislation passed in 2013 at least 60% of the value of industrial products has to be manufactured in Switzerland to carry the coveted "Swiss Made" label.
($1 = 0.9574 Swiss francs; $1 = €0.8920)