For twenty years, a particular kind of conventional wisdom has circulated in financial publications: Swiss precision manufacturing is in slow, dignified decline. The rumour is not entirely fabricated. It is, however, almost entirely wrong.
The companies in question — workshops of fifteen to two hundred employees, machining components for watch movements, surgical instruments, semiconductor capital equipment, aerospace — are smaller than they once were as a share of national GDP. This is what is meant when people speak of "decline." But share-of-GDP is the wrong instrument here. What matters is whether these workshops have customers who cannot easily replace them. Almost all of them do.
Pull quote"The workshop in Le Locle is not competing with Shenzhen. It is competing with no one. That is the point."
Examine the trade data carefully. Swiss exports of "precision instruments" — a category that includes everything from medical devices to optical components — have grown in absolute francs every year of the last decade except 2020. Margin profiles are healthy. Order books at the better workshops extend eighteen to thirty months out. None of this looks like sunset.
What has changed is the visibility of the work. Twenty years ago, a Swiss watch was a finished consumer object that ended up on a wrist. Today, increasingly, Swiss precision manufacturing is intermediate — a component inside a component inside a finished product made elsewhere. The workshop in Le Locle is not less important; it is just less visible.
Strategic acquirers — German and Japanese in particular — have been quietly attentive. A Bavarian medical-device group, an Osaka semiconductor-equipment maker, a Boston-listed aerospace primary: these are the buyers who turn up, repeatedly, on the bid lists of small Swiss workshops.
They are not present because they want a Swiss postcard. They are present because the workshop holds tolerances they cannot reliably hold elsewhere, on a part for which a 30-micron error is the difference between a working device and a recall.
If you own one of these workshops, your position is stronger than the financial press has implied. You should not be in a hurry. You should not accept the first offer. You should ask, of every prospective buyer, three questions:
- I Do they understand what their finished product looks like without your component?
- II Are they willing to commit, in writing, to retaining the site and the operators?
- III Have they bought a comparable workshop before, and is that workshop still operating today?
The answer to all three should be yes. If it is not, the bid is not a strategic bid. It is an option, and you should price it accordingly.