Swiss manufacturing: "We need to take risks"

With a degree in engineering from a university of applied science (HES) and experience working in an SME, a multinational and now a startup, Fabrice Jendly has seen the problems facing Swiss manufacturing from all angles. Mr. Jendly is currently manager of the engineering sector of a startup and Vice President of the Neuchâtel arm of Swiss Engineering, a professional network of Swiss engineers and architects that has more than 13,500 members. We caught up with him for a short interview.

In a globalized market where competition is extremely fierce, is Swiss manufacturing still profitable in the area of microengineering?
When it comes to mass-producing basic parts, such as engine parts for example, we can't compete with countries like China and India due to our higher labor costs. However, we do have an advantage when in comes to high-value-added products, or in other words sophisticated and innovative products. This is the case for medical and electronic devices, as well as everything related to watch-making. Generally speaking, Swiss know-how and training guarantee a certain quality that is very much appreciated by clients and partners. They also guarantee profitable production.

Yet several companies have recently left Switzerland, causing a wave of redundancies. Is there a crisis in Swiss manufacturing?
No, this is not the case for high-value-added products. Some Swiss companies have moved production offshore to Asia or Eastern Europe only to change their minds and come back to Switzerland due to problems of quality. Having to regularly send engineers abroad to resolve such problems is just too expensive in the end. It's also easier if the production site and the R&D site are not too far apart.

But some multinationals are quick to relocate...
Multinationals are different because the decision-makers are not necessarily in Switzerland anyway. Company management just looks at whether one site is more expensive than another. Everything should therefore be done to ensure that Swiss sites are better than those elsewhere in the world.

And how can competitiveness be increased?
Firstly, the exemplary training we have in Switzerland – like that provided by federal diploma programs, the universities of applied science and the federal institutes of technology – needs to be maintained. People trained in Switzerland have an excellent level of education, and many countries envy the complementary education offered by the universities of applied science and the institutes of technology. However, we mustn't rest on our laurels – we need to keep innovating to stay ahead of the game. Secondly, we can improve production management within companies, by adopting leaner practices for instance. This involves detecting and then eliminating wastefulness at all company levels by recognizing useless tasks, superfluous movements, inadequate machines and overproduction. Toyota adopted this practice very early on and became the world's leading carmaker as a result. But this method does require caution, and extremes must be avoided. People should always be at the center of our concerns – it’s not about creating a tyrannical system that is obsessed with profitability.

To make certain products, Swiss companies already have to work with foreign companies. Isn’t the idea of 100% Swiss rather utopian?
In medical devices fabrication, it's almost always impossible not to go offshore for part of the product. For instance, our startup, Symetis SA, manufactures heart valves abroad. But we still make the catheters here. Our headquarters are still in Switzerland, and we oversee all our operations from here. I think over time having some offshore manufacturing could become the norm for the development of medical device, and even for microengineering companies, at least for the products that involve a lot of manual work.

When faced with globalization, many entrepreneurs could be tempted to give up…
And it would be a real shame if they did. Over the last 50 years, Switzerland has invested a great deal in order to offer a very high quality of education. Thanks to these efforts, we are now able to create high-performance products and drive the Swiss economy forward. So it’s essential that we maintain our production capacity.

What pitfalls do we need to avoid if we are to keep manufacturing in Switzerland?
It's important that there's not too much of a gap between engineering schools and industry. When designing a highly sophisticated product, you need to plan its development over the long term and make sure that there's a market demand. Unfortunately, engineering schools sometimes develop extremely interesting products that can't be sold because of a lack of forward planning.

What needs to be improved in the area of entrepreneurship?
The Swiss are generally very calm and quite introvert. They don't always have the entrepreneurial spirit of people like Nicolas Hayek. We need to take more risks and not be afraid of getting our hands dirty, even if it means failing to begin with. By combining this appetite for risk with the right amount of humility to want to constantly improve, Switzerland would have everything it needs to succeed.

Fabrice Jendly is speaking at 11am on Friday 24 August.
Micro12: from 23 to 25 August 2012
Aula des Jeunes-Rives, Neuchâtel
www.micro12.ch