Swiss companies are taking matters into their own hands as the central bank shows little willingness to weaken the franc after it surged to a record.
Lonza Group AG (LONN), a Swiss chemicals maker, is extending work hours without additional pay, while the country’s Labor Union Federation representing about 380,000 workers said it’s in talks with companies about taking steps such as paying wages in euros and pegging salaries to exchange-rate moves. ABB Ltd. (ABBN), the world’s largest maker of power-transmission gear, is weighing whether to buy more parts from the euro region to lower costs.
“The franc has a brutal impact on exporters,” said Hans Hess, president of Swissmem, the largest lobby group for manufacturers, in a telephone interview from Zurich. “It’s as if Formula One driver Sebastian Vettel had to start behind his opponents. To win under these conditions is very difficult.”
The Swiss National Bank signaled it’s up to exporters to deal with the appreciation after attempts to weaken the franc through currency purchases in the 15 months through mid-June 2010 sparked a record loss for the central bank. That has prompted lawmakers to call for SNB President Philipp Hildebrand to resign for failing to protect the economy.
The currency, considered a haven in times of turmoil, has appreciated 8.3 percent against the euro this year, reaching a record 1.1495 today, as investors were concerned that the region’s debt crisis may undermine Europe’s stability. It traded at 1.1546 at 7:34 a.m. in Zurich. The franc has gained 15 percent versus the dollar in 2011.
