FRIEDRICHSHAFEN, GERMANY (Nov. 21, 3 p.m. ET) — Financial turmoil that roiled global currency trading hit home this year at Netstal-Maschinen AG, the injection press maker in Näfels, Switzerland.
The Swiss franc surged as investors loaded up on francs, because they consider it a stable shelter during the debt crises in the euro zone and the United States. Switzerland has stayed out of the common euro currency.
“This is really a challenge for the exporting industry, as you can imagine. Because at the end, this makes our products more expensive for our customers abroad,” said Bernhard Merki, Netstal's president and CEO.
When a currency rises quickly, a machinery company can react by increasing prices, taking smaller profits, or a combination of both.
Merki said Netstal sources many of its components from countries with the euro. “We buy about 60 percent of what we're buying in euros, so this helps to balance our situation a little bit,” Merki said in an interview at the Fakuma show in October.
Switzerland's important tourism industry also was hurt because it became very expensive, thanks to the currency moves.
In September, the Swiss National Bank took the extraordinary action of capping the franc. The bank said it would buy euros in “unlimited qualities” if the common euro currency falls below 1.20 francs.
Merki said that move has helped stabilize the franc. But he said that, even at the 1.20 rate, the franc is stronger than normal. That stability helps Netstal determine its costs and set pricing.