Swiss Packaging Industry at the Crossroads of Globalisation and Regionalism
Characterised by a mix of resilience and innovative strength, the Swiss packaging industry is navigating global challenges such as the Corona pandemic and geopolitical tensions. But what about future viability in terms of skills shortages, rising operating costs and sustainability?
The Swiss packaging industry is diversified thanks to its mix of large multinationals and smaller, specialised companies. Some of the major players are based in Switzerland or have a strong presence there. The proximity to important markets such as the European Union is another advantage of the Swiss. For although Switzerland is not a member of the EU, it has signed numerous agreements with the Union that facilitate trade. The harmonisation of packaging standards with those of the EU is therefore of great importance. After all, Switzerland is not an island either and is not unaffected by global developments. This has been demonstrated especially in times of crises such as the Corona pandemic or the war in Ukraine.
A survey by the Swiss Packaging Institute in the second half of 2022 therefore painted a mixed picture of the packaging industry in our neighbouring country. For example, companies were able to weather the problems of the international supply chain well – but only if they were able to procure sufficient raw materials. And that was only possible through close international relations. Nevertheless, according to surveys, about 15 percent of the companies are planning to relocate their production from abroad back to Switzerland.
Light and Shadow
Overall, the Swiss packaging industry is characterised by a high degree of resilience to economic fluctuations, as surveys from the years of the Corona crisis and the Ukraine war show.
In the last survey, for example, 42 percent of the companies stated that their staffing levels had remained the same, while 37 percent had even increased their staff. Only 21 percent had to reduce staff. In addition, 60 percent of the companies are currently training new employees. Capacity utilisation has improved compared to the previous year. Currently, about 71 percent of the companies surveyed achieve a capacity utilisation of up to 100 percent, compared to 47 percent last year. Almost 30 percent of the companies even report over-utilisation and use additional extra shifts. This data points to high capacity utilisation for 2023. As far as the financial situation is concerned, 47 percent of the companies reported increasing turnover, 37 remained at the same level and only 16 percent had to accept declines in turnover. In 2021, 77 percent of the packaging companies surveyed still reported rising sales. According to the Swiss Packaging Institute, the deterioration is due to cost pressure from rising raw material and energy prices.
A slowdown in growth is also evident in order backlogs. At the end of 2022, only 40 percent of companies report rising order backlogs, compared to 74 percent in the previous year. In terms of profits, around 37 percent of companies reported an increase, while the rest reported either stable or declining profits.
Despite the challenges posed by rising raw material prices and energy costs, the shortage of skilled workers remains the main problem facing the Swiss packaging industry. For 25 percent of the companies, this is their biggest concern. More than two-thirds of the companies have difficulties finding suitable personnel for vacancies. The Swiss share this problem with other European nations such as Germany and the UK.
Resilient Despite Challenges
Although Switzerland is not a member of the EU, policymakers are striving to align national packaging legislation with EU standards to ensure smooth trade with foreign countries. However, in contrast to the regulations in neighbouring countries, Switzerland does not have a comprehensive packaging ordinance or general regulations on the declaration or taxation of packaging materials. One exception is glass beverage packaging, for which an advance disposal fee is charged. Furthermore, there are no legal requirements in Switzerland for the labelling of packaging with regard to its disposal or recycling. Symbols such as the Green Dot are therefore losing importance in Switzerland, but may be retained when imported. The association Swiss Recycling (umbrella organisation of Swiss recycling organisations) offers voluntary pictograms for the labelling of recyclable materials and disposal. Under the umbrella of the association, 70 organisations along the entire value chain – from manufacturers, brand owners and retailers to recyclers and disposers – are now working on a circular economy for plastic packaging and beverage cartons. Among others, the retail companies Aldi, Coop, Denner, Lidl and Migros are actively involved. The Swiss Packaging Institute, the most important industry association, also supports the plans.
In future, a uniform collection bag with identical colours, sizes and messages will be offered throughout Switzerland. In addition, a uniform pricing system for the whole of Switzerland is being examined, Swiss Recycling announced. The financing of the collection and recycling system is to be ensured through bag fees, retailer levies and recycling revenues. This would cover all costs from collection to sorting to recycling. By 2030, recycling rates of 55 percent for plastic packaging and 70 percent for beverage cartons are to be achieved.