Swiss machine maker feels heat from auto sector slowdown, Trump’s tariffs

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By Dave Graham

UTZENSTORF, Switzerland (Reuters) -Norbert Steuer, a logistics worker at Swiss precision machinery maker K.R. Pfiffner, has been at the firm for over three decades. Now he is one of 80 out of 105 staff due to be let go as it reels from U.S. tariffs and a struggling auto industry.

The firm, which makes million-dollar machinery used by carmakers including Mercedes-Benz and suppliers such as Robert Bosch, is at the sharp end of a tough European car market that has been buffeted by U.S. President Donald Trump’s trade tariffs and a slowdown in key export market China.

The sector slump has hit carmakers and industrial firms hard in manufacturing strongholds like Germany, where many of Pfiffner’s European customers are. Part of Taiwanese-owned FFG, Pfiffner was already suffering before Trump announced the tariffs in August, which dashed the firm’s U.S. orders.

“It was like a bomb went off,” Steuer, 59, said of Pfiffner’s job cuts announcement, speaking at the company’s base in Utzenstorf, a village in central western Switzerland. 

Steuer, who is scheduled to be laid off next summer, worries about his future. “There’s always talk about workers being sought, but are they going to want to hire a 59-year-old?”

‘IT’S SOMETHING WE’VE NOT SEEN IN OUR LIFETIMES’

Pfiffner gives an insight into the challenges facing firms down Europe’s industrial supply chain and beyond.

Switzerland’s jobless rate is low at 3%, but has crept up from under 2% in early 2023. Its mechanical and engineering sector could lose around 30,000 jobs by the end of 2026 if U.S. tariffs were to remain in place, industry group Swissmem says.

Customers like Robert Bosch have announced major layoffs – 13,000, with others, including Mercedes-Benz and tyre maker Continental also cutting headcounts.

In the year through June, German industrial companies shed over 114,000 jobs, more than four times the amount in the previous 12 months, according to a study from consultancy EY. A year prior to that, they created over 65,000 jobs.

“It’s something we’ve not seen in our lifetimes,” said Volker Treier, foreign trade chief of the German Chambers of Industry and Commerce.

US TARIFF HIT ‘KILLS ANY BUSINESS’

Switzerland has been grappling with 39% U.S. tariffs which have dented its export sector. Still, on Thursday, the U.S. and Switzerland moved close to a deal that could lower the tariffs, potentially saving some jobs.

For Pfiffner, Trump’s tariffs dealt a hammer blow to its U.S. order pipeline.

“That kills any business,” said Pfiffner CEO Andreas Ewald, adding that with a weaker dollar it had made the firm’s exports around 50% more expensive for U.S. buyers.

Around Europe, there are wider signs of pressure on employment, with Britain’s labour market cooling in the third quarter. European companies have seen revenues flatline with cost-cutting increasingly needed to burnish profits.

In the U.S., meanwhile, layoffs in October were the highest for the month in over 20 years.

‘A DOWNWARD SPIRAL RIGHT NOW, EVERYWHERE’

On Pfiffner’s vast factory floor in Utzenstorf, staffing is thin as work dwindles.

Pfiffner’s parent group FFG has begun shifting some technology and production to its U.S. plants, said CEO Ewald.

The talk of job cuts is also creating a negative feedback loop for the local economy, said company veteran Steuer.

“There’s really a downward spiral right now everywhere, and what do people do then?” he said. “They save money instead of buying a new car, a new TV or a new phone. And on it goes.”

(Reporting by Dave Graham; Additional reporting by Mark John; Editing by Adam Jourdan and Emelia Sithole-Matarise)