When the economic slowdown hits Switzerland’s manual trades

The economic slowdown is no longer confined to design offices, export departments or administrative functions. It is now also evident in workshops, on building sites, in manufacturing companies and amongst craftspeople. For Swiss SMEs, this is a significant sign: manual trades, long supported by solid demand and a persistent labour shortage, are entering a period of greater uncertainty.

What makes the current situation unique is this paradoxical tension. On the one hand, order books are becoming less secure in certain sectors. On the other, recruiting qualified staff remains difficult. A company may therefore find itself with less clarity regarding its turnover, whilst knowing that it will not easily be able to replace an experienced employee if it allows them to leave. For managers, HR professionals and payroll service providers, the challenge is not merely cyclical: it affects salary planning, cash flow, apprentice training and the ability to retain expertise.

The slowdown is being felt right down to the workshop

The Swiss Union of Arts and Crafts’ SME Barometer, published on 4 November 2025, sets the tone: 52 per cent of the cantonal branches surveyed anticipate a deterioration in the economic situation of SMEs over the next twelve months, whilst 42 per cent expect it to stagnate. This does not signal an impending collapse, but rather a marked cooling of expectations. For the skilled trades, this caution often translates into very tangible consequences: quotes taking longer to be accepted, clients postponing work, delayed investments and increased pressure on prices.

Skilled trades do not form a homogeneous group. A joiner, a fitter, a precision engineer, a finishing contractor or an industrial subcontractor do not all operate within the same economic cycles. But they all share a cost structure in which staff, machinery, vehicles, premises, insurance and materials account for a significant proportion of costs. When demand slows, the adjustment is not instantaneous. You cannot downsize a workshop as easily as closing a spreadsheet tab.

In sectors closely linked to industry, signs of weakness have been visible for some time now. In the third quarter of 2023, 63 per cent of companies in the machinery, electrical equipment and metals sector reported a fall in new orders compared with the previous year, according to data from the MEM sector. This information is valuable for SME subcontractors: when clients slow down, the effect trickles down the value chain. Smaller firms sometimes feel the impact later, but often more severely, as they have less room for manoeuvre to absorb the downturns.

Fewer orders, but costs that don’t go away

In a manufacturing company, an economic slowdown rarely manifests itself through a single indicator. It becomes apparent in the time it takes for a quotation to turn into an order, in the number of non-billable hours, in slower-moving stock, in more noticeable delays in payment, or in requests for discounts. Accounting then becomes a management tool, rather than a mere end-of-period exercise.

The main risk is the gradual erosion of profit margins. An SME may keep its business afloat by accepting less profitable contracts, simply to keep its teams busy or to cover part of its fixed costs. This strategy is understandable in the short term, but it must be monitored closely. A busy workshop is not necessarily profitable; a full order book does not guarantee a healthy cash flow. Indirect costs, preparation time, rework, travel and productivity losses can turn a seemingly sound project into a loss-making one.

The slowdown also complicates the management of investments. Many manual trades require reliable, and sometimes specialised, equipment, as well as skills that need to be regularly updated. Postponing all expenditure may ease immediate cash flow pressures, but it can undermine productivity. Conversely, investing as if demand were set to remain stable may leave the business vulnerable if orders dry up. Between these two extremes, SMEs would be well advised to work on the basis of scenarios: secure orders, probable orders, and risky orders. This approach helps to decide which expenses are essential, which can be spread out, and which must be put on hold.

For a trust company or finance manager, discussions with the business owner should therefore focus on highly operational matters: which contracts actually cover the running costs? Which customers are paying more slowly? Which cost items are rising without being passed on? Which projects are tying up too many resources? The answer lies not solely in turnover, but in the quality of that turnover.

The recruitment paradox: less momentum, still not enough staff

One might think that a slowing market would make recruitment easier. Yet the reality for the Swiss skilled trades sector is quite different. AXA’s SME study, published in 2024, indicates that, despite the slowdown in the labour market, recruitment remains the main challenge for Swiss SMEs; more than half are struggling to fill their vacancies. For a workshop manager or a construction firm, this means that economic caution does not solve the skills shortage.

This paradox has significant consequences. When a qualified employee leaves, finding a replacement can take time. In the meantime, the company loses capacity, has to postpone projects or overburden the remaining team. Against the backdrop of an economic slowdown, some managers are therefore reluctant to hire; but if they wait too long, they risk being unable to meet demand when it picks up again. Human capital becomes a form of productive insurance: costly to maintain during a downturn, difficult to rebuild during a recovery.

Wage pressure must also be viewed with nuance. According to 2018 data from the Federal Statistical Office cited by JobUp, the median salary in Switzerland stands at 6,538 francs per month, with manual trades generally falling below this median, though there are variations depending on the specific occupation. But pay is only part of the equation. Qualified candidates also look at the stability of the employer, the organisation of work, training opportunities, the quality of management, commutes, working hours and the company’s reputation. In a tight labour market, an SME that cannot always compete on pay must focus on these other aspects.

For employers, the real issue is staff retention. Training an employee in the company’s methods, its clients, its machinery and its quality standards takes time. When an experienced employee leaves, it does not just create a vacancy; it takes with it part of the company’s operational memory. In manual trades, this memory often consists of gestures, reflexes, diagnostic skills and tips that are not found in any manual.

Apprentices and know-how: the next generation cannot be imposed

Switzerland has a dual vocational training system in which businesses play a central role: apprenticeships combine practical work in a company with teaching at a vocational college. For skilled trades, this model is a cornerstone. But it relies on SMEs having the capacity to mentor young people, gradually entrusting them with meaningful tasks and sustaining the training effort even when economic conditions become more uncertain.

This is precisely where an economic slowdown can have an adverse effect. A company under pressure might be tempted to scale back its commitment to training, due to a lack of time or visibility. In the short term, this frees up resources. In the medium term, however, it exacerbates the skills shortage. Skilled trades require a steady stream of trained young people; otherwise, recruitment pressures will intensify during the next growth cycle.

Attractiveness remains another challenge. Vocational training specialists, including Marc Lehmann, head of the woodworking department at the Geneva Construction Vocational Training Centre, highlight the growing difficulty in attracting young people to manual trades, despite their technical nature and importance. This perception carries significant weight. Many skilled trades today require the ability to read plans, use digital tools, comply with safety standards, handle expensive materials and liaise with demanding clients. These are not second-choice careers; they are professions that demand precision, responsibility and adaptability.

SMEs can take action at their own level: by hosting work experience placements, highlighting career progression pathways, showcasing concrete achievements, involving apprentices in the life of the business, and promoting technical skills to parents and schools. This image-building work does not replace working conditions, but it helps to correct what is sometimes an outdated perception of manual trades.

Taking the initiative before the balance sheet dictates the course of action

At this stage, it would be a mistake to wait until difficulties become clearly apparent in the annual accounts. For a skilled trades-based SME, useful indicators are often available earlier: offer acceptance rates, the average time between quotation and order, billable hours, profitability per project or contract, the level of advance payments, late payments, and workload per employee. These indicators do not necessarily require complex systems; above all, they demand discipline in monitoring them.

Critical decisions must be documented. Before hiring, replacing a departing employee, purchasing machinery or accepting a large, low-margin project, the business should assess the impact on cash flow and organisational capacity. A trust company can help translate on-the-ground intuition into simple tables: cash flow forecasts, break-even points, margin breakdowns, and comparisons between fixed and variable costs. The aim is not to hold the entrepreneur back, but to give them a clearer picture of the risk.

Prudence does not mean inaction. In certain sectors, a slowdown can be an opportunity to improve the quality of processes, train the team, calculate quotations more accurately, segment the customer base or develop maintenance and service offerings that are less dependent on major investments by clients. However, these approaches must be tailored to the sector, the canton, the applicable collective agreement where relevant, and the company’s actual financial situation.

The economic slowdown serves as a reminder of a fact often overlooked during periods of strong demand: skilled trades are at the heart of the Swiss economy, but they are not immune to economic cycles. Their strength lies in their proximity to clients, their expertise and their ability to deliver. Their vulnerability stems from sometimes narrow profit margins, a reliance on scarce skills and the burden of fixed costs. For SMEs, the challenge in the coming months will be to balance two imperatives: preserving the company’s core operations today whilst not sacrificing the skills they will need tomorrow.