How Switzerland at high cost remained a manufacturing center at the offshore era

In a wing of the sprawling HQ, a few dozen so-called “master perfumers” mix the luxury bottles Acqua di Gio or CK One, or a new detergent for a customer aimed at reaching new customers in Singapore, the United States or the Middle East. There are thousands of bottles, many of which containing scents protected by copyright. A friendly robot collects them for perfumers, which saves time.

A little further, there is a much more conventional factory site, where giant industrial mixers will en masse the firmenich perfumes. Some workers neglect the process. Others collect liquids in trucks and send them across Europe and the world.

In another central building, factory workers, master perfumers and office employees all mix with lunch. In a way, it looks like a return to the 1960s, the high tide of the boom in the industrialization of the European War, before the mass outsourcing of the Western industrial activity to low-cost economies like China.

How is a centenary industrial company such as Firmenich (renown of DSM-Firmenich after its merger in 2023 with the Dutch chemical company) manages to stay global today, given that a large part of its cost base is in the most expensive country in the world? And the approach of Firmenich and other Swiss companies as it has lessons for the rest of Europe of companies when it tries to regain its place in the world markets?

In depth talent

There are good reasons to want to learn from Switzerland’s experience. Its economy is today that which defies gravity. Despite a safety refuge currency which is resistant to record heights compared to the dollar and the euro, and despite the erosion of some of its historical competitive advantages, such as its banking secrecy and its access without tariff to the global markets, it has so far retained its status as one of the most productive, diverse and innovative economies in the world.

An example: with 12 companies on global fortune 500 and 36 on fortune 500 Europe, Switzerland has the highest density per capita of these companies in the world. And like Firmerich, many of them continue to TO DO things in their country of origin.

In recent months, I have tried to understand what is the secret of modern industrial success in Switzerland. I visited the Hitachi Energy High Tension Communization Factory Factory in a gentrrified, but still industrial district of the city of Zurich. I spoke to the OUBOTER family of textile producers who have become inventors, who created the modern kick scooter and sold 70 million units of their “micro” worldwide, and at the CEO of ON, the Roger Federer’s back to back shoes, which has become a global phenomenon in less than a decade, with more than $ 3 billion on sale. I spent time in Lausanne, where the EPFL University created a scaling incubator. And I visited the DSM-Firmenich site in Geneva.

If there is a magical ingredient for the sustainable economic success of Switzerland, I have found, it is that its companies often combine the know-how of blue passes with a white collar innovation. Switzerland, like Germany, has built its 20^th– Industrial economy of the century on the training and enhancement of all types of workers – these operate with their hands and those working at an office. But unlike most places, this system continues to the present day.

In DSM-Firmenich, for example, as explained by his CEO Dimitri de Vreze, the company transformed the complexity rendered by its talent base into an effective barrier at the entrance.

Three elements constitute this complexity: an “ingredient toolbox” with 1,800 perfumes protected by copyright, created by its perfumers over the decades; A “Creation Center” where a few dozen masters of masters, which are apprentice internally for many years, work with customers on the needs of consumers; and an AI and regulatory intelligence office, essential for the creation and approval of new ingredients.

“It is a complex system with thousands of ingredients, personalized memories daily and in -depth expertise. But that also means that if a competitor wanted to copy us, buying our talent alone would not be enough; They would need the base and the ingredient processes, which takes decades to build, “he said.

Reinvest in the ecosystem

This competitive advantage – in particular its contributions to blue and white passes – is also only possible because of the complete ecosystem that Geneva offers for this industry.

© DSM-Firmenich

At its headquarters, doctorates and graduates of the technical university work alongside the factory workers to create magic firmenich potions. Elsewhere on Lake Geneva are competitors such as Givaudan, (potential) customers such as P&G and Nestlé, and technical schools such as EPFL, or the famous business school of the hotel school of Lausanne.

Dimitri de Vreeze is far from being the only company in fortune 500 which benefits from the unique industrial-academic link in Switzerland. In Basel, the pharmaceutical giants Roche and Novartis, as well as chemical companies such as Syngenta, benefit and contribute to a similar configuration, with local universities and “fachhochschule” (business schools) providing scientific and qualified work underlying links with the Germans and the rhine field, and industrial access.

Zurich was even called the Silicon Valley Switzerland because it houses ETH, the leading technical university in Europe, industrial giants such as Abb and Hitachi Energy, the European R&D outposts of US Big Tech Companies such as Alphabet, Microsoft and IBM, and Trendy Consumer Good Innovators such as the Mini and Mini Electric Systems Maker.

In all these places, the great availability of talents – whether as founders, knowledge workers or highly qualified blue workers – is considered a central element of the success of the company’s ecosystem. The permeable links between universities and companies are another.

“The Swiss ecosystem is incredibly important,” said Martin Hoffmann, the CEO of ON, telling the foundation of the company. The company’s original “cloud” technology, for example, was developed by an Eth Zurich researcher, then bought by the startup.

To date, Hoffman has said: “All our products are designed in Switzerland, and we work a lot with universities, in particular on sustainability and science of materials.”

It is a current story here, through the sectors. In Geneva, for example, a nuclear invention of CERN researchers in the early 2000s led to the foundation of new treatment against cancer and, finally, to its acquisition of $ 4 billion by Novartis.

Share success

When scientific research does not play a direct role in the startup foundation, another link in the Swiss economy: the link between industries and between industry and finance.

As Wim Ouboter recalled, when he created micro -mobility systems – now the world leader in kick scooters – 25 years ago in Zurich, two elements helped him a lot: a letter of intent to the smart car joint venture from Swatch, committing to buy the first batch of kicks, and access to the capital of Swiss banks, Accompanied capital after developing an international health management expertise.

In other words, the country’s existing industrial and financial ecosystem often helps emerging industries, benefiting from both.

The result of the skilled labor, universities, banks and existing industrial links together becomes clear in many ways, in particular, of course, a higher layer of entrepreneurs and capitalists with and deployment of billions of Swiss francs.

But two indicators in particular demonstrate to what extent the success of the Alpine economy is widely shared: Swiss unemployment is only 2.8%, which means that the country is close to employment. And, it is median The salary of approximately more than $ 90,000 per year is around 50% higher than in the United States despite similar GDP per capita.

What is the lesson of Swiss Fortune 500 companies for the rest of Europe and the world?

He would go too far to say that the model of shared success in Switzerland could be applied to any business or economy, or even that all Swiss multinationals choose to produce their goods at the national level.

Some, including the manufacturer of accessories on, micro and PC, Logitech, are now practically all their products in Asia, due to the drop in costs and expertise in mass manufacturing there.

Many of those who still produce a large part of their products in cities and cities such as Geneva, Vevey and Zurich – such as the Nestlé Nestlé coffee arm, the DSM -Firmenich and the manufacturers of heavy industrial equipment like Abb and Hitachi Energy – are unusual to be able to do so in a competitive way.

In some cases, for example, it is because niche know-how sometimes counts more than the cost, while in other cases, it is because the cost of certain Swiss manufacturing products fades compared to the total cost of the projects they are part.

There are, however, lessons that could apply to companies and political decision -makers anywhere. Value each part of a corporate ecosystem, from the factory worker to the competitor next door. Be altruistic and interested at the same time: if you are successful, invest your product in emerging and innovative companies.

And do not try to save cents in manufacturing or any other accumulated know-how by outsourcing, if you could lose books (or billions of Swiss francs).