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Bombardier has 900 employees in Switzerland, up from 750 a decade ago. Here a tram drives through Paradeplatz Square in Zurich. The country has emerged as one of the company’s most important R&D sites as it tries to solidify its position as the European train market leader. (Arnd Wiegmann//REUTERS)
Bombardier has 900 employees in Switzerland, up from 750 a decade ago. Here a tram drives through Paradeplatz Square in Zurich. The country has emerged as one of the company’s most important R&D sites as it tries to solidify its position as the European train market leader. (Arnd Wiegmann//REUTERS)

Transportation

Why Bombardier is right at home in Switzerland Add to ...

Bombardier owns Switzerland.

About 70 per cent of the trains and trams in use there are Bombardier products. Swiss International Airlines is the launch customer for the new C Series jet, which is due to make its maiden flight at the end of June.

But there’s more. Tiny Switzerland, half the size of Lake Superior, has also become the headquarters of two of Bombardier’s 10 global divisions – locomotives and train propulsion and controls – and is one of the biggest sources of the Canadian transportation giant’s engineers. At last count, 530 of them, about half of the European total, were Swiss.

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History is only part of the reason for Bombardier’s strong presence in Switzerland, where it collected six companies, one of which was founded in 1871, and turned them into one, spread over four sites. The bigger reason is competitiveness, which in Bombardier’s case goes far beyond low taxes; it’s more about talent, infrastructure and the ease of doing business.

“In Switzerland, we have to develop our people because we have no natural resources,” says Stéphane Wettstein, 54, managing director of Bombardier Transportation Switzerland and the parent company’s chief country representative. “If you want to be successful here, you have to be more efficient.”

Switzerland is one of the world’s biggest magnets for international business. Hundreds of brand-name companies and a lot of wannabes are using Switzerland for their global, European or EMEA (Europe, Middle East and Africa) headquarters.

Each of Switzerland’s 26 semi-autonomous cantons competes vigorously to be their hosts and, collectively, their success rate is astounding. The canton of Vaud, the district that includes Geneva in the French-speaking region of the country, is home to the global, European or EMEA headquarters of heavyweights ranging from Archer-Daniels-Midland Co. and Honeywell International Inc. to Nestlé SA and Yahoo Inc.

From 2003 to 2009 alone, 269 companies transferred from abroad to Switzerland, according to a 2009 report by Arthur D. Little called “Headquarters on the Move: Benchmarking of Global and Regional Headquarters in Switzerland” (the report has yet to be updated).

While the financial crisis, the European recession and rising Swiss costs have greatly slowed the pace of corporate moves into Switzerland since then, there is no doubt the country remains highly competitive. It consistently ranks at or very close to the top of the Global Competitiveness Index, produced by the World Economic Forum. In the 2012-13 list, Switzerland was again ranked No. 1, followed by Singapore, Finland, Sweden, Netherlands, Germany and the United States (Canada was 14th, down two spots from its 2011-12 position).

Why do they come? Of course the attraction has a lot to do with low tax, companies interviewed by The Globe and Mail say. But they also insist that tax alone was not enough to convince them to move there. If tax were the only factor, they might well have chosen Panama or Liechtenstein or Cyprus.

The Arthur D. Little report cites Switzerland’s top five attractions (according to its clients), in order, as: tax, qualified work force, central location, transportation infrastructure and work force availability. Quality of life, political stability, international schools, little bureaucratic red tape and flexible labour laws also rank highly. Strikes are rare in Switzerland.

Switzerland has a tax system that encourages competition among cantons – that is, they can race one another to the bottom to attract companies. While the average canton tax rate is 19 per cent (compared with 30 per cent in Germany and 33 per cent in France), some cantons’ rates are as low, or lower, than countries such as Montenegro that market themselves globally as tax havens. The rate in the canton of Obwalden, at 12.7 per cent, is the lowest. Switzerland also has the European lowest value-added tax (VAT) by a long shot, at 7.6 per cent.

Transocean Ltd., the offshore oil driller best known as the owner of the Deepwater Horizon rig that exploded and sank in the Gulf of Mexico in 2010, moved its headquarters to Geneva from Texas in 2008 and says it has no regrets, even though Switzerland, home of Swatch, Rolex and other luxury groups, is hardly oilman’s country.

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