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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 ...

Spokesman Guy Cantwell says “Switzerland is centrally located for our worldwide operations. … In addition, Switzerland has a stable and developed tax regime. Further supporting our Swiss presence, we have listed on the SIX Exchange and the SMI,” a reference to the Swiss stock market and its blue-chip index.

He also cited “good infrastructure for schools” as bonus attractions.

Switzerland is not quite as competitive as it looks in a few industries, notably manufacturing, said Bernd Hirschle, head of the manufacturing practice for Arthur D. Little, in Zurich (who was not an author of the 2009 relocation report). Manufacturers suffered because of the rising franc, considered a safe-haven currency, and the shortage of skilled labour as the country tries to cope with an influx of companies.

“The efforts of the central bank of Switzerland to maintain the franc at a stable exchange rate to the euro and increasing manufacturing efficiency are some of the measures which are currently being taken to regain its competitiveness,” he says. “However, some companies both national and international have already moved non-value-added manufacturing out of Switzerland to lower-cost countries.”

The skilled labour shortage doesn’t seem to be hurting Bombardier, at least not yet. The company has exploited universities and technical schools to feed its train factories and research centres.

Bombardier has 900 employees in Switzerland, up from 750 a decade ago. The country has emerged as one of the company’s most important R&D and testing sites as it tries to solidify its position as the European train market leader. Two of Bombardier’s biggest innovations – tilting trains, that allow the train to go far faster in curves, and double-decker inter-city carriages – were developed in Switzerland. “Our basic asset is the brains of people,” Mr. Wettstein says.

To keep the talent rolling in, and the innovation levels up, Bombardier has formed partnerships with some of the leading Swiss schools. One is the Swiss Federal Institute of Technology, considered one of the world’s leading universities for engineering, science and technology (Mr. Wettstein calls it the “MIT of Switzerland”). “We are able to train and educate people here to become professionals,” he says.

One joint project with the technology institute was the development of an airbag for city trams. The airbag is mounted underneath the very front of the train and is triggered when sensors detect a pedestrian in danger of getting struck and falling under the train.

No companies, foreign or domestic, in Switzerland like the rising costs and the strong franc. But high costs have one advantage – it forces companies to be disciplined and creative to remain competitive. Bombardier’s view is that if it can compete in Switzerland, it can compete anywhere. “If I want to be successful here, I have to be highly efficient,” Mr. Wettstein says.

Little cantons compete to attract big-name clients in need of a tax haven

For international companies looking for a low-tax home, Switzerland’s cantons are a blessing.

That’s because the country’s 26 semi-autonomous cantons – roughly equivalent to U.S. states – use tax rates to compete with one another for corporate offices and wealthy individuals.

The competition works: Switzerland has attracted hundreds of big-name companies, turning Zurich and Geneva and a few other cities into thriving cosmopolitan centres. In Zurich alone, it is estimated that about 28 per cent of the work force is composed of foreigners employed at multinational companies. One recent arrival is Google Inc., whose Zurich office, with 1,100 employees, is now home to the company’s biggest development site outside of the United States.

The cantons have been competing for international companies since the 1950s. American chemical giant DuPont moved its regional headquarters to Geneva in 1959. Many others, from industrial equipment maker Caterpillar Inc. to offshore driller Transocean Ltd., have become neighbours in Geneva. The cantons have always been pros at international marketing and are now testing their charms in Asia. Sony, Toyota, Nissan and Hitachi now have big corporate presences in Switzerland.

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