The boss and majority shareholder of the chemical company Ems joins the chorus of entrepreneurs who warn about the consequences of accepting the Juso inheritance tax initiative. However, the frivolous request is not her only concern.
As the boss and major shareholder of the chemical company Ems, Magdalena Martullo-Blocher has a fortune of billions. The Young Socialists’ initiative, which wants to impose a 50 percent tax on the inheritance of assets of 50 million francs or more at the federal level, would have drastic consequences for her. “I or my children would have to pay 2.5 billion francs in one go,” she said at the Ems half-yearly conference. “My siblings and their descendants would suffer a similar fate. We are all entrepreneurs.”
Thoughts about moving abroad
Martullo-Blocher considered the retroactive clause, which would allow people with large assets to be taxed if they leave Switzerland after the vote, to be particularly problematic. “The Federal Council must definitely invalidate it,” she said.
Like other wealthy business families residing in Switzerland, Martullo-Blocher and her siblings are considering moving abroad to avoid paying taxes. “We have no other choice,” she said, visibly annoyed.
Despite all her outrage, the Ems boss and SVP National Councillor does not believe that the initiative will stand a chance with the Swiss electorate. Either way, the frivolous request of the Young Socialists is not the biggest problem that is currently weighing on her mind. Martullo-Blocher has long been concerned about the competitiveness of European industry, and she is specifically referring to Switzerland as a manufacturing base.
Ems is moving away from Europe
Europe is increasingly lacking competitiveness, said the entrepreneur. This is not only due to energy, which has become far too expensive compared to other countries. New regulations such as the European Supply Chain Act are also poison for industry. And the lack of work effort, which is reflected in the willingness of many employees to work part-time rather than full-time and to work from home as often as possible, is also not helping to raise productivity to a higher level.
The chemical company Ems, which has been run by Martullo-Blocher for 20 years now, is increasingly trying its luck in markets outside Europe. When she took over the management from her father Christoph Blocher, who was then elected to the Federal Council, in early 2004, over 70 percent of the company’s exports went to Europe. She said that this proportion is now just under 50 percent.
Crisis in the automotive industry weighs on
However, Ems is still heavily dependent on business with automobile manufacturers and their suppliers. They account for around 60 percent of total sales. And this means that Ems cannot escape the crisis that is once again spreading in the automobile sector.
In the first half of the year, global production of passenger cars stagnated. However, the first quarter developed significantly better than the second. According to Martullo-Blocher, production fell in May and June in both European and Chinese car factories. The decline reached 10 percent and 2 percent respectively. In the USA, growth was only zero.
All of this had an impact on Ems’ sales. These suffered from the weak economy, which is affecting not only the automotive sector, but also numerous other sectors such as mechanical engineering, furniture manufacturing and the textile industry. To make matters worse for Ems, the company’s most important foreign currencies – the euro, yuan and dollar – continued to weaken against the franc. Compared to the same period last year, sales fell by 8 percent to 1.1 billion francs. The negative currency effect accounted for almost 5 percentage points of the decline.
At the same time, the company managed to increase its operating profit (EBIT) by 4 percent to 291 million francs. This increased the EBIT margin from 23.6 to 26.8 percent, meaning that Ems continues to be one of the top earners in the production of plastics, which the company specializes in.
Innovations help profitability
Bernhard Merki, Chairman of the Board of Directors of Ems, admitted on the sidelines of the media conference: “Of course we are not happy with the sales.” However, he stressed that Ems had once again managed to offer more new products with higher margins. “We are selective and are phasing out older products that are less profitable.”
Ems is known for constantly working on innovations in close cooperation with customers. This often involves replacing parts that were previously made of metal with plastic ones, for example to save weight in cars. Ems is also trying to open up new sales markets. For example, the company’s plastics are now being used for injection systems by the Bern-based medical technology company Ypsomed, which has high expectations of doing business with suppliers of weight-loss injections.
However, not all of the innovations that Ems works on necessarily lead to success. For example, it is unclear whether a remote-controlled drone that is intended to serve as a flying taxi, the prototype of which Martullo-Blocher demonstrated in an advertising film, will ever become a reality. The company and its customer from the People’s Republic are primarily targeting the Chinese market, but most of China’s airspace still belongs to the military.