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Both in the canton of Zurich and in northwestern Switzerland, the number of bankruptcies in October exceeded the normal range. However, restorers are not affected.
The wave of bankruptcies of the crown mainly affects companies in the transport and logistics sector, such as taxi companies.
In the canton of Zurich, more companies declared bankruptcy last month than expected: 127 companies filed for bankruptcy. It has been calculated with 73. This shows ETH’s economic research center (KOF) tracking of bankruptcies.
According to the KOF, the canton of Zurich is particularly affected, as are the northwestern regions of Switzerland such as Aargau, Basel-Stadt and Baselland. According to a press release, the number of bankruptcies has soared outside the normal range.
“Bankruptcies have a seasonal pattern,” explains KOF’s Florian Eckert. “At certain times of the year, more companies fail than others.” Based on this expected value, a range in which bankruptcy is considered “normal” is calculated. Eckert says, “A good 90 percent of bankruptcies are within this normal range.” Based on previous observations, a normal range between 51 and 105 bankruptcies was established for October 2020.
A “market fit”
Given the closures and restrictions, it could be assumed that restorers are the ones who suffer. But so far they have come out lightly in the Corona crisis: According to the KOF, 56 restaurants in Switzerland had to close last month, this number is still in the long-term trend range.
On the other hand, companies in the service sector are particularly affected by the wave of bankruptcies: hairdressing and cosmetic studios, as well as cleaning and building maintenance companies, have had to close their stores (see box “Other services” ). The transport and logistics sector, which includes taxi companies, has also been hit hard: a total of 24 companies closed in Switzerland in October, most of them in Zurich.
George Botonakis, president of the Zurich Taxi Association, is not yet aware of any wave of bankruptcies within the industry. But he doesn’t seem surprised by the study’s results, either. It says: “There is a market adjustment.”
Botonakis explains: Since June 1, the taxi companies have not been paid any short-time allowance. At the same time, summer sales were cut in half compared to previous years. Also, some of the entrepreneurs were not innovative enough. “They are stubborn taxi drivers who refuse, for example, to work as messengers on the side.” Still others, contaminated sites like insurance, leases or AHV have been fatal. And finally, many would not have been able to obtain loans.
“Many taxi companies are a one-man show,” says Botonakis. But they wouldn’t go bankrupt so fast. “It usually takes six to eight months before bankruptcy occurs.” This is why Botonakis believes that contaminated sites are breaking the neck of many. That is why he speaks of “market shake”.
Botonakis, however, does not believe in subsidies. “This only postpones the death of the company.” Appeals to the canton and advocates for the containment of illegal ground taxis or for a “cut with Uber.”
Unlike KFO, Zürcher Kantonalbank (ZKB) is not currently experiencing any increase in bankruptcies. However, as one of the most important funders for small and medium-sized businesses, expect a wave of bankruptcies soon. “The longer the current situation lasts, the more bankruptcies can be expected,” writes spokeswoman Livia Caluori.
Across Switzerland, the number of bankruptcies notified to the ZKB is even lower than the previous year’s figures. “The reason for this is certainly also Covid-19 loans,” Caluori writes. “However, we assume there will be a recovery effect.” So far, the ZKB has repaid 7,500 krona loans.
In general, fewer bankruptcies than in other crises
In the rest of the country, bankruptcy figures are still close to the trend of recent years or even in the lower half of normal. According to the KOF, the data shows that significantly fewer companies went bankrupt in the spring and summer of this year than would have been expected based on seasonal patterns. In general, far fewer companies have filed for bankruptcy in Switzerland since the beginning of the Corona crisis than during previous crises.
One explanation for this should be the federal support measures that have now expired. Namely: the short-time allowance. Companies could have quickly reduced their wage costs with it. Financial support for difficult cases could further defuse the situation.
However, the study authors are concerned: “The current corona wave is pulling the economy down again.” The new bankruptcy figures showed that the negative consequences of the first wave have not yet been assimilated. The authors say: “In this situation, politicians should consider new measures to support the economy and be prepared to act if the situation worsens.”
