Manufacturing industries, although declining in importance, still contributed 34% of GDP (including construction) in 2002. The industrial growth rate in 2001 was 3.2%. Swiss industries are chiefly engaged in the manufacture, from imported raw materials, of highly finished goods for domestic consumption and for export. Most of the industrial enterprises are located in the plains and the Swiss plateau, especially in the cantons of Zürich, Bern, Aargau, St. Gallen, Solothurn, Vaud, Basel (Baselstadt and Baselland), and Thurgau. Some industries are concentrated in certain regions: the watch and jewelry industry in the Jura Mountains; machinery in Zürich, Geneva, and Basel; chemical industries (dyes and pharmaceuticals) in Basel; and the textile industry in northeastern Switzerland. In 1993, the industrial sector was targeted for assistance by a government-initiated revitalization program; in 1995, the sector again benefited from government policy when the turnover tax was replaced by a value-added tax system, expected to relieve industry of SwFr1–2 billion per year in taxes. Switzerland, along with Germany and Japan, is at the forefront of the emerging industry of environmental technology.
The textile industry, using wool, cotton, silk, and synthetics, is the oldest Swiss industry and remains important. The machine industry, first among Swiss industries today, produces goods ranging from heavy arms and ammunition to fine precision and optical instruments. Watches and machinery represent about 42% of the total Swiss export value. (By themselves, the world-famous Swiss watches account for 8% of exports and command 50% of the world market.) Chemicals, especially dyes and pharmaceuticals, also are important. About 10% of the world's medicines are produced by three companies in Basel. Despite agricultural problems, Switzerland has also developed a major food industry, relying in part on the country's capacity for milk production. Condensed milk was first developed in Switzerland, as were two other important processed food products: chocolate and baby food. The Swiss company Nestlé S. A., headquartered in Vevey, is one of the world's largest food companies. Because of shifts in foreign demand, some of Switzerland's major industries, such as textiles, nonmetallic minerals, and watchmaking and clockmaking, have declined in importance in recent years, while others, such as chemicals, plastics, and paper, have grown rapidly.