Swiss watchmaking: where things stand

Heavily impacted by way of the coronavirus crisis, Swiss made dive watch   watchmaking nevertheless stays a symbol of Swiss knowledge and “Made in Switzerland” precision manufacturing. Can it keep up its dominance within the luxurious quarter and compete against the likes of Apple? A primer on a key Swiss industry which exports its merchandise all over the global.

This content material was published on July thirteen, 2020 – eleven:00July thirteen, 2020 – 11:00
Samuel Jaberg Pauline Turuban
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Swiss-made merchandise dominate global market
Switzerland produces just over 20 million watches in step with year, or just over 2% of world timepiece production. However, it commands more than a 50% proportion of the global watch industry in fee terms, with turnover for all Swiss manufacturers mixed predicted at more than CHF50 billion ($53 billion) in retail income price.

In the high- and mid-variety segments, Switzerland leaves only a few crumbs for its French or German competitors: greater than 95% of watches offered for CHF1,000 or extra are produced via Swiss companies.

In recent years, the average cost of exported Swiss watches has endured to climb, achieving around $1,000. Multiply that quantity by way of or 3 and you have an concept of the common fee payed with the aid of customers who put on the ones watches.

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Surpassed by way of Apple
In contrast to the astonishing achievement of Swiss watchmakers inside the luxurious market, the drastic fall in the overall quantity of watches synthetic is a trend that concerns many industry experts. In 2019, Swiss watchmakers exported nearly 10 million fewer watches than they did in 2016. The impact of the coronavirus pandemic will see sales decline to just 14 million watches in 2020. Such dismal figures take the enterprise lower back to extent sales equal to those of the Forties.

Aside from competitive problems, the watchmaking enterprise is going through sizeable structural demanding situations. The first amongst them is competition from smartwatches —significantly the Apple Watch — which has delivered a heavy blow to “Swiss Made” watches inside the access-level segment (under CHF200). Apple by myself bought more watches in 2019 than the whole Swiss watch industry, even though the agency simplest commenced promoting watches five years in the past.

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Apple overtakes Swiss watchmakers
The celebrated Swatch logo has been the hardest hit by way of the downturn in extent, with estimates via Swiss public broadcaster RTS suggesting that the logo these days produces between three and 7 million watches yearly, compared to some 15 to twenty million produced at some stage in its heyday inside the Nineteen Nineties. Together with entry-degree manufacturers which include Mondain, Festina, Victorinox or even Raymond Weil, Swatch has additionally been hit by way of the creation in 2017 of tough new policies governing the attribution of the “Swiss Made” label. The new policies pressured the manufacturers to use extra additives made with the aid of Swiss suppliers which in flip forced them to boom fees, with the result that income volumes declined by way of numerous loads of thousands of units.

Most famous and maximum secretive
“If, by the age of fifty one does not very own a Rolex, one has failed at lifestyles,” is going the distinguished quote uttered via French advertiser Jacques Séguéla greater than a decade ago and which still serves to demonstrate the outsized symbolic size the Rolex brand occupies in the luxury universe. Rolex timepieces beautify the wrists of personalities from Roger Federer to Brad Pitt, Donald Trump or Jay-Z. It is also the pleasant-selling Swiss watch brand with an predicted turnover final yr of more than CHF5 billion.

At least, this is the determine predicted by the American bank Morgan Stanley and Swiss consultants LuxeConsult. Because at the same time as Rolex has evolved an remarkable notoriety across the globe, it also operates its business with overall discretion. Privately owned by means of the Hans Wilsdorf Foundation (founder of the logo) Rolex is not indexed on the stock alternate and its securities are not negotiable. It is an association that enables the Geneva-based logo to manipulate its communications inside the manner it sees fit, outside of transparency guidelines imposed by inventory markets.

Exclusive membership of billionaire manufacturers
There are some 350 watch manufacturers which bear the “Swiss Made” label but they’re a ways from all running within the equal league. The top five most powerful manufacturers collectively account for a 50% proportion of watch income. Behind the untouchable Rolex are Omega (Swatch Group, CHF2.34 billion in keeping with 12 months), Longines (Swatch Group, CHF1.Sixty five billion), Cartier (Richemont, CHF1.59 billion) and Patek Phillippe (CHF1.35 billion). The one of a kind membership of billionaires is completed through Tissot (Swatch Group, CHF1.05 billion) and Audemars Piguet (CHF1.03 billion).

Alongside the successful independent brands — Rolex, Patek Philippe, Audemars Piguet and Richard Mille — 3 corporations dominate the Swiss watchmaking market:

Swatch Group, international chief inside the watch quarter, indexed on the Swiss stock exchange and controlled through the Hayek family which owns about forty% of the capital.
Richemont, based by South African Johann Rupert, indexed at the Swiss and South African stock exchanges.
LVMH, global chief in luxurious goods, controlled with the aid of France’s Bernard Arnault, listed at the Paris inventory change.
Modest effect on Swiss economic system
Watchmaking accounts for round 1.Five% of Swiss gross domestic product (GDP). It is the u . S . A .’s 0.33-biggest export industry at the back of the prescription drugs and device equipment sectors. Its organizations are in particular placed in Neuchâtel, Bern, Geneva, Solothurn, the Jura and Vaud cantons wherein the industry generates extra than 90% of the world’s introduced price.

The watchmaking industry is a chief generator of jobs in those areas, with the seven-hundred agencies energetic in the enterprise employing almost 60,000 humans. When indirect employment related to the world is added, it’s far envisioned that nearly one hundred,000 Swiss jobs are depending on the watchmaking enterprise.

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But the salaries earned by using the industry’s personnel are lots extra modest than the cost of the timepieces they paintings to produce. In 2018, the average profits within the watchmaking industry changed into simply over CHF5,400 in line with month; that’s CHF1,000 much less than the average revenue of the u . S . A .’s employees.

Glorious and darkish periods
The watch quarter peaked at the cease of the Nineteen Sixties, whilst it counted almost 90,000 employees in 1,500 groups. In the early Nineteen Seventies, however, the advent of Asian-made quartz watches disrupted the marketplace and sent the Swiss watchmaking industry right into a profound crisis. By the mid-Eighties, just 30,000 personnel in around 500 to six hundred companies had survived the disaster.

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One of the primary prototypes of quartz watches
Ticking for fifty years: The quartz watch
This content turned into published on Aug 29, 2017Aug 29, 2017 The quartz watch, a Swiss invention subsequently commercialized and mass-advertised through Japanese corporations, celebrates its fiftieth birthday this month.

Switzerland’s watchmaking industry turned into revived by way of the production of mass-market fashions, specifically by means of Swatch watches. Beginning in the 2000s, this was followed with the aid of exponential hobby from rising markets in luxury fashions. As a result, by 2019, Swiss watchmaking generated more than CHF21 billion annually in exports.

The coronavirus pandemic has despite the fact that added a brutal blow to the easy operation of the industry. The Federation of the Swiss Watch Industry (FH) estimates exports will decline through 25% to 30% in 2020, making it worst financial disaster inside the region’s history.

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