The Swiss watch industry defends itself and prepares for the recovery

BUSINESS

After being hit sharply by the virus, the sector has experienced a smaller decline in exports in recent months - Swiss timepiece manufacturers aim to limit damage this year and then quickly regain ground the next

The Swiss watch industry defends itself and prepares for the recovery
FOCUS © CdT / Archive

The Swiss watch industry defends itself and prepares for the recovery

FOCUS © CdT / Archive

The Swiss watch industry accounts for over 50% of the sector’s global turnover and exports over 90% of its production. In terms of value, the Swiss pole is the largest in the sector globally; in terms of pieces produced, the dominance is instead of the Asian pole. Swiss leadership is marked in the high and medium-high price brackets and this explains the Swiss prevalence on the turnover side. The average price in 2019, according to data from the Federation of the Swiss Watch Industry (FH), was 998 dollars for watches exported from Switzerland (908 francs at current exchange rates), while for those from the United States it was 133 dollars, 90 dollars from Germany, 29 dollars from Hong Kong, 4 dollars from China.

Data and forecasts

Also inevitably affected by the effects of the coronavirus, the Swiss timepiece industry is trying to react and get back on top in this second half of 2020, to limit the damage and then, virus permitting, accelerate in 2021. exports from the Swiss hub are an important indicator for the Red Cross industry and for the sector more generally. The latest figures in chronological order concern the month of August, with exports amounting to 1.34 billion francs (11.9% less than a year earlier); in July the decline was 17% and in June 35%. If we look at the period January-August 2020, we see how exports amounted to 9.80 billion, 30.5% less than a year earlier; the first half of this year was naturally very hard and at the end of June the decline for the first six months was 35.7%.

The decline in exports is gradually easing and therefore we are not far from the forecast of Jean-Daniel Pasche, president of FH, who in June spoke of a possible contraction of 25-30% for the whole of 2020. René Weber, managing director of the Vontobel bank and expert in the sector, for his part, he always made a fairly similar forecast in June, indicating a possible decline of 24-25% for 2020. Weber also made a forecast on the possible rebound in 2021, indicating an increase 15%.

The scenarios

In 2019, exports of the Swiss watch industry amounted to 21.7 billion, up 2.4% compared to 2018. A moderate increase, but well received by operators, because it was achieved in a phase in which they were heard by on the one hand, an international economic slowdown, on the other the strength of the franc which does not facilitate Swiss exports. Then, the coronavirus outbreak between February and March of this year changed the scenario. With production and sales slowed down, and then in some moments even blocked, due to anti-virus measures, the sharp drop in turnover and exports was inevitable.

If we look at the series of annual data, we can see how between 2008 and 2019 exports decreased only in three years (in 2009 markedly, in 2015 and 2016 in a modest way) and how it increased in nine years. After 21.7 billion in 2019, Swiss watch exports could drop to 16.3 billion this year, according to Vontobel and could then rebound well to 18.8 billion next year. It is clear that a return to 21-22 billion euro takes time even in the best of hypotheses, but the figures indicated by the Zurich bank, if they materialize, would already represent a limitation of damages in 2020 and an encouraging recovery in 2021.

The Asian tow

In the first eight months of 2020, the top ten markets for Swiss watches were China, the United States, Hong Kong, Japan, the United Kingdom, Singapore, Germany, the United Arab Emirates, France. , Italy. Among these, only China recorded a slight increase (+ 1.6%) compared to a year earlier, all the others had marked decreases. If you look at the data at the end of 2019, you can see that Asia accounted for 53% last year for the export of Swiss timepieces, Europe 30% and America 15%. The dominance of the Asian continent as an outlet market was therefore confirmed, despite the decline in Hong Kong, caused by local political tensions, which also had repercussions in the economic field. Europe has essentially held its positions, the American continent was clearly driven by the United States. The expectations of the operators in the sector now naturally focus on the last months of this complicated 2020. Limiting the damage this year and going back as far as possible next is the leitmotif for the Swiss watch industry too.

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