Suppliers to the watch industry increasingly resort to short-time working
Published: Friday, Oct 18th 2024, 10:30
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The Swiss watch industry is feeling the headwind blowing against it from Asia. So far this year, significantly fewer timepieces have been exported to China or Hong Kong than a year ago. The weak order situation is also affecting suppliers. Some of them are applying for short-time working to keep their heads above water.
The consequences of the weakening demand for watches in Asia are being felt particularly strongly in western Switzerland, where a large proportion of the companies operating in this sector throughout Switzerland are based. The watch industry is an important economic sector in the canton of Jura.
The weakness of the global watch market is not without consequences in the Jura either: from January to July, no fewer than 41 Jura companies in the watch industry introduced short-time working, according to data available on the unemployment insurance website arbeit.swiss. That was seven times more than a year ago.
After seven months, the number of employees affected by short-time working in these companies was around ten times higher than in the previous year at 879. And if you count the companies that applied to the canton for short-time working as a precaution in the months from January to August, the Jura recorded an increase to 239 companies. That was four times more than in the previous year.
Short-time work not a taboo
"Applying for short-time working is taboo for fewer and fewer companies," says the managing director of a company specializing in the manufacture of tools for the watch industry, who does not wish to be named, in an interview with the news agency AWP. His company, which has around 100 employees, has not yet done so, but in view of the tight order situation, such a step cannot be ruled out.
Visibility regarding future business development has been poor in the watch industry for months, the manager continues. Some companies have even preferred to lay people off instead of taking advantage of the government's short-time working scheme.
These companies expect the situation on the international watch markets to deteriorate. Some even expect a double-digit percentage decline in watch exports.
According to the Federation of the Swiss Watch Industry (FH), Swiss watch exports fell by 2.7% to CHF 19.2 billion in the first nine months of 2024. A quarter fewer timepieces were exported to China, the second-largest sales market, and a fifth fewer to Hong Kong. On the other hand, the USA, now the largest sales market, recorded growth (+4.9 percent).
Vulnerable small companies
Small companies in the sector with 50 or fewer employees are the first to feel the fall in demand, says Gilles Coullery from the Canton of Jura's employment office. Their stocks would swell quickly and excessively in weak times. Another drawback is that SMEs are often dependent on orders from a small number of major customers and can hardly compensate for the decline of a single customer.
Large watch manufacturers have a much broader base and can part with temporary workers in difficult market phases, says Kedy-Joyce Pose from the Transjurane office of the Unia trade union. Supplier companies, on the other hand, usually only employ a few temporary workers and are more likely to have to resort to short-time working.
Subdued prospects
FH President Yves Bugmann is convinced that suppliers are feeling the brunt of the drop in demand. "In the past, we have seen how suppliers are the first to suffer from falling orders when watch manufacturers' stocks fill up." However, Bugmann is not yet talking about a crisis. He remains "positive" for the coming year and hopes above all that demand in China will pick up again thanks to Beijing's economic stimulus measures.
Watch expert Olivier Müller takes a more pessimistic view of the year 2025, with support for the Chinese economy likely to have only a limited positive impact on the local economy.
"There is currently no macroeconomic data that points to a recovery in China in the next twelve months," says Müller. Due to declining production volumes, the crisis could even be worse for the Swiss watch industry than the one in 2009.
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