Swiss watch industry demands support from politicians
Published: Tuesday, Sep 17th 2024, 08:30
Updated At: Tuesday, Sep 17th 2024, 11:30
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The Swiss watch industry is going through difficult times: Global demand for Swiss watches is declining and the strong franc is putting pressure on manufacturers. The industry is calling on politicians and the Swiss National Bank (SNB) to take action.
Measures are needed to strengthen the competitiveness of the watch industry, the Federation of the Swiss Watch Industry (FH) and the Confederation of Professional Employers (CP) announced on Tuesday. The SNB should curb the strength of the Swiss franc and the Swiss government should remove political hurdles.
However, it is not a "cry for help", emphasized FH President Yves Bugmann in an interview with the news agency AWP. "But we want to draw the attention of politicians and the public to our problems and raise awareness."
Slump in demand in China
However, the situation is tense. The problem that concerns watch manufacturers the most is the weak demand from Asia. "Brands are exporting significantly fewer watches to China and the important watch market of Hong Kong in particular," said Bugmann. Other markets are developing better.
This can be seen in the FH statistics. From January to July, watch exports fell by 2.4% to 15.2 billion Swiss francs in the record year 2023. While the largest sales market, the USA, grew by 5%, exports to the next largest markets, China (-23%) and Hong Kong (-20%), shrank significantly.
Consumer sentiment there has weakened noticeably in recent months. This was also reflected in the retail sales figures published at the beginning of the week, which rose by just over 2% in China in August, significantly weaker than expected.
Companies that manufacture and sell watches in the lower and mid-price segments are particularly suffering from the tense market situation and the strong franc. However, according to Bugmann, component suppliers are usually the first to feel the effects when demand for watches slows down.
Short-time working and redundancies
The consequences for the watch industry are serious, the association emphasized. Of the 700 companies with around 65,000 employees, many have already resorted to short-time working, extended their summer vacation periods or even laid off employees.
The State Secretariat for Economic Affairs (Seco) already pointed out the precarious situation in the unemployment figures published at the beginning of September. In August, the unemployment rate in the watch industry was the highest in the sector at 5.4 percent. Overall, the rate was clearly lower at 2.4 percent.
"We assume that the number of companies registering short-time work will increase," said Bugmann. Although it is difficult to predict the further development, there is no prospect of improvement in the short term.
SNB has room for maneuver
In their letter, the two associations therefore call on politicians and the SNB to take action. In view of the weakening inflation in Switzerland, the central bank has sufficient leeway to intervene in the foreign exchange market and weaken the franc. The currency guardians will decide next week whether there will even be a further interest rate cut.
Better framework conditions are also required from the federal government. In this context, the associations welcome the progress made in free trade with China, India and the Mercosur states (Argentina, Brazil, Paraguay and Uruguay).
The administrative burden on companies also needs to be reduced. "More and more laws are making life more difficult, especially for smaller companies," said Bugmann.
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