Switzerland: Luxury Watchmakers Struggle to Meet Demand

Bloomberg investigates how the 2009 GFC is impacting the Swiss Haute Horlogerie production and the difficulties faced with the recent surge in demand.

During the 2009 global financial crisis, Swiss timepiece exports fell approximately 22%, resulting in mass manufacturing redundancies across the industry. As demand sharply rises again, increasing by the same 22% from 2009 – 2010, luxury brands are finding it tough to source high quality parts, as well as workers with the precise skill levels necessary to complete assembly.

Thierry Stern, CEO of Patek Philippe, explains that whilst many craftsmen are willing to work, few posses the experience and expertise to confidently complete production. Patek Philippe produces roughly 45,000 pieces per year, all by hand in their Swiss workshop, and Stern goes onto explain that training is a matter of years, not merely weeks or months as in other industries. Therefore, even a commitment to further training their workforce would not yield results in time to meet the forecasted demand of the coming years.

Luc Perramond, CEO of La Montre Hermès, is similarly finding it difficult to source high quality parts, particularly those he considers strategic, such as movements, casing and hands. Explaining that suppliers are experiencing difficulties returning to the capacities they had become accustomed to before the crisis, Perramond is also concerned with meeting demand in 2011.

The industry peaked in 2008 with an export turnover of 17 billion CHF, which forecasters are expecting to be surpassed in the first half of 2011. However it has also been speculated that the recent events unfolding in Japan, coupled with the markets heavy reliance on Asia, may give Swiss producers an opportunity to slightly recover, as the recent steep increases in demand begin to plateau.