“It will make it a more stable atmosphere for our customer,” she says. “They will also be able to judge things a bit better compared to doing so in Swiss francs. It will mean I won’t get the upswing in the currency, but I will probably get sales stabilized in all parts of the world that went the wrong way against the Swiss franc.”
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Omega president Stephen Urquhart says although currency fluctuations can hurt businesses significantly, he stresses they are not a new phenomenon and believes the current state of the euro against the Swiss franc will improve.
“We’re not increasing our prices blindly in the markets to get back what we’re losing on paper,” he added. “That would be a bad decision. We’re keeping a close eye on it, along with the price of gold and diamonds. It’s part of our job to overcome [these challenges.]”
Markus Ingold, CEO of Chrono AG, parent company of Cover Switzerland, says his business hasn’t been deeply affected by the strong Swiss franc against the euro and that demand in European countries like France, Germany, and Switzerland remain strong. However, he notes private label watch producers like Chrono are feeling some of the economic upheaval in that sector when it comes to producing Swiss-made watches used as corporate gifts or sales incentives. Instead, some companies have switched to manufacturers in the Far East that can produce watches at a lower cost.
Aside from the overvalued Swiss franc, the Swatch Group’s decision to scale back its supply of movement and movement components to the industry was a hot topic of discussion. For the most part, watch manufacturers appeared to have accepted the news. When asked whether they were affected by the cutbacks, responses varied from no and partially to one of having dealt with the issue once and for all. Rather than looking for a new supplier, Festina Group opted instead to buy Soprod, a producer of Swiss-made mechanical and quartz movements. “If you can’t beat them, buy your own factory,” says Jason Newman, the company’s export manager.
Marcus Stadelmann, director of marketing and communication for Hermès, says the company will continue to get movements from the Swatch Group, and is straightforward about how the fallout should be handled. “The solution is you either have an agreement with the Swatch Group or you have to make other arrangements,” he explains. “It is legitimate for Swatch Group to say it needs to serve its own brands. Many companies are investing into developing their own movements. The biggest problem is matching Swatch Group’s prices because it has such a large-scale production.”
Livingston says the Swatch Group’s decision is a gain for other producers of movements.
“There will be scarcity, new people will come into the industry, and it will create more competition,” she says, adding Gc uses automatic movements from another supplier. “It’s a new business opportunity for somebody else. My hope is there are companies out there that can start to ramp up. I think they wanted to see if [Swatch Group would scale back its supply] first, and now there’s enough pressure that they feel safer making the investments.”
BaselWorld 2013 is set for April 25 to May 2.
