Time for industry’s recovery

Press, 26 April 1984, Page 5

Time for industry’s recovery

By

Anthony Williams

of Reuter (through NZPA) Basle Swiss watchmakers attending the annual European Watch and Jewellery Fair in Basle, Switzerland, are warily optimistic that a slump which almost obliterated one of the country’s most important industries may be ending. Traditionally makers of high-cost quality watches, the Swiss have suffered from the relentless onslaught of cheap products coming out of the Far East.

The most dramatic broadside against the Swiss industry was launched in Hong Kong, which in 1983 exported 300 million watches at prices averaging only SUS3.SO ($5.32). Against such competition, Swiss exports have slumped and the number of watch companies has fallen by a fifth in three years. In 1983 the industry employed only 32,649 people, compared with almost 47,000 in 1980, and more than 5000 people from the sector are still totally or partly unemployed. The crisis point came last May, when Switzerland’s two largest watch groups, S.S.I.H. and A.S.U.A.G., which account for a third of the total industry, faced bankruptcy. A.S.U.A.G. and 5.5.1. H., makers of the Omega, Tissot, Longines, Eterna, Certina, and Rado brands, have since merged after a bank rescue, which at more than 650 million Swiss francs ($45.6 million) was the biggest bail-out in Swiss industrial history. After years of losses the group aims to be back in black figures by 1986, reaping the profits of a thorough management shake-up, streamlined production and the elimination of duplication in research and marketing. Latest figures from the watchmakers’ association, the Federation Horlogere, show that Swiss exports are

at last picking up. Their value in the first two months of 1984 rose 12 per cent from the same period last year to 480 million francs’ ($334 million).

A federation report said that while this is still below the figure for the corresponding 1981 period, total exports in 1984 should be above last year's 3.4 billion francs ($2.13 billion). Switzerland sold 30.2 million watches and watch movements abroad in 1983.

"I am not very optimistic, but I’m getting more optimistic,” said the federation’s president, Andre Margot, in Basle on the eve of the

watch fair. Daniel Kellerhals, a director at F.H. who claims to be more confident than Mr Margot about the future for the Swiss industry, rationalised his optimism at a recent press conference: "There is enough capital around to restructure the industry and we have highly developed production facilities and an extremely highly qualified labour force," he said.

Mr Margot welcomed progress made by the Swiss in developing quartz watches and also saw potential for recovery in newcheap ranges produced in

Switzerland such as A.S.U.A.G. S.S.I.H.’s "swatch” and the "MWatch." produced by the private group. Mondaine. Between the top and bottom priced watches he detected a middle-range gap. “Filling this hole could be crucial to the future of the industry," he said. The swatch was the first Swiss departure into cheap electronic watches and A.S.U.A.G.-S.S.I.H.’s chief spokesman, Robert Hussy, seems delighted with the market’s response. "We don’t have any sales problems. The only question we face is whether capacity

can match demand." he told Reuters.

Deliberately shunning traditional Swiss elegance, the appeal of the swatch is a garish modernity in colours which even the company’s own publicity concedes is outrageous. The swatch, which sells at a domestic retail price of about $3O. proved an unexpected commercial success and Swiss sales exceeded company targets in 1983. Thanks to a marketing blitz, a total of 1.1 million were made and sold last year and the company expects to more than double that in 1984.

Looking to the future. Mr Hussy said that three innovative products due to be marketed at the start of 1985 were "trumps in the company’s hand." They are controlled by a microprocessor which, sensitive to touch, brings the the time, date or day on to a screen at the stroke of a finger. Riding serenely above the storm of industrial change are the aristrocrats of the Swiss watch industry, luxury producers housed in and around Geneva, including Patek Philippe, Vacheron Constantin, Piaget, and Audemars Piguet.