As the Watches and Wonders trade show opens in Geneva, the global geopolitical and economic contexts affecting the sector could be the main topics of conversation. On Tuesday, watch consultant Olivier Müller described this crisis as “particularly acute”.
Müller noted an accumulation of several negative cyclical elements. “We have a very strong Swiss franc, soaring gold prices, and geopolitical tensions. So we have a lot of negative things piling up on top of structural problems,” he said.
According to him, the war in the Middle East is “very bad news”, in addition to the downturn in the Chinese market. “The Middle East is almost completely at a standstill, with a few exceptions that are strongly negatively affected,” he reported.
In the same vein, Yves Bugmann, president of the Federation of the Swiss Watch Industry, highlighted the consequences of hostilities in the Middle East on the sector: “The region accounts for 10% of our exports, and tourism is also an important economic factor for us in this region. The United Arab Emirates is the eighth largest market for the Swiss watch industry, Saudi Arabia is in 15th place, and Qatar is in 21st place.”
In addition to a decline in exports, Müller fears that the conflict will have an impact on the American economy. He believes that the American market is currently keeping the watchmaking sector alive. “If suddenly stagflation (inflation and stagnation) sets in the United States, it will be even worse,” he anticipates.
The apprehension is strong because American tariffs have not yet been set. “It’s an administration and a president that are at least unstable. It’s mid-April and we still don’t have signed agreements when we should have signed them by the end of March. So we are living in uncertainty. It’s poison for all businesses,” Müller criticized.
He also pointed out that “we don’t know if the Trump administration will suddenly reverse course on tariffs or introduce another punitive element.”
The situation also has implications for employment. Müller explained that short-time work benefits, which are currently benefiting the industry, need to be renewed by a decision of the Federal Council by July 31. “If they are, it will be a breath of fresh air for the sector. Otherwise, I think there will be relatively significant consequences for employment, especially in subcontracting, but not only,” Müller anticipates.
“One in four companies currently benefits from short-time work in subcontracting,” Bugmann specifies.
Müller also believes that short-time work benefits should remain a short-term solution. “Jobs should not be ‘subsidized’ in the long term. Short-time work benefits are there to cushion cyclical downturns and not to address structural problems.”
(Source: Propos recueillis par Yann Amedro) (Credit: Article web: juma / Sylvie Belzer)
