Tuesday, 12 July 2011

Swiss Competition Commission allows Swatch Group to reduce shipments to independents.

Smaller Swiss watch brands are angry with the announcement from the Competition Commission (known as ‘Comco’) that the Swatch Group can reduce its shipments of components by between 5% and 30% based on 2010 order levels. The actual levels of decrease will be 15% to those firms who buy completely finished movements from Swatch and the 30% level will be to those firms who buy just parts from Swatch and use them to build competing calibres, people like Soprod and Sellita.

Most of the firms declined to speak about this publicly, for fear of retaliation from Swatch, but Miguel Garcia (head of Sellita) is one who has spoken out against the decision and who plans to file an appeal against the decision on Monday, according to the Swiss newspaper ‘Le Temps’. But he will not be alone, the firms Frederic Constant and the movement company Lajoux-Perret will also be filing appeals as will numerous other firms once these leading lights have made the first step.

Peter Stas, Frederic Constant’s CEO says that “this could have a significant impact on jobs in the independent companies”, whilst Miguel Garcia goes further, saying that this will have a much wider impact; “as there will be fewer movements, there will be fewer orders for cases, dials etc.”

The firms anger is concentrated on the year chosen as the base year to decide the cuts upon, these orders were placed in 2009, at the depth of the crisis in Swiss watchmaking; so, being 30% below their 2009 plans will prove a real problem for the independents.

The reduced supply will mean that the independents will be forced to reduce their output, meaning fewer of their watches will be in the stores at a time when the market is expanding rapidly and so customers will most likely turn to brands from the Swatch Group.

There is also anger about where the 2009 base figures used actually came from; the Swatch Group, with only informal contacts with the firms involved, say the Comco, adding that the independents should have looked harder for alternatives, even during the period of Comco's investigation. Although I have to say turning to an alternative movement maker is not going to help if these makers are also being forced to limit their production due to reduced supplies.

But the brands should remember that the late Nicholas G. Hayek had proclaimed that he wanted to end the era of the “supermarket watchmaker” in 2009, but this was just a repetition of his intent stated a decade earlier to suspend the delivery of unfinished movements. They should have realised that these statements were serious and that the Comco was not guaranteed to be 100% on the side of the independents. “But there is no alternative to ETA or to Nivarox (hairspring maker), both members of the Swatch Group. While Sellita, Technotime, Soprod, Vaucher Manufacture, Lajoux-Perret or Dubois Dépraz supply parts but in insufficient volumes to meet our requirements," retorted one independent watchmaker. "They need more time," he concluded, like most of his colleagues.

This piece is based on reports from Bastien Buss, Le Temps de Geneve

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