Economic slowdown felt by watch industry subconstractors
Watch industry subcontractors are beginning to feel the effects of the global economic slowdown, according to Swiss news agency Keystone-SDA.
Fiscal year 2024 is likely to be more demanding, and negotiations with watch brands on component price increases are shaping up to be tough.
“With Europe and the USA slowing down, and China not recovering as expected, visibility for business is diminishing,” François Billig, Managing Director of Jura-based micromechanics specialist Acrotec, a key supplier to the watch industry, told the news agency.
Switzerland’s export-oriented timepiece industry depends on the health of its main markets: China, Europe and the US. While this sector, like the luxury goods industry as a whole, has managed to shrug off the consequences of the rising cost of living and the war in Ukraine over the past two years, wealthy customers are beginning to be more selective when it comes to shopping in the boutiques of the big-name brands in Paris, London, New York or Shanghai.
Watch exports, a key industry indicator, may be heading for a new record in 2023, but the second half of the year has been less dynamic than the start of the year, leading the brand names to start taking a somewhat cautious approach when it comes to ordering components from their suppliers – companies that are often smaller and less resistant to economic ups and downs than the well-known brands such as Rolex, Swatch, Cartier, Audemars Piguet or Patek Philippe.
Small signs
“One of our relatively large watchmaking customers has requested relissage. This means that this customer wants his orders for components for 2024 to overflow a little into 2025,” says Pierre Dubois, General Manager of Dubois Dépraz, a subcontractor serving high-end watchmakers.
“There are small signs, but no major downturns yet,” stresses Pierre Dubois, while indicating that further requests for “re-smoothing” could arise in 2024 if the economic downturn were to worsen.
Notwithstanding this impending slowdown, Dubois Dépraz expects to close 2023 with double-digit percentage sales growth. “If all goes well between now and the end of this year, we should reach the record level of 2019, or even slightly exceed it,” confides the executive.
Margins, however, are likely to suffer from higher staffing levels and inflation. The complications specialist has hired around 100 people in the last 18 months, bringing the workforce to 425.
“Our company has never had so many employees.” Before the pandemic, the Vallée de Joux-based company employed between 380 and 390 people. By 2021, however, these numbers had fallen to 330, due to the drop in business at the height of the global health crisis.
Acrotec, which in addition to watchmaking also supplies the medical, aerospace and automotive industries worldwide, and has over 2,800 employees, anticipates a “decent” increase in sales of under 10% for 2023. The 500 million revenue mark should thus be passed once again.
This news story has been written and carefully fact-checked by an external editorial team. At SWI swissinfo.ch we select the most relevant news for an international audience and use automatic translation tools such as DeepL to translate it into English. Providing you with automatically translated news gives us the time to write more in-depth articles. You can find them here.
If you want to know more about how we work, have a look here, and if you have feedback on this news story please write to english@swissinfo.ch.
In compliance with the JTI standards
More: SWI swissinfo.ch certified by the Journalism Trust Initiative
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.