Cost of Swiss franc in US dollar. (Data: Yahoo Finance)
The Swiss watch industry is facing new headwinds as the Swiss franc trades at record levels.
Rolex CEO Jean-Frédéric Dufour had predicted a “challenging year” for the industry, “a phase in which all manufacturers were doing well is coming to an end,” he said in April at the opening of Watches and Wonders.
The most recent figures published by the Federation of the Swiss Watch Industry underscored the severity of a China-led slowdown that’s rippling across the industry. Exports to the country, the second-biggest market behind the U.S., slumped almost 6% YoY while shipments to Hong Kong slid 11%, as a downturn in real estate values weighed on sentiment.
Now, with the Swiss franc trading close to $1.20, the watch industry and La Convention patronale — a trade union representing watchmakers, including at Rolex — warned this week of a significant drop in demand that’s hurting Swiss watch brands and putting jobs at risk. They called on the Swiss National Bank to take steps to weaken the strong franc, which has pressured the industry.
While no layoffs have been reported at Rolex, other major brands are using the government supported “short-time” work program to furlough employees, including at Girard-Perregaux and Ulysse Nardin, for example, which have put about 15% of workers on furlough, the company’s chief executive officer told Bloomberg News last month.