As the Watches and Wonders watchmaking trade fair opens in Geneva, global geopolitical and economic contexts, which have an impact on the sector, could be the main topics of conversation in the halls. Speaking on La Matinale on Tuesday, watchmaking consultant Olivier Müller described this crisis as “particularly acute.”
Olivier Müller noted an accumulation of several negative cyclical elements. “We have a very strong Swiss franc, gold prices that are skyrocketing, and geopolitical tensions. So we have a lot of negative things that are adding up on top of structural problems,” he said.
According to him, the situation in the Middle East is a “very bad news,” in addition to the reversal of the Chinese market. “The Middle East is almost completely at a standstill, with a few exceptions that are strongly negatively impacted,” he reported.
In the same vein, Yves Bugmann, president of the Federation of the Swiss Watch Industry, emphasized the consequences of hostilities in the Middle East on the sector: “The region accounts for 10% of our exports and tourism is an important economic factor for us in this region as well. The United Arab Emirates is the eighth market for the Swiss watch industry, Saudi Arabia is in 15th place, and Qatar in 21st place.”
Beyond a drop in exports, Olivier Müller fears that the conflict will have repercussions on the American economy. He believes that it is currently the market that is allowing the watchmaking sector to stay alive. “If all of a sudden stagflation (inflation and stagnation) takes hold in the United States, it will be worse,” the consultant anticipated.
The apprehension is particularly strong as American customs duties are still not set. “It’s an administration and a president who are at least unstable. It’s mid-April and we still don’t have agreements signed when we were supposed to sign them by the end of March. So we live in uncertainty. It’s poison for any business,” denounced Olivier Müller.
He also pointed out that “we don’t know if all of a sudden the Trump administration will backtrack on customs duties or if it will introduce another punitive element.”
The economic situation also has consequences on employment. “We have a sword of Damocles hanging over our heads,” he said.
The expert explains that reduced working hours (RHT), which are a very useful tool to cushion downward cyclical cycles, are currently benefiting the industry, but they must be renewed by a decision of the Federal Council before July 31. “If they are renewed, 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,” Olivier Müller anticipated.
“A quarter of companies in subcontracting are currently benefiting from reduced working hours,” specified Yves Bugmann.
Olivier Müller also believes that reduced working hours should remain a short-term solution. “We should not ‘subsidize’ jobs in the long term. Reduced working hours are there to cushion cyclical cycles and not to address structural problems.”
Interview conducted by Yann Amedro Article web: juma / Sylvie Belzer
