2009: a promising transition year

The current financial crisis has brutally reminded us of the established truth that the economy in general, and the watch industry in particular, is eminently cyclical by nature. And today, just as in the Jean Fontaine’s fable The cicada and the ant , many of those who sang all ‘summer’ without storing up any supplies are now finding themselves pretty destitute now that the ‘winter’ winds are blowing.

While it’s certainly not our intention to preach or lecture, at the end of the day there is nothing mysterious about the fact that designing, developing, producing and selling watches is a profession – an admirable profession that naturally implies an element of luck, but is above all a matter of work, work… and more work. Fortunately, most Swiss watchmakers have not forgotten this fundamental reality, and that is what makes us optimistic for the coming months.

We are also delighted to offer you a chance to discover the finest examples of this production as you leaf through the pages of the Swiss Watchmaking Year. Cycle after cycle, we continue to be amazed and enthused by the creativity of the Swiss watch industry. We do not agree with those who claim the economic climate has made 2009 a minor vintage year without any striking new releases of significant technical innovations. In any case, this kind of reasoning should be definitively shunned: watchmaking is not a sports competition in which record-breaking performances are the sole goal. That which contributes to the value of a vintage lies elsewhere, in a whole set of elements including the human factor, a host of technical details, and of course emotional aspects.

The year we have just experienced has not been short on such ingredients. We remain convinced that Swiss Made watchmaking still has a fine future ahead of it. It is brimming with new talents who, despite not necessarily having the means to make themselves known, are nonetheless holding on and forging ahead. Indeed, this particular field of development is not tied to present circumstances. Fascinating and exciting research is being pursued in all manner of areas, including on new materials and on the key organs of a watch.

The beautiful watchmaking adventure continues, and here at the Swiss Watchmaking Year, we are proud to continue bearing faithful witness to it.

Roland Ray Publisher

Rare does not necessarily mean expensive...
A few thoughts on pricesand value

Last October, a perspicacious specialised watch journalist, Grégory Pons, caught sight of a Geneva-based politician wearing a fake Panerai watch. This was all the more potentially embarrassing for this particular figure in that he is at the head of a populist party with a stock in trade of advocating national interests, defending law and order, and denouncing foreigners who cheat and take advantage of the country. And how do you think this gentleman responded when challenged? He laughed off the accusation, explaining that no “normal” citizen could afford a ‘Swiss made’ watch. We will avoid commenting directly on such a ridiculous answer, which nonetheless naturally leads us to consider certain issues.

Yes indeed, Swiss watches are expensive! And by that I mean watches with a minimum of “horological” content. But I will however deliberately exclude from this particular debate the field of haute horlogerie or fine watchmaking, the stuff of dreams but which is only within reach of the extremely wealthy. So why are Swiss watches in general expensive? Because they are made in Switzerland, with carefully selected materials, according to specific procedures blending craftsmanship and industrial technologies, according to extremely rigorous standards. Because they call upon time-honoured expertise that is unique in its kind and practiced by workers who are trained at length, highly qualified and therefore well paid. So the end result is hardly surprising. Everything, from design through development and production to sales, comes at a price. And the latter simply cannot be compared with that of products which are mass-produced according to exactly opposite criteria to those just listed. The puerile populism of the politician “caught in the act” shows that he confuses price with value. A fairly common mistake, but an incredibly strange attitude for a man wishing to portray himself as the paragon of national virtues… Worse still, it’s an insult to the 40,000 or so people employed in the watchmaking sector.

Today, hardly anybody needs to actually read off the time on their watch. And yet there have never been so many watches sold around the world. It is therefore not for nothing that watchmaking – and Swiss watchmaking in particular – generates so much interest. It is in fact because men and women feel legitimately proud to wear beautiful objects with high technical, stylistic and emotional added value. In a nutshell, they have grasped the value of what watchmakers are offering them and therefore consider the price asked for such objects as justified.

Thierry Brandt Edtior-in-Chief

Confidence in the future

Despite the worldwide crisis affecting the entire economy, including watchmaking, I remain optimistic regarding the future of this sector. This statement may seem slightly provocative at the time of writing, when we have witnessed an approximately 25% drop in our exports over the first eight months of 2009. Yet we must also remember that Swiss watch exports rose by around 70% between 2004 to 2008 and the industry hired around 10,000 people during this period. Rest assured that I am not going to be naively euphoric about the situation: times are tough and even very tough for some companies. It is hard to have to reduce production with all the ensuing consequences. But watches have always been dependent on the economic climate. I also wish to express my concern for subcontractors, some of whom are suffering particularly intensely. This industrial fabric is indispensable to the future of Swiss watchmaking, despite the crisis and beyond the crisis.

Nonetheless, the Swiss watch industry as a whole is fundamentally sound and has not been weakened in respect to its competitors – quite the contrary. That is the key difference between this crisis and the one that shook the industry in the late 1970s. The reason I say it is sound is because it has what it takes to bounce back and engage in a new upward curve once the economic recovery is in place. Among the many characteristics of our sector, I would point out its constant investments in research and development, its creative capacity in the area of design, the quality of training, the concentration of skills in our watchmaking regions, the strength of its world-renowned brands and of its distribution network, as well as the reputation linked to the ‘Swiss made’ label.

While the Swiss watch industry has the resources to pull through, it must also be able to rely on a favourable legal framework, both in Switzerland and worldwide. The risk on this scale is that of protectionism when the going gets rough, a kind of natural inward-looking reflex that leads countries to close their borders. In this respect, the Swiss have shown a good example by agreeing to pursue bilateral negotiations with Europe, since a potential refusal of free movement of persons would have represented a form of protectionism.

Unfortunately, the situation is far from rosy in many countries, which is why it is so important to support the efforts undertaken by the Swiss authorities on behalf of free trade and the elimination of trade obstacles, whether under the aegis of the WTO, or via free-trade agreements. In this respect, I salute the signing of such an agreement with the Gulf countries, which will save companies 60 million Swiss francs in customs duties; and another with Japan which is particularly symbolic in light of Swiss watchmaking history. 30 years ago, who would have believed that the two countries would sign an agreement especially designed to facilitate the watchmaking trade? This is eloquent proof that the Swiss watch industry is not afraid of its competitors. It respects but does not fear them.

Jean-Daniel Pasche President of the Federation of the Swiss Watch Industry FH