Baselworld opens amid gloom
The world’s largest watch and jewelry fair opens Thursday despite the recession.BASEL - The watch and jewellery industry is preparing for a grim year due to the economic crisis, industry representatives said on the eve of the Baselworld watch fair.
The annual trade show in the northern Swiss city of Basel, opening Thursday, is the largest global showcase for the watch and jewellery industry.
Executives in the industry travel here annually to view new products and to place orders for the year.
But the host country's watchmaking industry, the world's biggest, struggled in recent months after a sharp decline following a booming market towards the end of 2008.
In February, Swiss watch exports fell 22.4 percent.
Luxury brands such as Rolex, Girard-Perregaux, Corum, Raymond Weil, Roger Dubuis, HGT, and Cartier's Swiss plants announced plans to cut work hours or reduce jobs in recent weeks.
About 1,000 jobs were lost in the watchmaking belt in the northwestern Jura hills, the Swiss newspaper Le Temps estimated.
Others in the industry are also struggling.
Jacques Duchene, who heads Baselworld's exhibitors committee, observed that the market changed in 2008 for watch and jewellery makers.
While the industry made "one of the most positive press announcements" last April, by mid 2008, "a less than favourable global situation meant the first signs of decline were being felt", he noted.
"Our sectors were directly and sometimes severely affected, once more allowing the problem of unemployment to emerge."
Referring to the watch manufacturing, jewellery and its related sectors, Duchene said, "The latter are ... particularly vulnerable."
"Their main problem is on the one hand due to a lack of orders and on the other hand to a lack of assets, combined with a lack of visibility in some cases," he said.
Robert Buchbauer, the chief executive of Austrian crystal-maker group Swarovski, described the downturn experienced by the group's components business as "quite substantial."
"This is because companies are making less and stocking less goods," he said.
Consumer sales, while suffering a "slight slowdown" from double-digit growth, is still growing at single-digit, he said.
Buchbauer expects full year sales for the group to be flat or slightly negative, as "the growth on the consumer side is being compensated by the slowdown in the components business."
A recovery, meanwhile, is not seen until 2010.
"We are taking a conservative view on this, we see a pick-up only in mid-2010," he said.
Chief executive of Hublot, Jean-Claude Biver said the group was not hurt by the crisis yet, but he noted, "It is clear that there would be a slowdown for the watch sector as a whole."
Sharp rises in prices for raw materials such as gold are also affecting earnings.
"With the continued increases in gold prices, 2009 is going to be a very problematic year," assessed Gaetano Cavalieri, speaking for Italian exhibitors.
"When people are losing their homes, clearly they are not in the mood to buy jewellery."
Trends in watch and jewellery materials, such as more leather or synthetic straps for French exhibitors, and more platinum rather than gold in jewellery for Swiss manufacturers, reflect companies’ efforts to lower costs.
Meanwhile, Sylvie Ritter, show director of the fair, admitted that the number of buyers would "definitely be down on last year."
The seven-day Baselworld showcases around 2,000 exhibitors from 45 countries.
AFP / Expatica