Qual Features Homepage
 Posts  Comments  

Luxury Watch Makers say Recession is Over

In 2008 while the lucrative holiday period drew near, luxury watch production had slowed, brought to heel by the global financial crisis. Since mid-2008, exports declined and unemployment rose, with notices of staff reductions being announced by large multinationals each month.

In Neuchatel where a large number of luxury brands are located, the manufacturer Ulysee Nardin had to fire 12% of its 25o man work force and produced at a slower rate.

But since September, according to the management, the ateliers are running at 100% with orders rising and the company has ended its practice of partial unemployment.

Ulysse Nardin has inaugurated a new boutique in Beijing and the Neuchatel-based luxury watch maker seems braced for renewed good times. The director of the company, Rolf Schnyder, recently stated recently that the company would end the year in the black, albeit with less profit than last year. 2008 had started off very well for the Ulysse Nardin but finished off badly. 2009 started off badly and has apparently finished well.

The Director’s prognostic is that the recession has ended and that growth has returned, with November sales 30% higher than those for November 2008.

Nonetheless, Mr. Schnyder believes that the United States will take much more time to recover, and their market is important for the luxury watch maker; that said, the importance of the US market has declined from 30% historically to currently 18%.

An unstated reason for the return to health is that the company is operating with a smaller workforce, which, for the moment, the company does not seem in a rush to rehire.

Additionally, with the rise in orders, their production capacities cannot keep up. The various subcontractors upon which the luxury brands depend – for watch casings, dials and other parts– let go substantial numbers of staff over the past year and do not have the resources to produce at the old capacity levels. They probably are also wary about too rapidly hiring back staff.

Also, despite the return of strong sales, the distribution of sales has nonetheless changed, with a marked decline in sales of super expensive pieces and a concomitant rise in sales of moderately priced pieces.

The phenomenon is identical in China and in the United States. Ulysse Nardin’s director believes that the worst is also passed in the United States and the economy is recovering, though it will be a longer road to elsewhere. Besides the US and China, Russia is also an important market for the luxury brands, as well as the middle east, though with the financial crisis in Dubai, sales have dropped by 70%. A large part of the luxury watch maker’s sales figures this year in Spain, Italy, Turkey or Florida has come from Russian tourists.

Post Author:

Comment Your Heart Out

You must be logged in to post a comment.