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.

According to the Swiss association of creditors, the data for May shows a steep rise in bankruptcies.

Close to 450 bankruptcies were registered last month, making the fourth consecutive month where bankruptcies exceed 400 per month. So far 2009, there have been more than 2100 companies declaring bankruptcy.

A large percentage of these companies are young companies, start-ups and PMEs.

Nonetheless, extrapolating these figures gives an estimate of over 5000 bankruptcies for 2009 in Switzerland, something not seen in Switzerland since 1974.

In May there were 2600 new companies (roughly 10% less than last year in May) registered with the Chamber of Commerce. The number of firms struck from the lists rose 20% to 200 companies.

To put these numbers in perspective, in 2004 there were 460,000 companies registered (the period of the last recession) and this number rose to 515,000 in January 2009, thus an overall rise of 55,000 companies. The number of SARL companies rose 90% of the same period and the number of individual companies (i.e., independents or ‘INC’s) rose 40%. SA companies rose 25% during this same 5 year period.

In 2008, almost 60% of the surveyed companies were less than 5 years old, as opposed to 48% in 2004. And only 23% of registered companies are older than 10 years.

Analysts say that the high proportion of young companies is an important risk factor for the economy. For one, these companies have less funds for investment and also tend to suffer first in economic downturns when overall business decreases.

Analysts are asking whether financing structures are appropriate for the needs of younger companies. Specialists are asking whether the government can play more of a role in fostering or godfathering younger companies if the options are scarce in the private sector.

Surprisingly, amid the general steep rise in companies declaring bankruptcy, personal bankruptcies actually decreased in May to 503, a drop of 7.7%. From January to May the drop was even steeper – down 11.5% to 2420 bankruptcies.