Strong Swiss Frank hits Watch Industry: firm couples salaries to fixed €/CHF exchange rate
Ornatus-Mundi
Dear All:
the Swiss luxury goods supplier Sycrilor in Le Noirmont is forced to react to the continuing appreciation of the Swiss Frank vs. the Euro or the US Dollar by paying the salaries coupled to a fixed Euro/Swiss Frank exchange rate.
The Swiss Frank rose against the Euro by more than 20% since January. This implies that employees at Sycrilor are faced with a 30% reduction in real wage. Employees' unions called for a strike.
Sycrilor is a manufacturer of high-quality luxury accessories and precious metal watch cases. While the industry is secretive as always and keeps customer relationships behind bars, I am positive that several high-end brands such as Hermes belong to Sycrilor's customers.
This is just one very practical (and according to my information the most radical) example of how vulnerable the Swiss industry is in face of exchange rate fluctuations. I am curious to see when the strong CHF will significantly impact on sales in both Europe and the USA.
Best regards,
Magnus
Comments:
Hororgasm August 24th, 2011-07:52
I do not understand.... If they are costed in CHF, and they sell their cases to their customers, Hermes included in CHF, what FX exposure do they have? If they buy gold, platinum and steel in USD, it's even cheaper when they convert their CHF for USD!!! The only reason I can thi...
Ornatus-Mundi August 24th, 2011-09:06
Much of the high-end case, dials or hands... are actually made in Germany (see Fricker, for example), Italy, France or even Japan. Lange for example uses Swiss cases, but how long is this going to continue? "Swiss made' actually is defined like this (quote Wikipedia): "A Swiss Watch In sum, a watch ...
Hororgasm August 24th, 2011-14:56
Yes, I am aware of the infamous Swiss Made requirements. But my point precisely. Fricker makes very good cases and prized in Euro, so Swiss watch brands effectively pay them LESSER because their CHF fletched more EUR now. It's that sort of circular logic used to justify price price rises that irritates collecto...
amanico August 24th, 2011-07:56
Well, I would be curious to know the impact on prices when the Swiss Franc is weaker .. Versus the Euro... Will we see the Swiss Manufacture reduce the price of their watches? I doubt it! Best, Nicolas.
Hororgasm August 24th, 2011-08:05
If the CHF weaken, they will give you the other excuse That their raw material costs in USD will in effect gone up, so they will have to raise their prices further. Let's wait for the half year results of Swatch and Richemont. Best, Horo
amanico August 24th, 2011-08:33
Aaah, yes, I forgot this one. Excellent. No message body
small-luxury-world August 24th, 2011-12:31
"... half year results of Swatch and Richemont" Then we know something about wholesale, but what is about retail? In the long run, retail is the key for success. Quite a lot retailers have a strong need for (quick) cash ... on the other side they are treated to place big orders ... discounts ... grey m...
Hororgasm August 24th, 2011-15:07
Yes, I agree with you. These brands are seeking to fatten their margins, under the guise of brand management and opening own brand boutiques, taking on the retail component you mentioned. The funny thing is money is dirt cheap to borrow at the moment, so ADS are NOT in a need t...
small-luxury-world August 24th, 2011-17:04
"... ADS are NOT in a need ..." Seems to be different in your part of the world. Over here (Europe) and I heard about a similiar situation in the US, only AD´s with customers (tourists) from Asia have strong business - more or less. ... Thanks for your reply, Horo. Oliver
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