BaselWorld opens doors to recession-stung industry

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BaselWorld opens doors to recession-stung industry

By Teresa Novellino

March 26, 2009

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Basel--After enjoying several years of record growth, Swiss watch industry leaders had the less pleasant task of flipping through some negative signs as they presented the latest industry financial figures at BaselWorld 2009, which opened to the press Wednesday.

Swiss watch exports were up for 2008, increasing about 6.7 percent to 17 billion Swiss francs (about $15.1 billion) as compared to 2007, said Jacques Duchene, president of the BaselWorld Exhibitors' Committee. But the figure is misleading, he said, since it primarily represents exports that occurred in the first half of 2008, before the economic crisis that hit the United States last fall began enveloping global markets.

"As you will certainly know, the export figures of the first two months of this year are not good, and the number of items produced has dropped significantly," Duchene said.

According to figures from the Swiss Exhibitors Committee at BaselWorld, Swiss watch exports for January and February 2009 were down 23 percent worldwide compared to 2008 (But notably, January and February 2008 saw nearly 20 percent growth over the same two months in 2007). The biggest slump in January and February occurred in the Americas, where exports plummeted almost 40 percent for the two-month period compared to 2008.

Duchene predicted the global recession has only just begun, as watch and jewelry industries face a double whammy: a lack of orders and a lack of assets. Still, he said that after spending 50 years in the watch manufacturing industry and enduring more than one downturn, he has seen that the companies best equipped to survive are the creative ones that boast a good financial basis and continue to control their production while investing in research and development.

Francois Thiebaud, chairman of the Swiss Exhibitors' Committee, said that he remains "optimistic" and noted that the industry could end the year at about 16 billion Swiss francs (or $14.3 billion) yet, a figure that is in line with export levels from 2006 and 2007.

"It is a crisis of confidence," he said, adding that the recession would summon a return to more traditional values in the watch industry and "less extravagance" in terms of styles and pricing levels.

As for the show organizers, there was optimism, although the recession is expected to lead to a decline in the number of visitors to BaselWorld this year, said Sylvie Ritter, show director.

"We know that the number of delegations visiting has been reduced," Ritter said, adding that she could not quantify how much attendance might be down until the show ends next week.

Ritter said that although exhibitors have had a rough year that has included being unable to sell certain product lines and being forced to reduce working hours for employees, the size of the watch sector exhibiting at BaselWorld has increased by more than 2,000 square meters and the show has six additional watch exhibitors over 2008.

In the jewelry side, "very few" exhibitors had to cancel plans to attend the show, mainly due to bankruptcies, Ritter said.

On the bright side, the "Exhibition Centre Basel" building project that will expand BaselWorld is still on after overcoming some political hurdles and being approved by 61.4 percent of voters in a referendum, said Rene Kamm, chief executive officer of MCH Group, which produces BaselWorld.

The completion date for the project has been pushed back from January 2012 to April 2013, and the building volume has been reduced by altering the height of the hall by eight meters on both upper floors, Kamm said.

"So you see, despite the current crisis, we have managed to stick to our building project and I am convinced that when we celebrate the opening of BaselWorld 2013, at the very latest, the international markets will have bounced back and the mood will be more positive."

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