Switzerland and the Swiss watch industry are finally in a state of emergency!

Watch Journalist Yasuhito Shibuya's Useful Watch Industry Chat

On March 16, the Swiss government declared a state of emergency that would last until April 19. The article reports that in response to this declaration, Rolex's factories would be closed for a tentative period of 10 days, starting the following day, March 17. However, the spread of infection in Switzerland, while not as severe as in Italy, is just as serious as in neighboring countries such as France, and the factory closure will likely be extended.
The Swatch Group will also be reducing working hours for approximately 70% of its employees from March 20th, and Audemars Piguet will be closing its factories and branches around the world. Hublot, part of the LVMH Group, has also reportedly suspended operations at its factories. Other watch brands are likely to be undergoing similar closures. Swiss watch brands are in a state of near-universal closure.

"Rolex closes all factories as it prepares for 'worst year ever'"

　This is the headline of Bloomberg's economic news article published on Thursday, March 19, 2020. The impact of the COVID-3 pandemic has not only led to the cancellation and postponement of watch fairs, but has also reached the watch production and distribution systems.

　On Monday, March 16th, the Swiss government declared a state of emergency that would last until Sunday, April 19th. In response to this declaration, Rolex's factories will be closed for a tentative period of 10 days, starting the following day, Tuesday, March 17th, according to the article. However, the spread of infection in Switzerland, while not as severe as in Italy, is just as serious as in neighboring countries such as France, and the factory closure will likely be extended.

　As a result of the state of emergency, Swiss borders are closed except under special circumstances, and the article also touches on the issue of "frontaliers" - French workers who cross the border each morning to work in Swiss watch factories - being unable to get to their jobs.

　The article also reports that the Swatch Group will be reducing working hours for approximately 70% of its employees from Friday, March 20th, and that Audemars Piguet will be closing its factories and branches around the world. It also reports that Hublot, part of the LVMH Group, has also suspended its factories. Other watch brands are likely to be taking similar closures. Swiss watch brands are essentially on a simultaneous closure.

　Naturally, travel and entry from Japan is also now impossible, except in special circumstances. Geneva Watch Days 2020, the watch event held in Geneva at the end of April, which I covered in my previous column, has also been postponed to August 26th (Wed) to 29th (Sat).

Will this year be even tougher than the Lehman Shock?

　As the headline of this column states, 2020 will be a tough year for the watch industry, far worse than the "Lehman Shock" of 2008-09. It's tough, but there's no doubt about it. At least for the rest of the year.

　Currently, gatherings of more than five people are prohibited in Switzerland (violations are punishable by a fine of 100 Swiss francs), and at the Swatch Group's Media Conference 2020, held online on Friday, March 20th, CEO Nick Hayek spoke of his preparedness for this difficult situation.

　Toyota and other automakers are reportedly suspending operations at their factories, but the watch industry has already been experiencing problems with parts supplies since January. Both Swiss and Japanese watch brands produce some of their parts in China, and as a result, product manufacturing is already being delayed due to a shortage of parts.

　The current situation will inevitably result in significant delays in the production, delivery, and development of new products, and many watch brands will likely treat their 2020 new releases as new releases for 2021. Considering the working conditions of workers, this seems like an appropriate response to this crisis.

　Analysts at a Swiss bank estimate that overall luxury business revenues will fall by more than 30% in the first half of this year.

　The impact of this will inevitably be long-lasting, and as a result, the luxury business as it stands today may be forced to undergo fundamental structural change.

　However, the biggest question is when and how much watch consumption will recover, and whether watch brands will be able to weather the crisis.

　In Switzerland and elsewhere, as a result of stay-at-home orders due to the coronavirus pandemic, and in Japan as a result of the consumption tax hike, watch sales are in an unprecedented state.

　How can we get out of this situation quickly? And how can we create a world where more people can enjoy watches?

　Now is the time to think it through, and there's plenty of time.

Shibuya Yasuhito/Shibuya Yasuhito

As an editor of a product information magazine, he began covering Geneva and Basel in 1995. As an editor and writer, he has been there 25 times since then. He is currently planning, covering, editing, and writing about not only smartwatches but also all kinds of things and events other than watches.