Rise of the Swiss franc value : bad news for the Swiss watchmaking industry
by Guillaume V - 17/01/2015
Only a few days before the opening of the SIHH 2015, bad news just broke. The Swiss National Bank suppressed the “floor rate” (1 euro for 1.20 Swiss franc) which capped the relative value of the Swiss franc compared to the euro.
The consequences of this decision are rather “harsh”: in just a few hours, the value of the Swiss franc in euros has jumped by more than 20%. This is good news - in the short run - for cross-border commuters but this is also a real cause for concern for Swiss companies... including fine watchmaking companies.
Indeed, Switzerland exports 60% of its production to Europe. If the prices in euros rise drastically, the exports are going to drop, thus putting in danger the durability of the companies and the cross-borders commuters’ jobs. Now, you get the picture.
In this particular context, Édouard Meylan, CEO of H Moser & Cie, decided to express his annoyance and concern - not without spirit - in an open letter to Thomas Jordan, president of the Swiss National Bank.
This is the letter that we present to you.
Neuhausen am Rheinfall, le 15 janvier 2015
Dear Mr. President,
I wanted to thank you personally and publicly for your decision to abolish the floor exchange rate of 1.20 Swiss franc for 1 euro.
This morning, when I woke up, I had a bad feeling. As I was reading the news, I was wondering what I was going to do today on top of all of our usual tasks in January, of course. There was no news of a new conflict, no important news about the decrease of the emerging markets, and thankfully, no new terrorist attack.
I am an entrepreneur and I am the head of the small watch manufacture called H. Moser & Cie, based in the Schaffhouse canton. At H. Moser & Cie, our signature is “Very rare”. “Very rare” because we manufacture 1,000 watches per year, because we are entrepreneurs within an independent and family-run group employing 55 people and because we are a manufacture in the true sense of the word, conceiving and producing in its entirety our ingenious watches.
As an entrepreneur in a small Swiss company, I love a good challenge. May they be created by the pressure put by big luxury groups regarding supply or retail, or related to the daily fight that we have to face to do more with less money against the overload of advertisement and large-scale marketing. Well, today, Mr. President, your spectacular decision has made things even more complex... Indeed, 95% of our production is sold abroad and to clients all over the world - outside of Switzerland. I would like to add, just to be practical and clear, that our first retailers have cancelled their orders following your announcement.
So, this morning, at 10.38 am, when my financial director sent me an email entitled “Breaking News”, I thought : “Finally, something to do !”, Something that is going to push me to find solutions to drive our growth, improve our profitability and ensure the longevity of H. Moser & Cie. thereby protecting the jobs of my 55 colleagues.
In fact, a thought came to my mind: why not simply move to Germany, only 2 kilometers away, and go on with our activity inside the European Union? I would even win of two accounts because it will help me resolving the other challenge what is awaiting the Swiss economy from February: related to the decrease of work permits delivered to European Union residents. And I forgot to mention: about 20% of my employees are German.
So let me clearly call you to act on behalf of all the small and medium-sized companies that are employing so many Swiss workers: I am convinced that you have a plan that will help us going through all that on the long term. Because, if that is not the case, like many other marvelous Swiss creations, the H. Moser watches may well become very, very rare indeed...
CEO of H. Moser & Cie.