Author Topic: Swatch drops as workshop fire may disrupt industry  (Read 3038 times)

Offline Jules Vega

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Swatch drops as workshop fire may disrupt industry
« on: December 31, 2013, 09:31:42 AM »
WORLD BIZ     |     DECEMBER 30, 2013 6:11 PM
Swatch drops as workshop fire may disrupt industry

STORY BY
BLOOMBERG
www.bloomberg.com
Swatch Group AG, the world’s largest watchmaker, fell in Zurich on concern that the destruction of a workshop that makes timepiece movements may disrupt the wider Swiss watch industry.

The stock dropped 1.8% to 583.50 Swiss francs as of 9:53 a.m., the most in the 20-member Swiss Market Index.

A fire yesterday morning caused considerable damage to a workshop of Swatch’s ETA unit at Grenchen, in the Swiss canton of Solothurn, Swatch said yesterday in a statement on its website. The cause of the blaze is unknown, the company said.

“It’s very serious,” Jon Cox, an analyst at Kepler Cheuvreux in Zurich, said in a telephone interview today. “It may have an impact on the whole Swiss watch industry as Swatch is the biggest supplier of movements.”

The incident was in the galvanic department of the main building of ETA, Swatch said. While nobody was harmed, the workshop was entirely destroyed, the company said yesterday, adding that it was too early to put a figure on the damage. Officials weren’t immediately available to take a call today.

The owner of the Omega brand has been required to supply movements, the mechanisms that make watches tick, to other Swiss watchmakers because of its dominant position. The ETA unit is estimated by analysts to make about two-thirds of the mechanical movements used in the timepieces made in the country.

While Swatch is able to source components from other sites, it’s unclear how quickly the company can adjust production to compensate for the damage from the fire, Cox said.

Competition regulator

Swatch’s operating profit from components jumped 37% last year, helping generate a 23% increase in group earnings. The company has nonetheless looked to reduce the supply of movements to competitors and won a partial reprieve this year from Switzerland’s competition regulator on rules forcing it to sell components to third parties.

Swatch will be allowed in 2014 to reduce shipments of mechanical movements to other watch producers in Switzerland to 75% of the average between 2009 and 2011, the antitrust overseer, known as Comco in French and Weko in German, has said. That will fall to 65% in 2016 and 55% in 2018, the regulator said in a statement Oct. 25.

Swatch had won provisional backing from the regulator in 2011 to start cutting deliveries, forcing some of the companies to find other suppliers or invest in their own capacity.

Offline Jules Vega

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Re: Swatch drops as workshop fire may disrupt industry
« Reply #1 on: December 31, 2013, 09:32:37 AM »
I wonder if this will bump prices up......the damage seem to be very extensive halting production significantly.

Offline sidestreaker

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Re: Swatch drops as workshop fire may disrupt industry
« Reply #2 on: December 31, 2013, 04:51:54 PM »
Now they got another reason to reduce the supply of their movements to other watchmakers.... :Blue:

Offline chrisyen

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Re: Swatch drops as workshop fire may disrupt industry
« Reply #3 on: December 31, 2013, 08:31:38 PM »
This is going to push for more in house movement