No Time to Doubt
The Swiss Insider 03.05.2020 #insidersdoitsmarter
Dear Insider,
Patience is a virtue…or so they say.
Around the world, this precious commodity seems to be running out as the economic consequences of the coronavirus crisis continue to mount.
Cracks in the carefully curated patience of the Swiss Federal Council seemed to appear this week when Finance Minister Ueli Maurer declared that he no longer felt happy in his role. His fellow councillor Karin Keller-Sutter brought him back down to earth:
“Welcome to the executive, Mr Maurer.”
But time is of the essence, make no mistake.
While death and destruction mount, time is running out for others as well - including the Swiss watch industry. Thousands of employees at Swatch, the largest industry group, have been furloughed. (Though that means something completely different than in the US, for example.)
The premiere of the new 007 Seamaster model from Omega, set to be announced along with the launch of the latest James Bond film No Time to Die has not been delayed. But the awkward timing of the launch leaves much to be desired.
These examples, and others, point to the longer-term effects of a Swiss economy that is more and more out of sync. While stock markets seem to recover, rewarding the rich, revenue and client bases continue to struggle.
Sooner or later, the sands of time may run out…
⏱ The Focus
A analysis of the Swiss watch industry in corona times…
It might only occupy spot number three in the list of most important economic branches in Switzerland - but the Swiss watch industry holds a special place in the psyche of a country that has long prided itself in quality and luxury.
Now, thanks to Covid-19, the venerable “Uhrenindustrie” faces one of its biggest challenges ever. Add to that the assault of smartwatches and things could seem to be quite scary. Vontobel analyst Rene Weber even went so far as to estimate that Swiss watch producers face their season in 50 years.
Despite the obvious hurdles, some remain optimistic. Swiss watch guru Jean-Claude Biver, speaking in an interview with Bilanz magazine, reasserted recently that mechanical watches from Switzerland will find their own segment of fans, even among millenials. His reasoning?
“The longing for things of substance keeps on growing.”
Meanwhile, TAG Heuer, the sport-focused devision of luxury conglomerate LVMH, is taking a different tack. The brand has made it clear that it will pursue the smartwatch segment with models of its own. Its 3rd-generation edition is already capturing attention.
In the end, the future of Switzerland’st most marketable industry (at least internationally) will rest in the hands of a few good men (and ever fewer women…).
People to Watch
Karl-Fredrich Scheufele - Co-CEO of Chopard, and die-hard supporter (and promoter) of the yearly classic car race Mille Miglia, for which the company also issues a new watch model.
Joachim Ziegler - CEO of Les Ambassadeurs, one of the largest dealers in jewellery and watches in Switzerland
Jasmine Audemars - President of Audemars Piguet, one of the (few) most influential women in the Swiss watch industry.
Guido Zumbühl - CEO of Bucherer Group, an innovator with the launch of the Certified Pre-Owned line and strong proponent of US expansion for the largest Swiss watch dealer in the world.
Jean-Frederic Dufour - CEO of Rolex, his decision to pull the most well-known Swiss watch brand from the Baselworld trade show sent shock waves through the industry.
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🔍 The Scoop
Inside takes that don’t make the front pages of daily news…
💸 Bye-bye Marcel
Former UBS Chairman Marcel Ospel passed away this past week. His death made headlines around the world. His vision and carefully crafted image - that of a responsible but amazing world-beater was convincing…for a time. His stumbles and rolls of the dice with sub-prime loans was the undoing of him when 2008 rolled around. By then it was too late…
🦅 Last Flight of the Falcon
The time has (seemingly) come to say good-bye to the golden runners and golden dreams of Falcon Private Bank. Sources indicate that the Zürich-based institution will soon give up its banking license. Its reinvention under CEO Martin Keller didn’t seem to work out. Neither did its plans to be a crypto bank in the best Swiss private model. Too bad - so sad.
The Brief(ing)
In which we boil down the stories of the last seven days - just enough to make them digestible…
🗞 Tough Times for Reporters
The Neue Zürcher Zeitung (NZZ),Switzerland’s most venerable print (and digital) outlet, faces uncertain times after reports surfaced that it is planning staff reductions of at least 10% - even as it stuck to its plan to give out 8 million CHF in dividends to its shareholders.
🔬 Now Time to Test
The race continues for medical and pharmaceutical solutions to the Covid-19 crisis. Swiss pharma giant Roche announced this week that it has received permission from the FDA to begin testing on its anti-body tests.
🚩 No Rebels in the Ranks
Despite unrest in shareholder ranks and lingering doubts after its spy-scandal blowup, Credit Suisse Chairman Urs Rohner was re-elected for the last year of his mandate and all compensation recommendations were accepted at the bank’s general assembly last week.
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The Numbers Game
All the numbers that matter in these troubled times…
1,5 billion CHF
They asked - and they received. SWISS and its smaller sister Edelweiss will now face a surer future thanks to 1,5 billion CHF in credit from the Swiss government. There are, of course, strings attached. No money should fly across the border to Germany.
44%
Swiss furlough programs are a savior for many small businesses and their employees. But recently published statistics show that a full 44% of those in the lowest income bracket in the country have been furloughed. Not a good sign when it comes to their long-term future.
225 million CHF
Coronavirus was bound to catch up with Swiss insurance companies sooner or later. Swiss Re reports a loss of 225 million CHF in the first quarter of the year. Not that the resinsurer has much to fear - at least not yet. Bigger losses may be yet to come.