Swatch in the news

Our Swiss Watch Index may see some changes, given this news from Switzerland:

Swiss Court Ruling…

The ruling would allow Swatch to “cut its supply of parts to rival watchmakers [which in turn] could boost Swatch’s sales but also force some smaller Swiss watchmakers out of business. ”

Tough times in Switzerland. But guess what, something we didn’t know — Swatch has other brands, specifically Longines, Omega and Breguet.

However, since Swatch makes mechanical movements (what makes the watch hands move) for many other watchmakers, mostly smaller companies, if the company stops selling those movements, those companies are probably too small to fire up their own manufacturing plants to make them themselves.

The Swiss love the free market, but not competition.

We think there is still hope for the little watchmakers. If they band together (if the Swiss competition commission allows that), they can either contract with another big watchmaker or fire up their own plant to make movements for all of them. Kind of like the cooperative grocery stores they already have, or the dairy cooperatives we have here in the U.S.

The Swatch CEO agrees with me, too. The WSJ quoted him: “Swatch Chief Executive Nick Hayek said the decision to reduce supply would strengthen, not weaken, the industry. “The companies should start to produce components themselves, and not rely on one source,” Mr. Hayek said. “They should invest, and that should create jobs and this will benefit the industry.””

Well, we’ll find out tomorrow, when we publish the weekly SWI once again

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About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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