Swatch fire seen affecting other watchmakers

Monday 30 December 2013 16.55
Fire over the weekend at a Swatch plant that treats metals to protect them from rust
Fire over the weekend at a Swatch plant that treats metals to protect them from rust

A fire that destroyed a workshop at a Swatch Group factory will affect other watch makers it supplies more than the Swiss firm itself.

The company said a break in production is likely to cut the availability of parts to an industry already facing bottlenecks.        

Sunday's fire at a part of the plant that treats metals to protect them from rust could stop production of some components for several weeks, Swatch's chief executive said today.
              
Swatch chief Nick Hayek said watchmakers that buy watch parts from its ETA Manufacture Horlogere unit, based in Grenchen, western Switzerland, would be most affected, rather than Swatch itself.

"It is a bigger problem for them than for us," Hayek told Reuters.
              
Swatch, the world's biggest watch parts supplier has a near-monopoly on "movements", the mechanisms that drive the moving parts of a watch, and counts rival luxury groups Richemont and LVMH among its customers.
              
The world's biggest luxury group, LVMH, which owns the Tag Heuer, Hublot and Zenith watch brands, said it had no immediate comment, while a spokesman for Richemont could not be reached.

Tired of its role as the industry's "supermarket", Swatch was granted the go-ahead by the Swiss competition authority WEKO in October gradually to reduce its deliveries to rivals. 

The move could cause supply shortages for some players in the industry already exposed to bottlenecks due to the shortage of firms able to make the delicate internal mechanisms of watches as well as a lack of investment in training.
              
Hayek said third parties supplied by ETA would be advised by letter that there may be some delays to the deliveries of certain watch components.
              
"We need to clean all the machines and reorganise. There will be a small delay of three or four weeks to production, maybe a bit more," Hayek said.
              
The Swiss watchmaker, known for its colourful plastic timepieces and the high-end Omega brand, said it had another 150 factories it could fall back on.
              
Hayek played down the impact on Swatch Group of the fire ,which gutted a 150 square metre workshop and damaged another with smoke, calling it a "relatively minor event" for the Swiss watchmaker.

The cost of rebuilding the galvanic workshop destroyed by the fire, whose cause is unknown, would cost around 4-5 million Swiss francs, Hayek said.