Verbatim Wednesday, July 4th 2012
Bernard Droux, President of the Geneva Financial Center Foundation, delivered a comparative analysis of Switzerland's banking and watchmaking industries.
It comes across as a soundbite, another throwaway phrase, yet these four little words - too Swiss to fail - capture the core values that Swiss banking and Swiss watchmaking supposedly share. The kind of short, sharp and to-the-point message that marketing gurus dream of for their ad campaigns. What also emerges from this phrase, however, is the world of difference that separates two activities which, in principle, are rooted in the same culture and identity.
A triumph of the real economy?
A guest speaker at the general meeting of the Federation of the Swiss Watch Industry, held on Thursday 28th June in Soleure, the President of the Geneva Financial Center Foundation, Bernard Droux, engaged in a comparative analysis of these two pillars of the Swiss economy. According to Droux, who is also Managing Partner at Lombard Odier & Cie private bank, these two branches are, then, too Swiss to fail, an allusion to the "too big to fail" claim of certain financial institutions. A misguided belief, given the lack of empirical evidence, which in 2008 led to the Swiss federal authorities throwing a CHF 60 billion lifeline to UBS, on the grounds of the systemic risk the collapse of the country's biggest bank would have provoked. In the United States, a similar line of thinking resulted in the bailout of a number of financial establishments.
Bernard Droux's review of the similarities and differences between the two sectors left the audience under the distinct impression that, where reputation is concerned, the two have little in common. What better ambassador for the country's excellence and values than its watchmaking, while banks wade through discredit. Even the banker himself was forced to admit that "the financial sector has an image problem. A person is proud to own a Swiss watch but no-one boasts about their Swiss bank account." Dura veritas, sed veritas; the truth hurts.
The importance of ethics
It would be pointless to shed tears over the difficulties Swiss banks are experiencing in these troubled times, ultimately the consequence of a road watchmaking has so far been careful not to tread. Further confirmation, perhaps, that a bricks and mortar economy must necessarily prevail over financial mirages? The tangible quality of time measurement, the aspirations it arouses and the expertise it brings to the fore continue to strike a chord. Yet success should never be taken for granted: the industry hasn't forgotten how, in the 1970s and 80s, quartz shook Swiss watchmaking to the core. Despite being "too Swiss to fail", and unlike certain banks four years ago, the sector wasn't at the receiving end of generous handouts from the Swiss Confederation, and through it the taxpayer, resulting in tens of thousands of job losses that plunged the watchmaking valleys into uncertainty and recession.
It's no secret that Switzerland's watchmakers were guilty by omission, resting on their laurels when the quartz wind of change was blowing. But they never dabbled in dubious practices. Unlike certain bankers, they can come and go as they please in the United States, a market where much remains to be done. In the watchmaking valleys, ethical conduct is still too important to be (too) sacrificed on the altar of short-term gain. Watchmaking takes a long-term view. We learn with time. Banking, on the other hand, must reinvent itself. Despite, or perhaps because of, the many crises they have endured, watchmakers have always found ways to rise to whatever challenge technology, the industry or the economy has thrown at them. Now banks must prove that they really do deserve the distinction, "too Swiss to fail". ■