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The forecast for 2016: hope, serenity and courage
Point of View

The forecast for 2016: hope, serenity and courage

Friday, 15 January 2016
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Franco Cologni
President of the FHH Cultural Council

“Talent demands effort, dedication and hours spent perfecting a gesture which, day by day, becomes a gift.”

An entrepreneur at heart, though a man of letters, Franco Cologni was quick to embark on a business career that would lead him to key roles within the Richemont Group.

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2 min read

Last February 18th, in one of my “Points of View” for HH Journal, I ventured a prudent but certainly reasonable forecast of CHF 21 billion for Swiss watch exports in 2015, based on figures published by the Federation of the Swiss Watch Industry (FH). A result ultimately in line with the worldwide inflation rate. If my memory serves me well, other specialists, brands and analysts appeared more optimistic. None, however, predicted the sudden change in watchmaking’s clement skies, brought on by the socio-economic droughts, hurricanes, floods, tornados and tsunamis that happened over the course of the recently ended year.

In any event, we won’t know the reality of the situation until it’s laid out in black and white at the end of the month, when the FH publishes statistics for 2015 and a more in-depth analysis. But in the well-organised world of Swiss watchmaking – and in particular Fine Watchmaking – we started work on 2016 some months ago already. The upcoming Geneva fair will give an indication as to what this new year holds.

It’s important that we reflect here and now on 2015 results, which will doubtless be closer to CHF 20 billion, a drop of around 4%. Even segments in Fine Watchmaking have taken a downturn: both exports of watches with an ex-works value of CHF 3,000 to CHF 6,000, and exports of watches with an ex-works value above CHF 6,000 are expected to contract by 3.5%. For watches with an ex-works value between CHF 1,500 and CHF 3,000, exports will likely fall by 4%.

These first signs of a downturn, after three high-flying years, signify that the end customer is buying less.

These first signs of a downturn, after three high-flying years, signify that the end customer is buying less. Beyond the possibility that there may be less money in circulation – a speculation that is often cited but hard to prove – there are three fundamental reasons for this behaviour: insecurity, unease and fear. These are self-sustaining negative values: insecurity causes unease, and from there it is only a short step to fear.

When we buy something, we always do so in the prospect of a pleasure to be peacefully enjoyed. So what will 2016 be like? Difficult.

In our well-organised world, forecasting results is ultimately like forecasting the weather, with multiple errors, particularly when these are finger-in-the-air estimates made a month (or a year) in advance, and even when they involve sophisticated but still imperfect instruments. There is a risk, and this is where the problem lies, that we find ourselves working with programmes on a day-by-day basis: something we simply cannot do.

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