Friday, January 16, 2015

And the Screams of Foul Grow Louder -


In fairness, I have to applaud Edouard Meylan's riposte to the unpleasant shift in the exchange rate jacking up the "value" of the Swiss Franc and thereby making his watches even more expensive.

I think we have here what has sometimes been referred to as a "teachable moment" for the Swiss watch industry.  When times are good, they continue to jack up the price, sometimes mid-year leaving their distribution and retail partners screwed.  When times are good, they are wasteful.  They flush millions down the toilet of vanity for hare-brained celebrity partnerships, "swag" gifts for corrupt FIFA and Olympic functionaries, the type of bloated executive salaries that would make the most corrupt leader of "Bizerkistan" blush.  So now they are actually facing a real, not imagined obstacle and if I am honest, perhaps this will force their hand and make them actually try to live within their formerly bloated means.  It might mean no more first class flights for sales staff, more honest and realistic bonuses, actually WORKING WITH your distributors and retailers instead of jerking the strings to make them dance, then abandoning them when you can't squeeze anything more out of them.

Sound a bit harsh?  Yes, I suppose it does.  But those who fail to learn from history are bound to repeat it - remember the quartz crisis?

While Hayek the Elder cut through the shit, cleaned house, and pretty much saved the Swiss watch industry, he also as much as anyone helped all of that thrift, caution and common sense approach go out the window when he achieved "rock star" status.

Ego is a tough master - you either master it, or it will master you.  

I said it last night and I'll say it again.  Who this is really going to hurt are the smaller players, and it is also going to hurt the distributors and the retail partners.  It will also hurt the "regular" staff.  Executive management?  Well maybe it's time for them to get back in touch with reality, and learn to live on a more realistic wage.  That way when they don't get a bonus, they'll maybe understand that a bonus is not a given, it is an incentive to make your projections.  And maybe, just maybe they will put down the crack pipe and realize that they have been giving outlandish projections and shit-canning everyone underneath them when it proves that their projections were unrealistic from the beginning.   Sure, they made the board and the share holders happy, but were the stuff of fantasy.

So having said that, here is Mr. Meylan's letter -


Neuhausen am Rheinfall, January 15th, 2015

Dear Mr. President,

I wanted to personally and publicly thank you, regarding your dramatic move releasing the minimum Swiss Franc exchange rate of 1.20 to the Euro.

When I woke up that morning I had a strange feeling. As I checked the news, I wondered, “What am I going to do today?” aside from our usual business in January. There was no new conflict, no big news about emerging markets slowing down, and thank goodness, no new terror attack.

I am an entrepreneur, and I own a small watch manufacture called H. Moser & Cie, based in Schaffhausen, Switzerland. Very Rare is our tagline at H. Moser & Cie. Very Rare, because we produce 1,000 watches, we are entrepreneurs in an independent, family-owned business that employs 55 people, and because we are a manufacture in the true sense of the word, developing and producing our own ingenious watches.

As an entrepreneur in a small Swiss company, I like a challenge; whether it’s the pressure from the big luxury groups in supply or distribution. Or, a fight to do more with small budgets against the avalanche of big advertising and marketing. Well, today, Mr. President, your dramatic move helped step it up a notch: over 95% of our watches are sold to people outside of Switzerland, and the first retailers called the same day to cancel orders.

So this morning at 10:38 when my CFO sent me an email titled “Breaking News”, I thought “aha, finally something to do”. Something that forces me to find smart solutions to continue our growth and improving profitability and to ensure continuity for H. Moser & Cie. and the jobs for 55 people working for me.

In fact, one thought crossed my mind: why not just move 2 kilometres into Germany and continue business as usual in the EU? I’ll even beat that other restriction on permits for workers from the EU that came up in February 2014 around 20% of my employees are German.

Let me make my appeal clear to you, on behalf of the many small and mid-size businesses that employ so many Swiss people: I trust you have a strong plan that will help all of us make it through with you over the long term. Because otherwise, along with many other wonderful Swiss creations, H. Moser watches may just have become very, very, very rare.


Edouard Meylan
CEO of H. Moser & Cie. 

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