Horological Meandering

The Euro/Dollar pressure is really what is driving a lot of the 10/20% price increase we have seen and will be seeing.  When you hold back prices for a few years and the the exchange rates are not favorable you need to protect your margins and obviously cost cutting is no where in sight so a price increase is the only option.

American Dollars to 1 EUR (invert,data)

120 days latest (Apr 18) 1.5742 lowest (Dec 19) 1.4344 highest (Apr 16) 1.5978

Just looking at this chart over the last 120 days we are looking at a 10% swing.  If we go back to 2005/06 we were at about $1.10 - $1.20 so you can easily see the justification.  Most of the parts and costs are Euro based and the Overseas markets are important but not at the cost of not making money.  No profits means no new developments and innovations.

What are the thoughts here on the subject.

Bill

Hi Bill,

I've been pondering this one for a while, and I guess you need to know the percentage of revenue and profit per currency to understand it.   The hard thing for those of us in europe would be to see a local price increase due to a weak dollar - that would be a killer  

What percentage of costs are actually in euros?  Is 100% of the watch really produced in euroland?  I'd understood that a lot of work was subcontracted to asia, in which case I've no idea what the situation should be.  Given that Switzerland use the Swiss Franc, I guess this would be a better reference than the euro, but if I remember they're track reasonably well (someone correct me).

As for cost cutting, weeeeelllllll... the parties, publicity, grand unveilings etc of the last few years must have cost a FORTUNE, and I'm sure they could do some serious cost cutting here rather than pushing up the price. 

nick

I notice since I started seriously collecting that the Watch Brands are REALLY into marketing (glamarous catalogs, advertising and parties). Here in the US, we have a saying "sell the sizzle instead of the steak." IMHO these high end brands are too much into marketing and reinforcing their images instead of heavily focusing on innovation and quality. I don't know the rest of you but I'm a pretty sophisticated buyer who focus on the cost/value ratio and high quality of the brand. Glamorous Catalogues with beautiful artwork and pictures doesn't seem to impress me as much as the pure technical marvals/achievements of these magnificant time pieces. Cut out the fat and focus on the lean meat is what I say!    

. . . to start producing watches here again ;-) . . . mischievously, Art

i was thinking the other day... A US watch company, of very serious quality, would be in a good position right now... to make a name and start a legend.

NT

... is that the price for crude oil is traded in Dollars, and in spite of the strong Euro, gas becomes more expensive here in Euroland every day ...

Unfortunately, also the watches raise their prices over here, which must double the price increase in the States. The reson for that is simply demand. Apparently, Asia and Russia are extremely well performing markets, so it is clear that the prices adapts to the high demand.

Regards,
Marcus

the elf unions are getting more militant and they are demanding significantly higher pay for taking an entire year to create a fine wristwatch. The elves that do the painstaking and tedious hand-finishing of individual parts with only a toothbrush and abrasive toothpaste are apparently seeking the highest price increases.

- SJX

that there may be some political issues behinds these sky high price increases? They probably need the high wages because of all the taxes that they are giving to the governments in Euroland?  Marcus is right in that the demand in emerging markets like China, Russia and India is what really driving these High price increase. They using the Euro/Dollar issue as a cover IMO.

Thanks

Marcus from California

 

 

is fueling allot of the price increases, of course the speculators getting into the market trying to make a buck has not helped matters any.  It use to be a more labor intensive endeavor to produce the truly high end pieces, and now the watchmakers are more likely to be heavily into engineering, computer aided design and manufacturing.

The fitting, finishing, and assembly are arts that have been lost by the majority of watchmakers over time.  There was a period where maintenance was more profitable and the only way to survive in the industry.  Now the demand has come back to a market that is now stretched due to the contraction of past and prices will be continuing to go up for all I would believe.