Saturday, 3 September 2011

Trouble in Paradise as Switzerland Becomes Victim of Own Financial Success

THE DAILY TELEGRAPH: Fears of joblessness and hard times are rare in Switzerland. But with the soaring franc making exports prohibitively expensive, it's dark days for the country's famed watchmakers, cheese producers and chocolatiers.

Bijan Vafi's business should be booming. His company, Loetscher, is the world's only manufacturer of Swiss cuckoo clocks, carving elaborate chalet-style creations that are the ultimate Alpine souvenir.

But now, after more than 90 years of fashioning precision timepieces, the clock may be ticking on Loetscher's own future. "Our exports are down 38 per cent, and that's a large part of our business," said Mr Vafi, 61. "The situation is extremely fragile."

From the picturesque lakeside village of Brienz, flanked by dramatic Alpine peaks, the pretty wooden-fronted factory manufactures 30,000 clocks a year, with 40 per cent of them exported internationally. Yet the soaring Swiss franc has meant that, on the international market, his clocks are becoming rapidly more expensive.

As fears over the stability of the euro continue, investors are looking to buy into "safe havens" – secure, trustworthy investments like in gold or the Swiss franc – which has caused the franc to rise 20 per cent against the euro this year and 30 per cent against the dollar.

And with American customers now finding his products almost a third more expensive, they are choosing to take their business elsewhere. » | Harriet Alexander | Geneva | Saturday, September 03, 2011