Crystal-studded clouds reflected in a pond, an oversized crystal chandelier surrounded by mirrors: The headquarters of the Swarovski AG crystal empire are every bit as glitzy as one might expect — but the sparkle cannot distract from a bitter family feud over the company’s future.
Normally, 650,000 tourists flock to the site in the town of Wattens in Austria’s mountainous Tyrol region every year, but the COVID-19 pandemic has not only left it deserted — it has also magnified much deeper issues for the company.
Exactly 125 years after founder Daniel Swarovski developed a machine to cut glass to shimmer like diamonds, his great-great grandchildren now reign over a diversified operation — offering rhinestones to fashion brands, binoculars to hunters, and jewelry and crystal figurines of characters from Mickey Mouse to Princess Leia.
Photo: AFP
However, chief executive officer Robert Buchbauer said that drastic change is needed.
“We are forced to reimagine and rescale our entire Swarovski business,” Buchbauer said at the Wattens headquarters.
Swarovski’s crystals might have adorned the outfits of celebrities such as Beyonce and Marilyn Monroe, and been used by designers including Christian Dior, but Buchbauer said that among business clients they are losing their luster.
Crystals made by competitors in China sparkle just as brightly — for as little as 1 percent of the price.
To this already ruinous competition, the pandemic has added “sales shortfalls on a gigantic scale,” Buchbauer said.
Overall revenues for crystals are projected to plummet by 30 percent from 2.7 billion euros (US$3.3 billion) last year to about 1.9 billion euros this year.
Long-planned, sweeping cuts have only become more urgent, Buchbauer said.
He wants to make Swarovski’s crystals more exclusive, producing fewer, larger and more colorful products that can be sold for more.
Mass-market products such as manicure sets and mobile-phone cases graced with Swarovski crystals might have given the company a wide appeal, but they have no place in the future, he said.
Neither would about 750 of its 3,000 stores worldwide. The downsizing would also mean laying off about 6,000 employees.
The plans are already under way, with about 1,200 employees in Wattens losing their jobs this year and a further 600 posts expected to go next year.
Buchbauer said that unless his plans are executed in full, “we’ll end up among the losers.”
Other clan members are convinced that customers who have been turning to cheaper competitors would not pay higher prices.
Paul Swarovski, a shareholder and former member of the executive board, said that he wants to stop Buchbauer’s plans “before everything goes down the drain.”
He has been joined by Nadja Swarovski, one of three members of the executive board, as well as her father Helmut Swarovski and her uncle Gerhard Swarovski.
In the cut-throat luxury goods industry, Swarovski is one of few entirely family owned businesses left run as a limited partnership.
Initially this was a useful structure for a small-scale manufacturer, but all sides agree it is now an impediment for the international, multibillion-euro operation.
Buchbauer, who became Swarovski’s first ever chief executive officer in April, won approval from shareholders for his own proposal which would bring the Wattens operations under the umbrella of a holding company.
The plan won the backing of family members holding about 80 percent of shares — a “legally effective” decision, said Buchbauer, who stands to gain more power from the change.
Nadja, Helmut, Gerhard and Paul Swarovski and others objected, saying that the roughly 20 percent of shares they hold gives them veto power.
They have filed for arbitration, hoping that Buchbauer’s move will be nullified.
Paul Swarovski insists that Buchbauer must go.
“As long as the captain who is steering us toward a reef has his hands at the tiller, one has to make sure to get him away from the tiller,” he said.
Meanwhile, members of the clan posting photographs of luxury holidays on social media or descending from helicopters for meetings in Wattens have only added to the frustration and disbelief of employees, union representative Selina Staerz said.
“We don’t feel like we are the heart of the company anymore,” Staerz said in between advice sessions for laid-off staff.
In a region otherwise dependent on tourism where Swarovski is the single largest employer, ex-employees could struggle to find new jobs.
Although Buchbauer said that no further cuts would be necessary after next year, rumors persist that the whole operation would be transferred to neighboring Switzerland.
Either way, Staerz said, people have lost faith in an employer once lauded for providing benefits such as childcare and housing.
Moreover, she said that many staff do not believe that Swarovski will succeed in becoming an affordable luxury brand.
“The super wealthy don’t need our Swarovski crystals. They can buy diamonds,” she said.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) founder Morris Chang (張忠謀) yesterday said that Intel Corp would find itself in the same predicament as it did four years ago if its board does not come up with a core business strategy. Chang made the remarks in response to reporters’ questions about the ailing US chipmaker, once an archrival of TSMC, during a news conference in Taipei for the launch of the second volume of his autobiography. Intel unexpectedly announced the immediate retirement of former chief executive officer Pat Gelsinger last week, ending his nearly four-year tenure and ending his attempts to revive the
WORLD DOMINATION: TSMC’s lead over second-placed Samsung has grown as the latter faces increased Chinese competition and the end of clients’ product life cycles Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) retained the No. 1 title in the global pure-play wafer foundry business in the third quarter of this year, seeing its market share growing to 64.9 percent to leave South Korea’s Samsung Electronics Co, the No. 2 supplier, further behind, Taipei-based TrendForce Corp (集邦科技) said in a report. TSMC posted US$23.53 billion in sales in the July-September period, up 13.0 percent from a quarter earlier, which boosted its market share to 64.9 percent, up from 62.3 percent in the second quarter, the report issued on Monday last week showed. TSMC benefited from the debut of flagship
TENSE TIMES: Formosa Plastics sees uncertainty surrounding the incoming Trump administration in the US, geopolitical tensions and China’s faltering economy Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday posted overall revenue of NT$118.61 billion (US$3.66 billion) for last month, marking a 7.2 percent rise from October, but a 2.5 percent fall from one year earlier. The group has mixed views about its business outlook for the current quarter and beyond, as uncertainty builds over the US power transition and geopolitical tensions. Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported a monthly uptick of 15.3 percent in its revenue to NT$18.15 billion, as Typhoon Kong-rey postponed partial shipments slated for October and last month, it said. The
RSS