Faulty pump believed to be cause of Swatch fire

Biel, Switzerland-- While the investigation into the fire that destroyed part of a Swatch Group factory remains under investigation, a company spokesperson said early results indicate the fire was caused by a “technical deficiency” in one of the pumps in the galvanic workshop.

The blaze broke out around 8:45 a.m. local time on Dec. 29 in the galvanic department of Swatch Group Inc.’s main ETA factory in Grenchen, Switzerland. While the factory never completely closes, there was no activity in this area at the time of the fire, so no workers were injured.

Total damage from the fire, including lost production, reproduction of destroyed components and clean up, is estimated at $44.3 million to $55.4 million.

Swatch Group spokeswoman Béatrice Howald said that because of the fire the company will have a temporary delay in production but, “the management is confident … to catch up with the delays within the first half-year.”

She added that the fire also destroyed already-produced components of standard movements that were mainly for third-party suppliers. Other galvanic workshops within Swatch Group can help with production as the fire-damaged shop is repaired.

Despite production delays caused by the late December blaze, Swatch Group said Friday when releasing sales figures for 2013 that is expects “dynamic growth” in 2014, based on the strong start by all brands in the first few days of January.

Swatch Group reported 9 percent growth in watch and jewelry sales in 2013, with total group sales also reaching a record high.

Sales in its watches and jewelry segment reached $9.45 billion, compared with $8.70 billion in the prior year. The company attributes the positive performance to strong brands and its extensive distribution and retail network.

Gross sales for the group were $9.77 billion, an increase of 8 percent as compared with the full year 2012 and setting a new high.

Despite a poor currency exchange situation, which had a negative effect on the company’s sales in the second half of the year, Swatch said that it still expects good results in terms of operating profit and net income when it publishes all key figures for 2013 next month.