Rolex cuts production

[mrlube1151001]

Had a conversation with my A.D today.He mentioned that they had a meeting with Rolex representatives and were told that due to global uncertainties and price hikes Rolex is reducing their production.i don’t know how far it is true.Any thoughts.

[Oxfordian]

Nonsense, that's my thought.

If Rolex was worried about price hikes it could reduce the price of its watches.

Sure the economic climate isn't as good as it could be but there are still lots of people across the world who are earning good money and want to spend some of that money on a rather nice Rolex watch.

What we maybe seeing is the speculator dropping out of the market which is freeing up watches for others to buy.

[Vanyo]

Originally Posted by Oxfordian

Nonsense, that's my thought.

If Rolex was worried about price hikes it could reduce the price of its watches.

Sure the economic climate isn't as good as it could be but there are still lots of people across the world who are earning good money and want to spend some of that money on a rather nice Rolex watch.

What we maybe seeing is the speculator dropping out of the market which is freeing up watches for others to buy.

Not a complete nonsense. From the permanent expenses perspective, it is better to produce less, but with a higher price, presuming that the demand is high and you could sell the stock rather than keeping overproduced one it in the warehouse. Less labour, utilities, associated administrative costs and frozen capital in stock.

I have relations with 4 Rolex ADs in EU. Whenever I come in the last 2-3 months, there is always available full gold options for immediate purchase. Recently, I was offered with DD YG Champaign dial, RG Sundust dial and WG Ghost Daytonas. I think Rolex has problems to sell them after price increase and considering current market prices. They should react in some way.

The easiest solution is to produce more SS sports models which are still wiped out from the shelves immediately. Let’s see if it will be the case.

[pbr]

Perhaps PM pieces and smaller diameter models? Considering that pretty much any stainless steel models 36mm and up are still unobtainable to the general public at retail, I find it hard to believe that Rolex would forego profits in the name of manufactured scarcity beyond what it already is.

As Oxfordian said, I would guess that speculators being sidelined is an indicator of market conditions, but not to the point where Rolex would cut production across the board.

[mrlube1151001]

Originally Posted by pbr

Perhaps PM pieces and smaller diameter models? Considering that pretty much any stainless steel models 36mm and up are still unobtainable to the general public at retail, I find it hard to believe that Rolex would forego profits in the name of manufactured scarcity beyond what it already is.

As Oxfordian said, I would guess that speculators being sidelined is an indicator of market conditions, but not to the point where Rolex would cut production across the board.

True I agree. But also most of the luxury items sales are based on the hard to get model. Anything which is freely available the desire to purchase may diminish.With global uncertainties purchasing luxury items may not be the top priority for people.Rolex or any other manufacturer may have to make market corrections.

[Dave O]

Nonsense. They sell everything they make. Why on earth would they cut back and reduce their revenue? I can only seeing them cut back if we ever got back to watches sitting on the display shelves and not selling.

[Tim Plains]

Why are they opening a new factory? Think about it.

[BraveBold]

Originally Posted by Tim Plains

Why are they opening a new factory? Think about it.

The new factory is only slated to add 25% production capacity (over current total) and in 5+ years for initial ramp… it is also unknown if they won’t shutter aged lines. It could be a net add of under 25% capacity.

In any event, that is a long-term investment and a production cut is simply reducing output, not capacity… Rolex plays the long game and I would not be surprised if they prefer less volume over any indication that a market runs the risk of saturation. Asian markets in particular and given tariff policies, greater risk of broader slow down.

Not saying I think they are doing this, but unrelated to long-term capacity planning.

[Dave O]

Originally Posted by BraveBold

The new factory is only slated to add 25% production capacity (over current total) and in 5+ years for initial ramp… it is also unknown if they won’t shutter aged lines. It could be a net add of under 25% capacity.

In any event, that is a long-term investment and a production cut is simply reducing output, not capacity… Rolex plays the long game and I would not be surprised if they prefer less volume over any indication that a market runs the risk of saturation. Asian markets in particular and given tariff policies, greater risk of broader slow down.

Not saying I think they are doing this, but unrelated to long-term capacity planning.

Incorrect. Two new temporary facilities were to come on line late last year, early this year until the new permanent facilities come on line.

[BraveBold]

Originally Posted by Dave O

Incorrect. Two new temporary facilities were to come on line late last year, early this year until the new permanent facilities come on line.

The public info is 250-300 employees across the three temp sites. Rolex employs about 10k in Switzerland (focused on production) and several thousand more globally not involved in production.

Of the 10k in Switzerland, about 8k are likely production workers.

I would love to see where they meaningfully boost production with this group of 250-300 people… which implies, on the high side, a 3-4% production bump. This is not going to change their decisions across their primary lines.

If you understand how manufacturing works you will also understand that once plants are at capacity (or over) shifting to additional lines takes time to execute - and conditions can change quickly. Reducing production vs the established capacity is much faster and easier… decisions to temp add made in 2022 were during a different context than today. Good companies need to adapt.

[Dave O]

Originally Posted by BraveBold

The public info is 250-300 employees across the three temp sites. Rolex employs about 10k in Switzerland (focused on production) and several thousand more globally not involved in production.

Of the 10k in Switzerland, about 8k are likely production workers.

I would love to see where they meaningfully boost production with this group of 250-300 people… which implies, on the high side, a 3-4% production bump. This is not going to change their decisions across their primary lines.

If you understand how manufacturing works you will also understand that once plants are at capacity (or over) shifting to additional lines takes time to execute - and conditions can change quickly. Reducing production vs the established capacity is much faster and easier… decisions to temp add made in 2022 were during a different context than today. Good companies need to adapt.

I worked in manufacturing for over 38 years, retired as a GM of a large manufacturing plant before I retired, so I think I know a thing or two about it. We could scale up quickly when new units came on line - wasn't an issue.

The bottom line, as I have stated before, is that it makes no sense whatsoever for a company to cut production when they sell everything they make - and would continue to sell everything they make if they increased production by 50%. Until the shelves at AD's become full, and they are no longer exhibition pieces, it makes no sense to cut production. If anything, AD's will be seeing more pieces this year with all of the AD's Rolex is cutting out of the network.

[prnceofpersia23]

Originally Posted by Tim Plains

Why are they opening a new factory? Think about it.

Exactly. Sounds like the AD is setting the stage to never call OP

Kidding OP, but I am skeptical of the comment.

[DoctorsOrders]

Originally Posted by Tim Plains

Why are they opening a new factory? Think about it.

+1. Sounds like OP's AD is closing lol

[rolph]

I've heard some buzz about luxury brands adjusting their production due to various global factors.

[JRell]

Originally Posted by rolph

I've heard some buzz about luxury brands adjusting their production due to various global factors.

Honestly with so much changes and talk of tariffs I am second guessing a few items to buy for awhile.

[Nads786]

Originally Posted by JRell

Honestly with so much changes and talk of tariffs I am second guessing a few items to buy for awhile.

That’s an interesting perspective - my industry hasn’t been impacted at all by tariffs so I don’t think about it much. But something to think about if the economy shifts further.

[BraveBold]

Originally Posted by JRell

Honestly with so much changes and talk of tariffs I am second guessing a few items to buy for awhile.

As are many - but equally (more!) important, companies are adapting their investment strategies to these risks…

Rolex is no doubt monitoring volume impacts and considering risk of reputation harm (prestige impact) if volumes continue to erode at this pace - or worse. They will absolutely not walk back prices. Small production cuts are much safer.

[Dave O]

Originally Posted by rolph

I've heard some buzz about luxury brands adjusting their production due to various global factors.

Again, what global factors? Is Rolex not selling everything they make? I can only see them cutting back if their watches were not selling. And this simply isn't the case.

They are in business to make money. Cutting back on production when they could increase production by 50% or more and still sell everything they make makes no sense whatsoever.

[RotorSelfWinding]

Originally Posted by mrlube1151001

Had a conversation with my A.D today.He mentioned that they had a meeting with Rolex representatives and were told that due to global uncertainties and price hikes Rolex is reducing their production.i don’t know how far it is true.Any thoughts.

Until you hear it from someone outside your AD, don't believe it. They sell every watch they make.

[Oystersteel92]

Originally Posted by RotorSelfWinding

Until you hear it from someone outside your AD, don't believe it. They sell every watch they make.

At the very least your AD WANTS you to believe they sell every watch the make and are favoring you with an allocation.

[7enderbender]

That sounds like nonsense to me. For one, I don’t think Rolex would share that kind of information with some random shopkeeper who happens to be allowed to sell new watches for them. Other than that they are building new facilities and are probably desperate to hire new staff (just like everyone else). And what “global uncertainties” would these be? Yeah, maybe fewer watches will go to third world countries if America and hopefully Europe continue to realign their interests. . Still enough western customers ready to buy them.

[WatchTimes]

Why would they decrease production with bigger new factories coming online and its not like ADs have much if anything just sitting on shelves

[GB-man]

Probably Rolex is cutting your AD soon and they are just telling lies lol

[brandrea]

Originally Posted by GB-man

Probably Rolex is cutting your AD soon and they are just telling lies lol

There’s a bit of truth to every joke ^^^

[UnderPolished]

Originally Posted by brandrea

There’s a bit of truth to every joke ^^^

A quick peak at Google Maps for Toronto yields three ADs, one of those a boutique....

[brandrea]

Originally Posted by UnderPolished

A quick peak at Google Maps for Toronto yields three ADs, one of those a boutique....

Sounds about right with a couple of recent closures

Welcome to the forum.

[Feseroni]

I mean in theory they could cut production despite the new factories. I work in manufacturing and this happens more often than what you would expect.

Having say that, I don't think this this is realistic based on the current market anything SS is still selling pretty well.

[Mystro]

No one knows anything. Rolex never ever discloses any info.

[BraveBold]

Originally Posted by Mystro

No one knows anything. Rolex never ever discloses any info.

Well, Rolex HQ knows.

In the absence of real info from them, cannot know. As I say above, I don’t know IF it is true but I can be certain that Rolex’s 2029 capacity plan has zero influence on how they run their production lines in Feb 2025… and those decisions will be dictated (given Rolex’s structure and proclivity towards a long view) by what’s in their long-term best interest.

[fishingbear]

Originally Posted by Mystro

No one knows anything. Rolex never ever discloses any info.

This.