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Typically 650,000 tourists flock to the site in the town of Wattens in Austria’s mountainous Tyrol region each year.
Tiaras made of crystals are on display at the Swarovski Crystal Worlds (Kristallwelten) museum near the Austrian Swarovski crystal manufacturer’s plant in Wattens, Austria, on October 27, 2020. Clouds studded with crystals reflecting off a pond, an oversized crystal chandelier, fully encapsulated by mirrors: Swarovski headquarters is a world of glitz. Recently, however, few have seen it shine. Image: AFP
WATTENS – crystal-studded clouds reflected in a pond, an oversized crystal chandelier surrounded by mirrors – the headquarters of the Swarovski crystal empire is as dazzling as you’d expect, but the brilliance can’t distract from a bitter family feud on future of the company.
Typically 650,000 tourists flock to the site in the town of Wattens in Austria’s mountainous Tyrol region each year.
But the coronavirus pandemic has not only left it deserted, it has also magnified much deeper problems for the company.
Exactly 125 years after founder Daniel Swarovski developed a machine to cut glass to shine like diamonds, his great-great-grandsons now reign in a diversified operation: offering rhinestones to fashion brands, binoculars to hunters, and jewelry and crystal figurines of characters from Mickey. Mouse for Princess Leia.
But CEO Robert Buchbauer says a drastic change is needed now.
“We are forced to reinvent and resize our entire Swarovski business,” Buchbauer tells AFP at the Wattens headquarters, framed by a selection of Swarovski embellished robes.
LEAVING THE MASSES
Swarovski crystals may have graced the outfits of celebrities like Beyonce and Marilyn Monroe and been worn by designers like Christian Dior, but Buchbauer says they are losing their luster among business clients.
Crystals made by competitors in China shine just as brightly, for just 1% of the price.
To this already ruinous competition, Buchbauer says, the pandemic has added “sales deficits on a gigantic scale.”
Total glass revenue is projected to plummet 30%, from 2.7 billion euros ($ 3.3 billion) last year to about 1.9 billion.
Broad and long-planned cuts have become more urgent, says Buchbauer.
You want to make Swarovski crystals more unique, by producing fewer, larger, and more colorful products that can be sold at a higher price.
Mass-market products such as manicure sets and Swarovski crystal-embellished cellphone cases may have given the company great appeal, but they have no place in the future, he says.
Neither will about 750 of its 3,000 stores worldwide.
The reduction will also mean laying off some 6,000 employees.
The plans are already in place, with about 1,200 employees at Wattens losing their jobs this year and another 600 positions are expected to disappear in 2021.
Unless his plans are fully executed, says Buchbauer, “we will end up among the losers.”
‘DIRECTION TOWARDS A REEF’
Other clan members are convinced that customers who have already turned to cheaper competitors will not pay higher prices.
Paul Swarovski, a shareholder and former member of the executive board, says he wants to stop Buchbauer’s plans “before it all goes down the drain.”
He was joined by Nadja Swarovski, one of the three members of the executive board, as well as his father Helmut and his uncle Gerhard.
In the cutthroat luxury goods industry, Swarovski is one of the few fully family-owned companies that remains a limited company.
Initially this was a useful structure for a small-scale manufacturer, but all parties agree that it is now an impediment to the multi-billion euro international operation.
Buchbauer, who became Swarovski’s first CEO in April, won shareholder approval for his own proposal that would bring Wattens operations under the umbrella of a holding company.
The plan won the backing of family members who own about 80% of the shares, a “legally effective” decision, says Buchbauer, who hopes to gain more power from the change.
Nadja, Helmut, Gerhard and Paul Swarovski and others objected, saying that roughly 20% of the shares they own gives them veto power.
They have requested arbitration, hoping that Buchbauer’s measure will be overturned.
Paul Swarovski insists that Buchbauer must go.
“As long as the captain leading us to a reef has his hands on the wheel, you have to make sure you keep him away from the wheel,” he says.
OUTSTANDING PERSPECTIVES
Meanwhile, clan members posting photos of luxury vacations on social media or descending from helicopters for meetings in Wattens have only added to employee frustration and disbelief, says union representative Selina Staerz.
“We no longer feel like we are the heart of the company,” Staerz told AFP between counseling sessions for the laid off staff.
In a region that is otherwise dependent on tourism, where Swarovski is the largest employer, former employees may find it difficult to find new jobs.
Although Buchbauer says no further cuts would be necessary after 2021, rumors persist that the entire operation will be transferred to neighboring Switzerland.
Either way, Staerz says, people have lost faith in an employer that was once praised for providing benefits like childcare and housing.
In addition, he says that many employees do not believe that Swarovski will succeed in becoming an affordable luxury brand.
“The super rich don’t need our Swarovski crystals. They can buy diamonds,” he says.
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