Here comes Apple. The next industry targeted by the Cupertino, California-based company is the watch, with shipments scheduled to begin last week. Of course, the watch is something that many people find less necessary these days, now that they can easily determine what time it is by looking at, well, their iPhone or other cellular devices.
What would it mean for another industry caught in Apple’s crosshairs, I wondered, particularly when I read that the co-inventor of the Swatch predicted that “Apple will succeed quickly” in an interview with Bloomberg.
Let’s suppose Apple is as successful resetting the watch industry as it has been in the music industry with iTunes and the iPod, and the cellphone industry, with its iPhone. What would that mean?
For Miami, it could be a logistics windfall.
A little background first. The global watch industry has long been led by Switzerland, renowned for the precision of its timepieces. In the Bloomberg interview, Swatch co-founder Elmar Mock predicted that Apple, a company, could surpass Switzerland, a country with hundreds of years of experience in the industry, in the number of watches sold globally within a few years.
To give you a sense of the size of the market from an export-import point of view, the United States last year imported a record $4.82 billion in wristwatches, including those with precious metals and those without. U.S. exports — and these can include imports being exported elsewhere, as is common with cellphones, computers and other items — totaled $1.14 billion, also a record.
The largest U.S. source for imports is Switzerland, followed by Japan. Switzerland accounted for more than 90 percent of the $1.13 billion in watches with precious metals, generally those at the high end, but only 50.27 percent of the $3.69 billion without precious metals. Apple is entering the market at both ends, with prices ranging from $349 to $10,000.
Here’s where South Florida enters the picture.
SHIFT AT THE TOP
If Apple is successful, expect a shift at the top. Currently, the headliners are Switzerland and the New York City Customs district. They are paired. Their rank almost certainly shift in favor of imports from China, where most of Apple’s products are at least partially manufactured and almost always assembled, and Los Angeles, their U.S. port of entry.
Although Los Angeles dwarfs all other Customs districts in trade with China — accounting for about 40 percent of the total — Miami’s trade with China is growing, thanks to direct cargo flights recently established at Miami International Airport. That trade is likely to grow with the expansion of the Panama Canal and PortMiami’s preparations for the larger ships it will accommodate.
As it is, the Miami Customs district ranks third in imports of watches, behind only New York City, with 49.99 percent of the market, and Dallas-Fort Worth, with 18.29 percent. Miami’s market share in 2014 was 11.44 percent, ahead of Los Angeles, at 8.06 percent.
EXPORTS AND SOUTH FLORIDA
Why is South Florida important on the import side? Miami is a top retail market for luxury watches. But its real importance as a watch importer is as an exporter to Latin America.
The Miami Customs district leads the nation in the export of watches, with 26.27 percent of all watch exports and 35.35 percent of those without precious metals, the larger market. The 2014 total for all watch exports from Miami was $299.74 million.
Looking just at those Miami watch exports without precious metals, which accounted for $230.11 million of the $299.74 million total and are shown in the accompanying chart, the largest markets are South Florida’s traditional Latin American and Caribbean markets, although not in the order you might expect.
In 2014, Argentina jumped to the No. 1 position, despite a difficult economy, with 348.56 percent growth from the 2013 total. Overall Miami exports, to 71 nations, increased 43.50 percent. Exports to No. 2-ranked Panama increased 84.63 percent and even those to No. 3 Venezuela, whose economy is hobbled at best, increased 78.89 percent.
Those three markets account for about 10 percent each — the first two slightly over and Venezuela slightly under. The sharp increases were not one-year aberrations.
Prior to 2014, Miami had never exported more than $6 million in watches to Argentina, so the $24.61 million total in 2014 was quite a jump. Panama’s previous high was in 2012, at $13.79 million, well below the 2014 total of $23.81 million. Similarly, Venezuela had never been on the receiving end of more than $5 million until 2013, when the total swelled to $12.43 million. The 2014 total was $22.24 million.
The question, then, is what happens when Apple, with a strong global brand, makes a push into the market? I am betting that Miami sees continued growth on both the import and export sides, given its increasing role as a bridge between Latin America and China.
Ken Roberts is the founder and president of WorldCity, a Coral Gables-based company. More import-export trade data is available at www.ustradenumbers.com. He can be reached at email@example.com.
Record year for South Florida watch exports
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Source: WorldCity analysis of U.S. Census Bureau data