Here comes Apple. The next industry targeted by the Cupertino, Calif.-based company is the watch, with shipments that were to begin April 24. 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 device.
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 and quickly picked up by Fortune and others.
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 dominating the cellphone industry — from a profit point of view — with its iPhone. What would that mean?
Well, it could mean, here comes Miami, at least from a logistics point of view, or, at least be good news.
A little background first. The global watch industry has long been led by Switzerland, long renowned for the precision of its timepieces. In fact, in the Bloomberg interview, that was the thrust of Swatch co-founder Elmar Mock’s comments. He 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.
Size of the market
To give you a sense of the size of the market, strictly from an export-import point of view, the United States imported a record $4.82 billion in wrist watches, including those with precious metals and those without. U.S. exports — and these can include imports becoming exports, 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 $10,000 to $349.
Here’s where South Florida enters the picture.
Shift at the top
If Apple is successful, expect a shift at the top. Currently at the top are Switzerland and the New York City Customs district. They are paired. That would almost certainly shift to Chinese imports, where most of Apple’s products are at least partially manufactured and almost always subject to final assembly, entering the United States at Los Angeles.
While 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 flights recently established at Miami International Airport, and that trade is likely to grow more with the expansion of the Panama Canal and Port Miami’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? Well, certainly there are quite a few people in the Greater Miami area, including those who can afford expensive watches. But Miami is important on the import side because, in large part, it is more important on the export side. In other words, it is Miami’s typical role as the gateway for Latin America — exports — that make it important on the import side.
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.
Before 2014, Miami had never exported more than $6 million in watches to Argentina so the $24.61 million total in 2014 was quite the 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, including in Latin America, makes a push into the market? I am betting that Miami sees continued growth on both the import and export side, 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. He can be reached at firstname.lastname@example.org.
Record year for South Florida watch exports
Change in rank
Source: WorldCity analysis of U.S. Census Bureau data