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Swatch fire strikes at 'heart' of watch mechanism production

[December 30, 2013]  ZURICH (Reuters) — A fire has destroyed one workshop and damaged another at Swatch Group's <UHR.VX> watch mechanism subsidiary, the Swiss firm that has a near monopoly on the supply of mechanisms to other watchmakers said.

Swatch Chief Executive Nick Hayek told Swiss radio on Sunday that the blaze had struck at the "heart of production" at ETA Manufacture Horlogere and the impact on output would be examined more closely on Monday. "Everything is devastated," Hayek said.

Hayek said the Swiss watchmaker, known for its colorful plastic timepieces and high-end Omega brand, had other factories it could fall back on.

ETA is the world's biggest supplier of watch "movements," the internal mechanisms that drive the moving parts of a watch, and Swatch counts high-profile luxury groups Richemont <CFR.VX>, LVMH <LVMH.PA> and Hermes <HRMS.PA> among its customers.

Swatch was given the go-ahead in October to gradually reduce component deliveries to rivals, a move which could cause supply shortages for some players in the industry.

Flames ravaged the galvanic workshop of ETA in Grenchen, Switzerland, where watch parts are protected against rust, while another workshop had been damaged by smoke, Swatch said.

Local police said the damage from the fire could cost several hundred thousands Swiss francs.

Swatch said no one was harmed in the fire and the cause was unknown.

(Reporting by Alice Baghdjian; editing by David Goodman and Erica Billingham)

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