It all began with the Protestant Reformation against the Catholic Church in the early 16th century. This huge social change in Europe gradually resulted in the prosecution of Protestants, in particular the French Huguenots that were forced to leave their country after 1534. Among them, many clock technicians that were being settled in Geneva, the city where one of the leading figures of the Reformation, theologian John Calvin, published in 1536 his most influential work “the institutes of the Christian religion” according to which people were prohibited to wear jewelry (watches excluded!). In a city full of unemployed goldsmiths, enamellers and clock makers, the combining of all this gathered workforce, and the development of horology had been more than an anticipated evolution. First in Geneva, later on further to the north in the Jura mountains and eventually all over the country, Switzerland would develop in the most important watchmaking center on the planet. The rest is history, actually a story of almost five centuries, a story of skilled artisans and smart managers surviving and evolving through multiple periods of crisis including the French revolution, the financial consequences of two World Wars, the “quartz crisis”, the ongoing and increasing competition from the East and the West. Today in the 2020s, despite the “smartwatch” threat, they are still holding their leading position on the podium, and this is called tradition.
Etablissage production system
Geneva is the birth city for the Swiss watch industry, with its own representative association of watchmakers, formed as early as 1601 including more than 500 members by the middle 18th century, plus an exporting volume of more than 60,000 watches around 1800. The Swiss industry however had flourished in the mountains, thanks to the initiative of the goldsmith Daniel Jeanrichard (1665-1741) who created his first watch in 1681 being committed το his vision to differentiate from the centralized production process in England and France, and introduce a decentralized “cottage” system of production where each “watch farmer” had been specialized in the hand crafting of specific parts that were being sent to Etablisseurs meaning workshops outsourcing all the necessary components and undertaking the final assembling of the watches. This system had been first implemented at Neuchatel in the early 18th century, and gradually adopted by the entire industry, with great expansion after 1740 and impressive results till the end of the century. In 1800, the Swiss were producing approximately 200,000 watches annually, a volume equal to the leading English industry, but not in par regarding quality. Among the exceptional Swiss watchmakers of that time is Jaques-Frederic Houriet (1743-1830) who had spent around 10 years in Paris working as an apprentice for the best watchmakers of that era, before returning home and establishing his own workshops and collaborations since the late 1760s. He is considered the “father” of Swiss chronometry.
The major reason for the quality gap between English and Swiss watches had been the fact that the division of labor had not been followed by the mechanization of production (this was the deference with the Americans later on). Hand crafting of parts without standardized specifications (not being interchangeable) had resulted in troublesome assembling, simply because the outsourced parts were subjected to uneasy fitting with each other. The Swiss industry had been insisting on hand crafting of all components till the end of the 19th century, with very few exceptions related to specific brands that started to use tools and machinery in their production process around 1850. One of the first such examples had been VACHERON CONSTANTIN (VC) established in 1755, and engaged in collaboration with Georges Auguste Leschot from the middle 19th century. G.A.Leschot along with P.F.Ingold, are considered two of the most influential Swiss watchmakers in the 19th century, for the introduction of special tools that had resulted in fast and precision crafting of parts, and eventually to large volumes of qualitative watches. The second one, rejected from the three European traditional markets, had cooperated with WALTHAM in the setting up of the American industry in the middle 19th century. It is worth mentioning that in 1850 the Swiss industry was producing more than 2 million watches annually, 10 times more than the English one, and this huge difference indicates their priorities towards quantities on the expense of quality. The achievement of the new comer (started in 1850) fully mechanized competitive American industry by the end of the 19th century, had eventually moved the Swiss to the right direction, in preparation for their dominance in the 20th century.
Coming back to the few brands that had combined sales volume with proved quality, from the beginning of their existence in the first half of the 19thcentury, their common characteristic had been the housing of all the skilled labor under the same roof. LONGINES (1832), JAEGER LE COULTRE (1833), PATEK PHILIPPE (1839) have been three primary such examples in addition to VC mentioned earlier. During the second half of the 19th century, IWC was incorporated in 1868 at Schaffhausen by the American watchmaker Florentine Ariosto Jones, with the help of Heinrich Moser. It is perhaps the best example of a Swiss entity implementing a fully mechanized production process from the very beginning. Two more significant brands of that era founded in Le Brassus in the 1870s are AUDEMARS PIGUET with a long tradition holding from the late 18th century, plus C.H.MEYLAN that was affiliated with WALTHAM, the premier American brand of that period. One final worth mentioning example is OMEGA founded in 1848 by Louis Brandt, but adopted a mechanized production process later in 1894 due to the initiative of the next generation, Louis-Paul and Cesar Brandt. In 1876, the foundation of the Jura Industries Association, the first step towards the later formation of the “Federation of the Swiss Watch Industry” (FHS), contributed to the final evolution of the Etablissage system in the next century, primarily thanks to the work of the watchmaker Jacques David.
According to the English publication of Richard Watkins from 2003, Jacques David (1845-1912) is credited with the restructure and recovery of the Swiss industry in the late 19th century. After his trip to U.S. in 1876, he prepared and sent two manuscript reports to the newly formed “Intercantional Committee of Jura Industries” in early 1877 presenting in detail the operation of the largest American watch factories and suggesting the necessary actions, for the Swiss industry future development. It is worth mentioning that during the previous two years, 1875 and 1876, the Swiss exports to U.S. had dropped more than 75%. Focusing on the necessary reaction, his first report includes recommendations on (a) the adoption of standard sizes for the mechanisms, (b) the independence of the case from the mechanism, (c) the introduction of standard mechanisms used by many brands, (d) the introduction of patents, (e) the establishment of watchmaking schools, among others. His guidelines had been subjected to criticism and reluctance, but eventually were accepted before the end of the 19th century, and their effect is obvious even today. These two reports had remained hidden for 115 years, before LONGINES discovering and disclosing them in 1992, on the occasion of its 125th anniversary. Fairly enough, the publisher considers that these two letters are the most important documents in the history of modern watchmaking, and Jacques David is the “father” of Swiss horology, despite his involvement three centuries after the first early steps of this industry in Geneva.
The 20th century and the wristwatch
Regarding the pocket watches, the Swiss had found almost all critical developments ready and available, primarily from the English and the French. The history of watch making in the 20th century is almost exclusively devoted to the wristwatch, and it is a completely new era, it is actually the period of the real Swiss evolution in the industry, the time for their dominance and establishment. Essentially, the first wristwatches were the military “trench” timepieces produced for the needs of the First World War. These were pocket watches with refined dimensions, equipped with a leather strap for their placement on the wrist. The road to the contemporary watches in the coming decades included 4 major innovations. First came the presentation of water resistant cases from ROLEX in 1926, and the same brand presented the first mass production automatic mechanism in early 1930s fitted in the “Bubbleback” line. In 1933, the collaboration of Swiss and Germans resulted in the introduction of NIVAROX hairspring reducing the vulnerability of the mechanisms to temperature changes and magnetic fields, and in 1934, the invention of INCABLOC by the Swiss engineers Georges Braunschweig and Fritz Marti, improved the mechanism shock resistance. All these four developments contributed to the perception of the wristwatch as a practical instrument for all human occasions. Apart from the technical innovations, the Swiss brands have also pioneered in the functionality of the wristwatches. The first wrist chronographs were presented in the early 1910s, primarily from LONGINES, BREITLING, UNIVERSAL GENEVE. In 1947, VULCAIN presented the first alarm model. In 1950s, the first diving and GMT models were introduced from BLANCPAIN, GLYCINE, ROLEX, TISSOT, ZODIAC. All these first model designs have been related with the history and evolution of the wristwatch in the 20th century.
No matter how impressive might be a classic mechanical wristwatch, at the very end it is a thing telling the time, subjected to cost and profit analysis, both for those who sell it and for those who buy it. The elevation of the more affordable, more durable and more accurate electric quartz watches in the 1970s was no surprise for the Swiss since they had been among the pioneers even in this field. The quartz technology (the utilization of the quartz crystal oscillation at a frequency of 32,768 Hz when the balance of the mechanical caliber oscillates at the optimum frequency of 4 Hz) had been used in clocks since the late 1920s, and the Swiss started working on experimental quartz wristwatches since the early 1960s, in a close competitive rival with the Japanese, in particular SEIKO. Eventually, BETA-21 the first Swiss marketed quartz caliber (a project of 20 brands) was presented in 1969, a little later than SEIKO Astron being the first quartz model put in production. Despite the fact that the Swiss presented a great number of quartz wristwatches during the following decade, including significant models from top brands like OMEGA and ROLEX, the Japanese industry expansion in the 1970s was so rapid that proved impossible for the majority of the Swiss brands to adapt and convert their strategy. In the early 1980s, the entire Swiss industry had deprived almost 2/3 of its companies and had reached a dead end situation calling for a rescue.
The SWATCH group evolution
The great mid-war economic depression had forced the Swiss to form two major associations in the early 1930s. On the one hand SSIH, initiated in 1930 from OMEGA and TISSOT, was a group of watch companies that gradually had enlisted several other brands like AETOS, BULER, CORTEBERT, HAMILTON, LANCO, LANGENDORF, LEMANIA, etc. On the other hand, ASUAG was formed in 1931 as a second group of watch companies including both mechanism manufacturers (gradually enlisted under the entity EBAUCHES SA including A.SCHILD, FHF, ETA, PESEUX, UNITAS, VALJOUX, DUROWE, LANDERON), and watch brands gradually enlisted under various holding entities including ARSA, ATLANTIC, CERTINA, CYMA, DOXA, EDOX, ETERNA, GLYCINE, LONGINES, MIDO, ORIS, ROAMER, TAVANNES, TECHNOS, among others. Both associations had developed separately till the late 1970s gathering at least half of the entire Swiss industry resources. Being practically insolvent, they eventually merged to the entity SMH (Société de Microélectronique et d’Horlogerie) in 1983, and finally renamed to SWATCH Group in 1998 developing into the biggest Swiss watch company, and holding approximately 20 brands and many other supporting manufacturing companies in the first two decades of the 21st century. The major contributions of this conglomeration are the clear separation of the Swiss brands to four distinct ranges (basic, middle, high, luxury) and profoundly the introduction of the SWATCH watch in 1983, the “savior” product of the Swiss watchmaking industry.
The formation of the SWATCH group in 1983 (under SMH name initially) naturally co-insides with the launch of the SWATCH brand being the brilliant idea of Ernst Thomke (first CEO of the group), materialized by the Lebanese-Swiss Businessman Nicolas Hayek (1928-2010). Based on the article of Joe Thompson (Hodinkee 2017), the first dealt with the restructuring of the ASUAG association from 1978, and in particular the concentration of all the critical production activity in ETA SA (the premier mechanism manufacturer), whereas the second is credited with the merging plan of the two major industry associations of that time (mentioned above), ordered by the Swiss banks that were committed to backup and finance the rescue of the third biggest exporting industry of Switzerland in the early 1980s. The master plan implemented was straight forward projecting that all the mechanisms would be produced from ETA, and the brands of the group would focus on designing and marketing, especially the basic, middle, high range ones, without excluding the luxury brand OMEGA. Targeting on the low end of the market, SWATCH was from the very beginning an affordable (basic range) but also qualitative non-repairable plastic wristwatch, distributed directly to the market. Issues and initial credibility problems did appear, but eventually were solved and the project proved a huge success within two years, with a contribution of approximately 15 million timepieces in the market sales volume of 1985, plus further increase to 20-30 million shipments annually in the 1990s and 2000s driving the whole Swiss watchmaking industry into a new era.
The case of ROLEX
A phenomenal brand founded first in London in 1905 by the German Hans Wilsdorf (1881-1960) and the British Alfred Davis. The name ROLEX was selected and registered by the first in 1908, and the company had been initially engaged in the assembling and distribution of pocket watches with outsourced selected parts, before moving to Geneva after WWI in 1920. H.Wilsdorf was among the first who had envisioned the importance of wristwatches, and his genius management had set the ground for the very successful development of his brand, especially after the 1960s. ROLEX is diachronically the market leader by far in the luxury range segment, for two primary reasons. First, throughout its timeline it has totally ignored the “grand” complications focusing in the quality and functionality of its tool watch models bringing several practical and useful innovations in the industry, like the water resistant case, the first mass produced automatic caliber, the magnified date crystal, the first publicly used diver and GMT models, the improved grade 904 stainless steel alloy, the latest patented materials for the critical elements of its calibers. Second, the brand has maintained the design of its iconic models pretty much unchanged since their introduction in the 1940/50/60s implementing a smart (case study) marketing strategy. Producing most parts in-house since the late 1950s, ROLEX is the most independent and self-sufficient manufacture watchmaker in history, along with JAEGER LECOULTRE and PATEK PHILIPPE, perhaps the three most important Swiss brands diachronically.
Working on the brand serial numbers, the average annual sales during the 1940s and 1950s were 70,000 watches increasing to approximately 170,000 pcs in the decade of 1960s. Despite the introduction of quartz watches in the 1970s, ROLEX not only survived, but achieved a remarkable development with the average annual sales being constantly above 400,000 units till the end of the 1980s, a really surprising result for the two worst decades for the Swiss mechanical watches. In the 1990s, the brand established its leading position with approximate annual sales of 900,000 watches reaching a total production volume of more than 20 million watches by the end of the 20th century! Considering that after 2000, the annual sales volume has been steadily above one million watches for almost two decades, it is estimated that the total volume of ROLEX watches in maintenance and circulation has already doubled in 2020. The usual question is if these 40 million watches are the “best”. The simple answer is that quality is relevant to price, and the truth is that ROLEX watches become more overpriced as the time passes, but not without a good reason since they are considered among the best value keepers. Among all the brand’s historical models, the “simple” Oyster Perpetual (with or without date) models are the most representative and fairly have achieved the status of the most all-around watches in the market, at least for the last 60 years.
Swiss made and ETA
The label “Swiss Made” derives from a regulation introduced in the late 19th century for all Swiss industrial products, applied primarily to watches. According to COSC institution (Contrôle Officiel Suisse des Chronomètres) that certifies the accuracy of the best Swiss calibers since 1973, the recent regulation adjustments set three basic requirements. First, the watch should be assembled and tested in Switzerland. Second, the mechanism should be Swiss, assembled and tested domestically with at least 50% of its components produced domestically. Third, the domestic production cost generated should be at least 60%. Considering that most brands outsource materials, with high margins between the production cost and the list price, plus the fact that most of the cases and a great number of parts in Swiss (primarily quartz) movements are produced abroad (probably in Asia), this regulation is open to much discussion and interpretation. What is critical however is that no matter the origin of the components, the “Swiss Made” label is diachronically a guaranty of proper quality control both on the materials and the processes used, even though this assumption holds true more for older watches, before the recent globalization status, and primarily the global recession of 2008.
Profoundly the determinant factor for a Swiss watch is its mechanism, with ETA being the premier manufacturing company of watch movements in the global industry. Founded in 1856 as an ebauche factory in Grenchen producing raw mechanisms for third party watchmakers, it gradually absorbed almost all the independent watch movement manufacturers in a timeline starting in 1932 with its participation in EBAUCHES SA holding company (member in ASUAG association), and finishing with the establishment of SWATCH group in the late 20th century. A company that fully represents the dogma of standard mechanisms produced on the account of many watchmakers, carries the heritage of several distinctive ebauche manufacturers from the past. FHF (Fabrique d’Horlogerie de Fontainemelon) had been the first such company founded in 1793, followed by A.SCHILD (1890), UNITAS (1898), VALJOUX (1901), PESEUX (1923), VENUS (1923) being the most significant among others. ETA has continued to produce several established “workhorse” mechanisms originated from the above entities like UNITAS-6497/98, VALJOUX-7750, PESEUX-7001. Above all, the automatic caliber 2824-2 (plus 2892 line) and its derivatives originated from ETERNA Cal.1427 introduced in the 1950s, is the most widely used movement ever appeared. After the decision of the SWATCH group (circa 2010) to gradually stop supplying mechanical calibers to brands outside the group, ETA-2824-2 has been legitimately cloned by other Swiss ebaunche manufacturers like SELLITA, STP and RONDA, a practice proving the significance of standard Swiss mechanisms for the global watch industry.
Between the “traditional” past and the “smart” future
According to the results of the global watch industry towards the end of the second decade of the 21st century, the annual sales volume of APPLE smartwatches (approx. 30 mil.units) has already exceeded the respective volume of the entire Swiss industry (approx. 20 mil.units). Apart from the market trend, there is a huge supply of used and vintage timepieces that increase their share of circulation pushing the demand of the brand new models, primarily thanks to the fact that buyers get more informed and sensitive regarding horology and its heritage. Two things are clear in the early 2020s. Prices need to be adjusted downwards, and mainstream brands need to be less for claiming viable market shares. Sticking to the present (2020), the Swiss watch industry includes more than 150 established brands, belonging to all six ranges and producing watches with an average price of 800,00 euro. What matters most is that this average price represents the true value of a good quality Swiss made mechanical wristwatch. In other words, a budget of 1000 euro is the optimum one for purchasing a “best value for money” mechanical timepiece.
Examining the mainstream market in the early 2020s, there are more than one hundred (100) established Swiss brands, almost equally distributed to the three major ranges, middle (very few basic brands), high and luxury (including the hyper luxury segment). Additionally, there are more than fifty (50) independent watchmakers engaged in the crafting of a limited number of handmade watches per year keeping the traditional watchmaking alive although they address their usually extremely expensive creations to the very few who know and can afford to buy their watches.
Like mentioned before, all these brands are not monitored only for their brand new models, but also for their vintage and pre-owned ones, available on the internet and counted in multi millions. Perhaps, the biggest challenge for the Swiss industry further on would be the management of the ongoing surplus of supply in a market of diminishing demand. The Swiss have to manage their past excessive development, and once more they have to escape in time from a crisis situation. It has happened before and will happen again. So we say all! GS