If you love and admire independent watchmaking, the skill of a single watchmaker capable of designing and producing his own unique take on a high quality Swiss made watch, you should be aware of what is fast approaching, big, bright and horn honking in the rear view mirror.
Around 15 years ago, when the Swiss watch industry had finally turned the corner on the so called quartz crisis of the late 70s and early 80s, Swiss watch exports amounted to some CHF 8 Billion. By 2012 export figures had reached a very healthy CHF 22 Billion. That is approximately an annual watch output of around 40 million, of which 70% is exported to the world’s major watch market, China.
China has taken over as the world’s largest consumer of luxury goods, which is why it is no coincidence that in recent years so many of the major watch brands have geared their output to suit Chinese tastes, including the manufacture of a number of high end Chinese Lunar new Year watches. Top name brands such as Vacheron Constantin, Patek Philippe, Ulysse Nardin and Cartier have all developed watches directly aimed at the Chinese market and they are by no means alone.
But perhaps the biggest sea change in the past decade is within the Swiss watch industry itself. The rise and rise of the mighty conglomerate has seen some of the most respected brands come under the control of giant groups with their vast buying power and almighty marketing and distribution muscle. Pick a brand, just about any well-known watch brand, and the chances are it is tied to a large conglomerate.
The Swatch Group, in addition to Swatch, controls among others, Omega, Breguet, Blancpain, Tissot, Longines, and Harry Winston. The Richemont Group owns Vacheron Constantin, Jaeger-Le Coultre, A. Lange & Sohne, Cartier, Officine Panerai, Montblanc, IWC and more. And just this week, with the announcement that Hublot Chairman Jean-Claude Biver will become of Head of LVMH’s watchmaking division, he will be putting his undoubted skills behind beefing up the LVMH portfolio which already includes TAG Heuer, Bulgari and Zenith. In the past decade the Swiss watch industry has been grabbed by the collar and controlled by these groups with their might dictating the International distribution market and the mainstream media.
At the same time as controlling the brands, these mighty groups have acquired almost all of the high quality suppliers in Switzerland, including the best dial makers, hand makers, case makers and several other artisans. Once acquired, no one else can use their services. And of course, as is well known, Swatch, formerly the biggest supplier of quality movements, will now cease to make its movements available to any brand other than one of its own. It might sound like progress, but for small and independent watch brands and watchmakers it makes it increasingly tough to make any progress at all.
Of all these problems, the greatest is the increasing control of mechanical movements.
The history of Swiss movement making dates back to 1793. It was at this time that a factory was set up in Fontainemelon in the Swiss Jura. The founders made movement blanks and started to develop the large scale mechanisation (initially by oxen) of mechanical movements with several components that could be interchanged.
Over time, steam replaced the ox, which in turn was replaced by hydro electricity. In the same years as the sinking of the Titianic, Fabrique d’Horlogerie Fontainemelon FHF, was on the rise, having registered the patent for the winding and setting of a movement by crown. It was known as the “keyless” mechanism. By 1913, just before WWI, output had reached one million movements a year. Many other “Ébauche companies started to appear including A. Schild, Eterna, and ETA, of these ETA was, as we know, acquired by The Swatch Group.
By the mid 20thcentury, the so called “Golden Era of Watchmaking” was under way with the perfect mechanical movement being produced in high quantities. Fully 30% of the Swiss population was earning some or all of their livelihood from the watch industry at this time.
There were 36 Ébauch companies manufacturing and supplying millions of high quality movements to Swiss and German watch companies, including Rolex, Patek Philippe and Girard-Perregaux as well as Fortis, Gruen, Tissot, Longines and many other companies.
When the quartz watch became a global trend and consumers by the million rejected the mechanical movement for the reliability of a quartz powered watch, thousands of watchmakers lost their jobs and the worst economic crisis in Switzerland’s history wreaked havoc. Of all the watchmaking families in the Swiss watchmaking industry today, not one was unaffected by the quartz crisis. Many of the well-known watch making families deserted the business for good. Desperate for a solution to the problem, the government intervened and united the major Ébauch companies into one large conglomerate under the name Ébauche SA, which later became the Swatch Group.
Hundreds of smaller companies simply went to the wall, and expensive tools and machinery were dumped in the lakes.
But due to the uniting of all the best Ebauche makers, 200 years of collective industrialised movement knowhow was contained within one company – the Swatch Group. Since that time the Swatch Group has supplied the industry with around 80% of all movements used in Swiss watches as well as a countless number of small and independent watchmakers from brands all around the world. However, by 2019, no further movements will be available outside of the Swatch Group. If you want a movement you will either have to make it yourself in-house, which is extremely costly and complex, or source elsewhere – but unless you source within Switzerland you will lose your entitlement to call your product Swiss made.
Powerful groups such as Richemont and LVMH have been able to invest millions in their own production plants and can produce high quality movements but these are only available for watch brands within the Group. Meanwhile, CNC machining has progressed to the point where many traditional artisans and watchmakers are simply no longer required. These crafts are fast disappearing in modern day Switzerland.
Respected Independent watchmaker Martin Pauli of Angular Momentum & Manu Propria is unhappy with the way the large groups do whatever they can to keep control of everything. They hold shares in the large retail group’s around the world to make sure only those brands that are listed are accepted. They also own the specialist suppliers, who, although ostensibly independent, are not as they can only serve the brands within the Group. As for the cost of the watch you buy, it’s increasing constantly to cover the cost of ad spend. Someone has to pay for all those expensive brand ambassadors – and that’s you. 45% of what you pay for is the advertising budget.
While you may see images of the elderly artisan at his cosy wooden bench in his workshop, the reality is sterile, dust free snow white rooms with CNC machines and factory workers (not watchmakers) producing perfectly machined robot finished timepieces. The more the large groups’ take control, the more the individuality disappears.
It’s Martin Pauli’s belief that within a few years the watch industry will be just like the car industry. The same design, same manufacturer, massive advertising budgets, and the independent watchmaker being steadily squeezed out for profit and production capabilities within Switzerland.