Swiss watchmakers face and beat hard times

Press, 11 August 1979, Page 16

Swiss watchmakers face and beat hard times

Swiss watchmakers are at last emerging from the crisis brought on by Japanese electronics and the soaring value of the Swiss franc. Omega has just nabbed the contract for timing China’s national games, a major coup over Japanese rivals and another sign that hard times may be ending. It was a Swiss who in- ' vented the first electronic watch. At the end of the 19505, an engineer named Max Hetzel offered his revolutionary idea to a number of Swiss manufacturers. They all turned it down. The idea was taken up by America and quickly copied by Japan. As a result, Swiss watch sales slumped and the number of jobs in the industry declined from 76,000 in 1969 to 53,000 in 1978. The structure of Japan’s watch industry is completely different from Switzerland’s. As one Swiss watchmaker put it: “They are very lucky not

to have all that tradition behind them.” In Japan, the industry is concentrated into three big firms working with, at most, a dozen brand names. In Switzerland, there are hundreds of Notaries and work shops holding rights to lu,v u o registered names, of which 3000 are active. These hundreds of , ' workshops would be thousands without the recent drive towards rationalisation and concent’9tion, which many of the peopl.e in the industry still consider as, at best, a nec- • essary evil. “We are in danger of losing our souls,” one told me. The metaphor is apt. Watchmaking is almost a religious thing with the Swiss. Rationalisation has killed off a number of small firms, especially those making the cheapest watches. It is not the Japanese who are taking over here, but the workshops of South-East Asia. Middle-priced mechani-

cal Swiss watches still find a good number of customers. In that area the Swiss are challenged only by the Russians. But it is in high quality watches that the Swiss are making their comeback. They are playing the double trump of technical superiority and styling for all it is worth.

In 1974, a Japanese manufacturer proudly presented an electronic watch that beat all records for slimness with a calibre of 3.5 mm. This year, at the Basle fair, a Swiss firm showed a new ultra-slim model: I.7mm. Last month, a Swiss watch measuring 1.47 mm was announced. What the Swiss makers emphasise is not that they can make a prototype of

such a watch to present at a fair, but that they can produce it in series of a thousand. Not perhaps the common man’s watch at , $15,000 each, but there are people willing to pay the , price. The existence of such ' people also assures the prosperity of a third branch Of the Swiss ■ watchmaking industry — ; those whose outlets are the world’s top jewellers. Expensive Geneva bijoutiers with double-barelled names are having no problems at all. Even in Japan, they do very well, and one exclusive club in Tokyo is open only to people whose watches show the magic names of Geneva. Along with the Japanese technological, challenge, Swiss watchmakers have also had to face the constantly rising exchange rate of their franc. Two factors have helped to prevent that problem becoming a catastrophe. First, the Japanese yen

has gone up, in relation to the dollar, only a little less than the Swiss franc. Second, since 1974, inflation in Switzerland has held at about 1 per cent, a year. As a result, prices in countries with doubledigit inflation were relatively less affected than they might have been. What makes Swiss exporters angry is that the rise in exchange rates has been exploited by middlemen and retailers. Take the example of a watch sold in shops for the equivalent of $2OO. It costs $5O on leaving the factory; the wholesaler adds on 50 per cent, and the retailer doubles the wholesale price, reaching $l5O. To this are added another $5O for marketing, insurance and transport. At each stage the exchange rate is used as an excuse for the multiplication of profits, although it is only the first buyer, the wholesaler, who actually has to bear the high exchange rate.

By

LEISL GRAZ

of the “Observer”