Not so very long ago, ETA, a Swatch Group company producing watch movements and blanks (ébauches) since 1793, was an obligatory port-of-call for any firm lacking the industrial capacity to make its own calibres. And for many of the 200-some Swiss brands, this was the case. With some fifteen production sites in Switzerland, Germany, France, China, Malaysia and Thailand, and flanked by Valijoux, Nouvelle Lemania (now called Manufacture Breguet), Frédéric Piguet, Comadur, Valdar and Nivarox, all part of the Swatch Group, ETA laid down the law, supplying movements, blanks, hands, regulating organs and other micro-mechanical parts for some 80% of Swiss watches.

When in 2002 Swatch Group CEO Nicolas Hayek peremptorily announced that ETA would be discontinuing deliveries of blanks to instead supply finished movements, clearly marked Swatch, of course the profession cried foul. Indeed, the outcry was such that the Swiss Competition Commission (Comco) had to step in and attempt to tone down measures that would have had the entire profession by the throat. In November 2004, Comco and ETA Manufacture Horlogère Suisse reached an amicable agreement whereby deliveries of blanks would continue until 2008, rather than the original cut-off point of 2006, then be phased out over two years. Put simply, over the next few weeks Switzerland will see its main source of mechanical watch parts begin to dry up.

A much-needed wake-up call?

Back to 2002. Did Nicolas Hayek once again read into the future and predict the remarkable growth witnessed in the mechanical watch market over the past few years? The figures speak for themselves. Exports of Swiss mechanical watches rose from almost 2.7 million units in 2002 to more than 3.7 million last year for a total value of CHF 8.3 billion, a 55% increase over four years. Not to mention the trend across the branch, and within the Swatch Group through Breguet, Blancpain, Glashütte, Jaquet Droz, Léon Hatot and Omega, to upgrade production. This implies heightened demand for blanks which brands can then adapt with additional modules as a means of distinguishing themselves. And in this respect ETA’s "heavy-duty" models, beginning with the 2892, have always enjoyed an ironclad reputation.

Another factor swayed Nicolas Hayek’s decision. Why should Swatch be one of the few companies to have invested heavily in production to form a totally integrated group, leaving its competitors, who it supplied, free to plough money into promoting their brands? Taking this view, the plan to cease deliveries of blanks was presented as a long overdue reminder to watch companies that having industrial resources worthy of the name was a matter they could no longer ignore. At the time, Nicolas Hayek’s decision was seen as a pretext to bring the competition to its knees. The subsequent changes in the sector over recent years have softened the blow. This is all the more true as ETA has been operating at full capacity for some time already while international demand shows no signs of waning, resulting in longer and longer waiting times.

Spurred into action

Indeed, the industry has been quick to respond with takeovers and massive investments aimed at creating vertically-integrated groups. LVMH injected millions into Zenith. Richemont took over Minerva Villeret, now associated with Montblanc, to then buy manufacturing operations at Roger Dubuis. Jaquet Droz (Swatch Group) is developing its own Manufacture, as are Gérald Genta and Daniel Roth, both from the Bulgari group. Extensions are planned at Audemars Piguet, Jaeger-LeCoultre and Nouvelle Lemania while Vaucher Manufacture forges ahead, backed by the Sandoz Family Foundation with Hermès investing CHF 25 million to acquire a 25% stake.

As these examples clearly show, the profession is now fully aware of the importance of production, and not just the major groups either. At one time the alternatives to ETA could be counted on the fingers of one hand; today, numerous companies are supplying quality movements and blanks (see also: The indispensable movement manufacturers) while specialists such as BNB and Agenhor (see also: Modesty, intelligence and creativity, Agenhor has them all) are developing new complication movements. Equally noteworthy, several brands have recently unveiled their own Manufacture movement, including Omega and Maurice Lacroix (see also: From brand to Manufacture). As the dispersion of balance-spring production shows, from its sleepy state a few years ago, Switzerland has well and truly answered this industrial wake-up call. ■

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