ETA, a symbol of Swiss watchmaking history

Swiss watchmaking has come through many crises over its five centuries of existence which have helped shape the industry into the form we know today. The expansion of ETA Manufacture Horlogère Suisse into one of the biggest producers of watches and movements in the world is a perfect illustration of this. Now part of the Swatch Group, ETA has traversed the many decades since its origins in the eighteenth century, not without the multiple restructurings, mergers and acquisitions that have been part of the “growing pains” of what is now Switzerland’s third largest export industry.

Creation of ASUAG in 1931

The seed was sown in 1793 with the establishment, in Granges in the canton of Soleure, of Fabrique d’Horlogerie de Fontainemelon (FHF). However, it was only in the early twentieth century, with the spread of mechanised production methods, that Swiss watchmaking made its first significant moves to regroup its members. The need to regulate the branch and set boundaries for competition led watch manufacturers, blanks-makers and ancillary trades to adapt their practices. A turning-point came in 1926 when, with support from banks, blanks manufacturers FHF, A. Schild and Ad. Michel (set up in Granges in 1896 and 1898 respectively) merged to become Ebauches SA, based in Neuchâtel. These three firms produced 75% of blanks in Switzerland and employed several thousand people. This new company could also count on significant financial resources to further strengthen its position within the market. From 1927 to 1929, no fewer than 27 manufacturers joined Ebauches SA, including Sonceboz, Bovet, Optima and Urania.

The 1929 Great Depression got the better of this early initiative, as a spate of bankruptcies hit the Swiss watch industry during the early 1930s. More than 20,000 watchmakers were thrown out of work. Banks and trade organisations decided to stake their all: the strategy behind the creation of Ebauches SA hadn’t been wrong; it simply hadn’t gone far enough in consolidating the segment. Henceforth the decision was taken to set up a new holding structure in which banks and industry would hold equal stakes, and which would bring together the vast majority of manufacturers of blanks and essential components. Thus in 1931, the Société Générale de l’Horlogerie Suisse was formed, more commonly known as Allgemeine Schweizerische Uhrenindustrie (ASUAG). A shortfall in funding prompted the Swiss Confederation to step in with CHF 13.5 million, some as a stake in the new company’s capital and some in the form of interest-free loans. This was about watchmaking and therefore in Switzerland’s national interest.

Swiss watchmaking "under control"

Henceforth, ASUAG could fulfil its objectives, such as the creation in 1932 of two manufacturing firms, Fabriques d’Assortiments Réunis and Fabriques de Balanciers Réunis, and an aggressive takeover strategy. Auguste Reymond, a watch manufacturer established in Tramelan in 1898, and Eterna, founded in 1856 in Granges, were part of the draft. Eterna, on entering the ASUAG fold, was effectively cut in two: the Eterna name was kept for watch manufacturing while the company’s blanks-making activity was given the new name, ETA SA.

To give ASUAG, owner of ETA, every chance of success, the Swiss Confederation intervened a second time, in 1934, with a Federal Council decree aimed at protecting the Swiss watch industry. It made it illegal to set up a company without authorisation and outlawed exports of chablons (unassembled components sold outside Switzerland at discounted rates) except under the terms of specific conventions. As Joël de Toulouse writes on his website, invenitetfecit.com, “Swiss watchmaking was under control.” More takeovers followed, including Derby, Precimax and Gigantic in 1941, Glycine in 1942 and Valjoux in 1944.

SSIH is founded in 1930

Manufacturers of watches didn’t stand by idly as blanks-makers pulled together, helped by the Swiss state. In 1930, Louis Brandt et Frères, Omega and Charles Tissot et Fils joined forces as the Société Suisse pour l’Industrie Horlogère (SSIH). A series of takeovers would follow, such as Lémania (1932), Marc Favre (1955), Eideldinger et Cie (1957), Rayville, which made Blancpain watches (1961), Cortébert’s production resources (1961), Langendorf Watch (1965), Aetos (1969), Economic Swiss Time Holding, the biggest Swiss manufacturer of Roskopf watches (1967) and Hamilton (1974). In two decades, the SSIH would become a key player, alongside ASUAG, in the Swiss watch industry, which would go from strength to strength until the 1960s.

Switzerland, whose annual production of watches and movements grew from 18.8 million in 1945 to 41 million in 1960, wasn’t the only country to benefit from this golden period. Others such as the United States and Japan sharpened their spears and set out to conquer new markets for their inexpensive timepieces. Despite the many companies to have come under the umbrella of ASUAG or SSIH, Switzerland’s watchmaking industry remained fragmented with more than 3,000 firms, 80% of which employed fewer than 20 people. In an attempt to match the might of such giants as Timex and Seiko, ASUAG continued its takeovers, acquiring Cyma (1967) then Longines (1971). Meanwhile, Ebauches SA became the new owner of Durowe in Germany and Sefea in France. The Swiss watch industry was at its height. In 1974, it manufactured 84 million watches.

A giant is born

The years after 1974 would prove far less rosy. The quartz tidal wave, the aftermath of the 1973 oil crisis, and appreciation of the Swiss Franc brought the sector to its knees. Between 1974 and 1983, Swiss production of watches and movements fell from 84 million to 30.2 million. Once again hundreds of firms were forced into bankruptcy and the industry shed thousands of jobs. Says Joël de Toulouse: “ASUAG could do nothing but despair. In 1978, ETA and Schild merged. Borel, Doxa and Cyma were sold following dissolution of Synchron. In 1980, Ebauches SA slashed the number of calibres it proposed from 136 to 40. The following year, ASUAG posted losses of more than CHF 44 million. In 1982, all the blanks-makers were merged within ETA, Oris was sold, losses were in excess of CHF 156 million.” SSIH was in no better shape and, with the situation now at a head, the group’s creditor banks called in an outside consultancy: Hayek Engineering.

The rest of the story has been well-documented (see Nicolas Hayek Focus), namely the merger of ASUAG and SSIH, orchestrated by Nicolas Hayek between 1983 and 1984. Hayek himself would become majority shareholder in the new entity, named Société Suisse de Microéléctronique et d’Horlogerie (SMH). Its entire movements and parts wing was regrouped under ETA which now encompasses all the former Ebauches SA companies. Today, ETA operates ten production sites and employs 6,000 people. From small beginnings two hundred years ago, ETA stands firmly at the head of Swiss movement production.