The Swiss Watch Industry: Challenges, Losses, and Lessons

The Swiss Watch Industry: Challenges, Losses, and Lessons

Introduction

Over the centuries, the Swiss Watch Industry has grown to be one of the biggest watch manufacturing industries globally, beating its French, British, and German counterparts. Though not being the brains behind the innovation of watches, they boomed and came to be known for manufacturing luxurious, sophisticated, and quality watches with a guarantee of excellence. This industry boasts watch manufacturing companies such as Rolex, Omega, Richemont, Bremont, Hublot, and Accutron. 

In recent times and years past, the industry has faced challenges that have resulted in a decline in production, exports, and sales. As a result, leading to transformation, growth, and revitalization of the industry. This article aims to tell the fascinating history of the Swiss Watch Industry, highlighting a few challenges faced. We will explore some of the losses they encountered and the lessons we can draw from them.

  • History of the Swiss Watch Industry 
  • Three Challenges Faced By the Swiss Watch Industry
  • Losses Encountered By the Swiss Watch Industry 
  • Lessons To Learn From the Swiss Watch Industry 

History of the Swiss Watch Industry 

How it Started

Watchmaking began in the 16th century with an evolution from portable clocks to mechanical watches. The first “pocket watch” is purported to have been invented by a German clockmaker, Peter Henlein, in 1530. 

In Switzerland, watchmaking also started around the 16th century with the influx of the French Huguenot refugees, who were primarily watchmakers, into the city of Geneva. Though the city was known for its love for jewellery, it was not exactly into the watchmaking trade. 

At the time of the Huguenot influx, John Calvin, the then leader of Geneva, had strict rules and regulations placed against any show of wealth, leading to the ban of jewelry. This caused a massive meltdown and destruction of businesses of goldsmiths and jewelers in the city. The goldsmiths ventured into the watchmaking business, seeing that the only form of jewelry still allowed were portable clocks and watches. 

This was the beginning of the Swiss Watch Industry. With their skills combined with the expertise and knowledge of the French Huguenots, the local goldsmiths created beautiful watch designs that soon became popular around the country and Europe. 

The Journey After

As years went by and the watchmaking business grew, Geneva soon became packed and overcrowded with watchmakers. As a result, causing some to leave the city and move to the mountain area of Jura. 

Following the move, Daniel Jean Richard started the first innovation in the watchmaking process, applying division of labor. This meant dividing the process into subsections. Each part of the watch was produced by craftsmen and experts specifically trained for the job. Then finally, all the parts go to the “etablisseurs,” who will assemble the watch. This idea of division of labor and specialization saw an increase in the productivity and quality of the watches made, making the Swiss Watch Industry an industry of interest. 

By the end of the 17th century, when the rules against jewelry adornment were relaxed, Geneva had come to be known for its watchmaking expertise. However, despite their knowledge and reputation, the Swiss watchmaking industry had not yet become a “big dog” in the global watchmaking industry (at the time, the British Industry was leading). As time went by and years passed, more innovations were born, and the industry grew. Perrelet created the “perpetual watch” in 1770. Philippe invented the “pendant winding watch” and the fly backhand of the Jura area. 

These innovations, improved quality, and productivity, and the “etablissage” production system enabled the Swiss Watch Industry to outpace the French and British Watch Industries, putting them at the top of the watch manufacturing chain. 

Three Challenges Faced By The Swiss Watch Industry 

No matter how successful, every organization and industry has faced challenges at some point in its existence. The Swiss Watch Industry faced quite a few of which we are going to highlight three.

Technological Innovation and Advancement

Since its inception, the Swiss Watch Industry has always had to deal with the issue of technological advancement sewing as most of the watches manufactured by them are traditional and mechanical. 

One of such challenges was the quartz technology which almost led to the destruction of the industry. They, however, were able to overcome this by learning about the technology, accepting it, and then adapting to the change. 

In recent times, the industry is facing another technological issue, smartphones. The development and introduction of smartphones into the market has seen a decline in the volume of sales and exports in the Swiss Industry. According to a 2021 study by Deloitte, the demand for smartphones has doubled since 2018, with Apple dominating the market. 

The COVID-19 Pandemic

When the COVID-19 virus broke out, the world was thrown into a frenzy. Public gatherings were banned, events and flights were canceled, stores and businesses were shut down, and cities and countries were placed on lockdown. 

Everything was at a standstill. As a result, the global economy was affected, and the Swiss Watch Industry wasn’t left out. The pandemic brought various challenges for the industry, one prominent one being the disruption of the supply chain. This led to a shortage of watch manufacturing materials and machinery. 

The lockdown also affected companies’ work schedules, meaning only a few staff could come into workshops, causing a decline in production volumes. 

The “Swiss made” label

The “Swiss made” label, though seen as a means of communicating value and quality and preserving the cultural background of the industry, is something sort of a challenge, especially for the low and mid-priced segments of the industry. 

Though the “Swiss made” label requirements of 1990 were flexible, the “Swissness” amendment of 2013 isn’t. It requires that for a watch to merit the “Swiss made” label, 60% of the manufacturing costs must be done in Switzerland. The top players and top companies in the industry accepted this. 

However, the small and medium companies did not. This is because most of the watch machinery and components that most small and medium companies use come from abroad. After all, they are cheaper and affordable. Therefore, the “Swissness” amendment means that they would have to replace their foreign suppliers with domestic and local ones. 

Replacing these foreign suppliers with domestic ones translates to an increase in the demand for domestic machinery. As a result, this will cause a shortage of and delay in delivery of machinery, resulting in the hike of prices. All these factors will also cause a resulting high cost of production, and therefore high price of finished products (watches). 

Losses Encountered By The Swiss Watch Industry

Losses are a regular part of business and are sometimes inevitable. The Swiss Watch industry experienced its fair share. One of the significant losses the industry experienced was in the 20th century when they introduced quartz technology. This technology was one that almost saw the extinction of the industry. 

When quartz technology first came to being, the Swiss watchmakers thought it “funny.” They thought that consumers would prefer electronic watches to traditional luxury mechanical watches. They ultimately rejected the idea. Well, the Japanese accepted the technology and developed their watches on it. And before long, they were making a large volume of sales. This caused a considerable decline in the demand for the Swiss watches kicking the Swiss Watch Industry from the top. 

Realizing that they were wrong, they learned all they could learn about quartz technology. Combining it with their expertise and craftsmanship, they made excellent and beautiful master timepieces. This move increased the demand, exports, and sales, and before long, the Swiss were back to the top. 

However, the delay in responding to the technological change and advancement led to the loss of their Japanese market and then competition in their other Asian markets.

The Swiss Watch Industry is again facing huge losses due to smartphone technology, and they don’t seem to be doing anything about it. This delayed reaction of the Swiss Watch Industry may cost the industry its position as the number one in watch manufacturing. Though some Swiss watchmaking companies like Hublot have launched their smartphone brands, there hasn’t been any positive response. 

Lessons to Learn From The Swiss Watch Industry  

There are important lessons that you can learn from the Swiss Watch Industry. The first of these lessons is the ability to see opportunity amid disappointment. The Swiss Watch Industry exists today because the goldsmiths of Geneva took advantage of the ban on jewellery to venture into a new trade, watchmaking. 

They learned the trade and improved on it, becoming experts and soon redefining their country’s history. Another thing is that they understood the need to learn and train and, as such, sought knowledge from the French Huguenots, who were primarily watchmakers. They combined their expertise and the knowledge received to create master timepieces. 

Another lesson to learn is the lesson of growth and adaptation to the ever-changing environment. Knowing they were on the verge of losing their industry, the Swiss had to see and understand that times were changing, and they needed to adapt to the changes to survive: they needed to grow. The quartz technology would have ended them had they not grown and adapted to time and consumer preference changes.

Conclusion 

The Swiss Watch Industry is the most significant watch manufacturing industry today. They have put a lot of time, effort, knowledge, and dedication into their works all through the years. Though faced by, and still facing, challenges, they are still leading and haven’t stopped expanding and growing. 

Their resilience and deep-rooted cultural value system have kept them afloat for so long. However, adapting to and embracing changes in trends and consumer preferences will further consolidate their position as the top watch industry in the world.

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