The Three Outsiders Who Saved the Swiss Watch Industry

In 1982, there weren’t numerous crucial signs of life remaining in the emaciated body of the Swiss watch market. In one year alone, the sales of Swiss watches dropped by 25 percent. The giant of Swiss Watch Manufacturing, Allgemeine Schweizer Uhrenindustrie AG – Société Suisse put I’ Industrie Horlogére (ASUAG-SSIH), owner of a number of unforgettable Swiss brand names including Omega, was hemorrhaging loan so terribly that its lenders intervened to ensure that at least something stayed of their investment.

The rather smug and remarkable Swiss horological facility remained in the depths of an horror-logical nightmare from which it could not awaken. End of Days was in sight, and Switzerland’s rich watchmaking custom and remarkable history of development were in risk of being swept aside by some piddling piezoelectric material that vibrated at a specific frequency when caught within an electrical field, particularly quartz technology.

The Japanese quartz invasion, and, to a lesser level, the emergence of the American jewel-free, throw-away watch company Timex, delivered a blow of atomic proportions to the Swiss. So many solid and cherished brand names were vaporised overnight.

Like lots of manufacturers at the time, the doyens of ASUAG-SSIH remained in a state of suspended shock at the devastation triggered by the quartz onslaught. When the bankers actioned in and took control of the conglomerate, among the first things they did was use ‘outsiders’ to lead the rescue attempt, believing, with some reason, that the task could not be done by market experts. This, as you can think of, decreased about as severely as serving a plate of squid rings for lunch after a brit milah event.

Among the excellent champions to right the wrongs of the Swiss watch manufacturing industry was an individual who knew precious little about horology and mass production of timepieces. Nicholas Heyek was hired to establish a turn-around prepare for ASSUAG-SSIH, a plan that eventually led the Swiss from the dark winter season of despair into the sweetness and light taken pleasure in by the market today.

Lebanese-born entrepreneur Hayek was the owner of an organisation consulting company Hayek Engineering Ltd. of Zurich. He carved the moribund corporation into 3 different divisions covering the manufacture of motions and watch parts, ended up watches, and produced items that leveraged the organisation’s crucial capabilities.

Another outsider, Pierre Arnold was opted to head the organisation. Arnold’s only experience of mechanical timepieces was that of using one on his wrist. Before he joined the organisation he headed the Federation of Migros Cooperatives, a multi-billion dollar flagship of Swiss retailing.

Maybe the most galling choice of all was the visit of a doctor to run the watch division of ASSUAG-SIH. Radical surgical treatment was required if the patient was going to survive, and, apart from cutting deeper into the fat of the organisation, among the most significant medicaments Ernst Thomke recommended was to offer ‘ebauches (watch motions) on the global market. This hitherto unusual practice was welcomed by some of the more conservative experts as identical to treason.

But, without a doubt the most essential choice made by this farsighted medico was to wage the horological equivalent of the Fight of Midway with the Japanese to recapture territory owned traditionally by the Swiss. Thomke established 5 rules of engagement for the coming hostilities. In developing an expect the lower end of the market he decreed that the watch:

  1. should have style
  1. should be cheap to make
  1. need to be priced competitively
  1. be durable, and
  1. establish a technological lead.

Thomke’s vision result in the supreme creation of the Swatch in 1983, a brand that clawed back much of the ground lost to the Japanese. The Swatch was a brilliant fusion of design and technology. It mirrored the style choices of the day and provided a quartz movement under an analogue dial. The number of parts used to produce the watch were reduced to around 60 percent of those employed in basic models of the day. Fantastic economies were accomplished by robotics and single assembly lines.

Example has been the dominant lower-end brand of the last two decades launching literally numerous designs, producing ersatz exclusivity and collectiblility by producing limited editions and branching out into retailing through Swatch stores of a range of fashion devices.

In 1985, ASUAG-SSIH went through a name modification to SMH and Nicholas Hayek was chosen to lead the new entity. His appointment was welcomed with the now-customary hauteur by the Swiss horological establishment who could not rather get it into its head that outsiders provided a freshness of vision that was in very short supply within the market. Their sobs reached banshee level when, later, he acquired the high-end ‘ebauche maker Piguet and its luxury bedfellow Blancpain.

Maybe bewaring of Thomke’s surgical technique, Hayek excised nearly half of the company’s workforce and rationalized the number of brand names produced by SMH. This allowed him to target the organisation’s energies into building up the brand name power of crucial marques like Omega, Rado, Longines, Hamilton, Certina, Tissot, and Mido while still milking the Example golden goose for all it deserved.

Swatch bankrolled the renaissance of much of SMH’s finest understood brand names including our beloved Omega, and certainly has earned the right to a rename of SMH to the Swatch Group. Hayek’s claim that what rescued the Swiss watch industry was the very un-Swiss principle of the Example stands well to scrutiny. Swatch signalled that performance and time-telling were no longer the primary selling points in a watch.

Swatch was not a lot marketing time-telling as it was enjoyable, fashion and accessories. Heyek stated, ‘We were encouraged that if we could add our dream and culture to a psychological item, we could beat anybody. Emotions are something nobody can copy.’ Heyek went on to create the Smart Car for the Mercedes group, known passionately as the Swatchmobile, and the same mix of fantasy, culture and feeling has actually made the Smart Automobile ubiquitous in Europe.

Baur on WSJ, What is indisputable is that without the vision, insight and vitality of 3 market outsiders – an engineer, a retailer and a doctor – the mass production of Swiss mechanical watches and Switzerland’s role as the rather pompous high priestess of horology might have been but a fading memory of the past.