A Brief History Of ETA: THE Swiss Watch Movement Maker

[george_]

ETA is one of the most prevalent and powerful companies in the modern watch industry. It is Switzerland's largest movement maker with countless small and major brands relying on the products they make. Its story has, as we will learn, defined the watch industry of today.



The first step in an effort to break these unnerving trends was the 1924 founding of the Swiss Watch Federation (FH, for short), uniting some three quarters of the industry. Two years later, as a second stage, with strong financial support from some powerful Swiss banks, the corporate trust Ébauches SA was created by the three largest movement makers - Schild SA (ASSA), Fabrique d’horlogerie de Fontainemelon (FHF), and A. Michel SA (AM).

At the time, the firm had been managed by Theodor Schild, the founder’s son. He felt great responsibility for the company his father had created, but he also had to see that Eterna was affected by the economical meltdown no less than any other company around it. Theodor saw the possible advantages the merger with ASUAG/Ébauches SA could bring in such a problematic situation, but he remained reluctant to actually join them

The complex tasks of movement manufacturing had been split up into three large segments within ASUAG. Manufactures like FHF, Fleurier, Unitas and others were responsible for building hand-wound movements, chronographs were created by Valjoux and Venus, while ETA and some others were in the business of building automatic ones - something fairly new on the market. By 1948 ETA established its watch making school that allowed it to recruit and train craftsmen as the industry rapidly expanded during the ‘50s and early ‘60s. Furthermore, ETA had been busy developing new movements that incorporated ball-bearings in the automatic winding mechanism.


Sales figures of more than 80 million watches per year dropped to a mere 30 million in less than ten years' time. The market share of Swiss watches worldwide dropped from more than 80% in 1970 to 58% in 1975, and all the way to no more than 15% in 1983! This inevitably resulted in a steep and ceaseless decline in employment, from 89,000 in 1970 to a shockingly low 33,000 in 1985.

That though, didn’t satisfy the banks who had been funding all this pandemonium. UBS, Credit Suisse and Swiss Bank Corporation have poured more than 900 million francs into ASUAG and SSIH only to keep them going. They had every reason by now to consider the Swiss watch making doomed and that sentiment was only enforced by the Japanese who approached them with a generous offer for both ASUAG and SSIH.



Had the Japanese managed to purchase these two major groups, they would have owned nearly all major Swiss manufactures, patents and brands. But that did not bother the banks and so they asked the prestigious consultancy firm called Hayek Engineering AG to prepare the sale... but the president of the company, Nicolas G. Hayek, was outraged by the concept of Swiss watch making practically getting sold under his supervision. I assume most of you know where this is going. As the Wall Street Journal quotes Mr. Hayek: “The watch industry of Switzerland sells, in fact, the message of the culture of Switzerland, of everything you have heard about, our chalets, our fields, our mountains. One day, the president of a Japanese watch company in America said to me, "You cannot manufacture watches. Switzerland can make cheese, but not watches! Why don’t you sell us Omega for 400 million francs?" I told him, "Only after I'm dead!”


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Launched in 1983 with prices below $50, the quartz Swatch was intended to be a second watch with which one could still express his or her personality, lifestyle or mood. Swatch, however, could not have existed had it not been for a movement design by two ETA engineers, Elmar Mock and Jacques Müller. The movement was based on the aforementioned layout developed for the ultra-slim Delirium quartz watch of 1978: the parts were installed on the back panel of the watch and not on a main plate.

They have also managed to decrease the number of parts from about 150 (as done by Japanese competitors) to a mere 51, hence further reducing the manufacturing costs. In no time Swatch watches began turning a hefty profit with sales sky-rocketing from 1.1 million the first full year to the 100 millionth piece sold in less than 10 years, in 1992. In 1985 Hayek repurchased 51% of the ASUAG-SSIH duo and created the Swiss Corporation for Microelectronics and Watchmaking Industries Ltd. (SMH) - which was renamed in 1998 to Swatch Group Ltd.


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As we know, from 1985 onwards there were no more ASUAG or SSIH - they were all united in Nicolas Hayek's SMH group.

In essence then Nivarox is the one and only company in all of Swiss watch making that is able to overcome all the immense difficulties of mass-producing balance springs. What is more is that they also make balance wheels, anchors, pallets, escapements, main springs and other tiny parts such as screws and small gears.



ETA sold 0.767 billion francs worth of parts, ébauches and movements to non-Swatch companies

A Reason to Reduce Supply


Firstly, because ETA was there to supply high-quality, reliable, easily customizable movements any time of the day. Secondly, the problem is with cost and time. Developing a movement from scratch can take five years or more and might require an investment of up to 10 million francs. It requires a more reasonable investment to come up with a design, create the case, the dial, the marketing campaign and buy a finished movement from ETA, than to spend years without selling anything only to start your brand with a proprietary movement. Last but not least, an in-house movement all by itself will never be a guarantee for success. If any one of the aforementioned factors are flawed (the design, the marketing, the distribution) you can boast about your 10 million franc movement, but the watch will never sell.

by the early 2000s ETA became a supermarket for watch brands. Just about anyone could have created a brand and ETA was bound to sell movements to them.

Surely, not everyone is able to make a 5-10 million franc investment, but then again the Group's intentions had been made clear long ago. Politics aside, the actual managerial/strategical reactions are as diverse as the brands in the Swiss watch industry themselves. Several small and large companies have decided to start developing their own movements with more or less success.



the Group will continue selling parts to several external companies (a majority of those that have invested into making their own movements will receive supplies in the future, such as Patek Philippe will continue to receive hairsprings from Nivarox and Rolex's Tudor will still get movements from ETA). But the Group will not be selling to everyone and anyone from now on.

A great number of non-Swatch brands relied exclusively on ETA/Nivarox without seriously investing into their independence. However, what used to appear as nothing more than an improbable turn of events, suddenly (in such a technologically sophisticated industry 1-3 years is "sudden") became harsh reality.

So while it isn't clear whether Sellita (also Swiss) and companies like it will innovate, they should be able to meet at least a large chunk of the demand for ETA movement clones.

I am greatly excited to see what the next 5-10 years will bring because the present situation will inevitably force luxury groups, major and minor companies, high-end and more fashion-oriented brands alike to either invest into technology and develop their own movements and parts or purchase from new companies who have done it for them.

ABTW

[george_]

Πανο,μαλλον η Tudor δε θα εχει προβλημα!Οι μεγαλοι εχουν σωθει!