Decline of Swiss and American Watch Industries

Swiss and American Watch Industry Declines

  • Impact of Quartz Watches:

    • Swiss and American manufacturers struggled to adapt to the introduction and mass production of quartz watches.
    • Their traditional practices, tied to heritage, failed to compete effectively.

  • Statistical Evidence:

    • Watch exports from Switzerland halved from their peak in 1974 to the early 1980s.
    • Example: Exports dropped significantly due to a combination of foreign competition and technological shifts.

  • Acquisition and Market Shifts:

    • Waltham watch company in the U.S. was acquired by a Japanese firm, illustrating the shift in ownership and market dynamics.

  • Economic Challenges:

    • The Swiss Franc's rising value, alongside increased production and raw material costs (partly due to the oil crisis), created compounded financial pressure on the industry.
    • By the mid-1980s, watch sales plummeted, leading to numerous business closures.

  • Industry Downsizing:

    • The number of Swiss watch companies shrank from over 1,600 in 1970 to fewer than 600 by the mid-1980s.
    • Employment in the Swiss watch industry fell drastically from 90,000 in 1970 to only 33,000 by 1984.

  • Production Techniques:

    • Historically, Swiss and American industries utilized pin-lever type watches (Roskopf watches) to support local manufacturing.
    • The efficiency and low cost of quartz watches undermined this traditional production.
Swiss Timepiece Methodologies

  • Horizontal Division of Labor:

    • The Swiss industry initially adopted a method where various manufacturers contributed small-scale productions for individual brands.
    • Small and medium-sized family businesses used traditional methods to create parts for larger brands.
    • Cooperative associations coordinated production, but no lead corporate group was established.

  • Lack of Cohesion:

    • By the late 1970s, both production and marketing strategies lacked logical cohesion, delaying responses to technological advancements, particularly in electronics.
Competitive Response

  • Japanese Market Strategies:

    • A few Japanese manufacturers successfully employed mass production systems with coherent marketing strategies across all watch types, whether quartz or mechanical.
    • Unlike the Swiss industry, they did not restrict themselves to specific price ranges, allowing for broader market penetration.

  • Currency Fluctuations:

    • The Japanese yen maintained stability against the dollar, while the Swiss Franc's rise against the dollar created additional burdens for the Swiss watch industry, exacerbating their competitive disadvantage.