I read an incredibly interesting article in the NY Times this week on the Swatch Group. The watch manufacturing company is unable to meet the current demand for its products. To combat that problem, Swatch is looking to add 2,000 employees and expand their factories.
The statistics mentioned in the article are astounding. Exports of mechanical timepieces increased 32 percent in terms of units from 2009 to 2010. Meanwhile, Swatch group’s net profit in 2010 was a record 1.08 billion Swiss Francs.
The most interesting part of the article for me was reading how Nick Hayek, the Swatch Group CEO, wants to change what it means for a watch to be “made in Switzerland.” Swatch has supplied the base movements for watches manufactured by brands outside of their group for years and controls 70 to 80 percent of the industry’s current overall watch movement production.
As Hayek says, “We are in a ridiculous situation that would be like having BMW supply all the engines for Audi and Mercedes. In no other industry do you have one company supply all the critical parts to the people who then compete directly with it.”
Patek Philippe, Rolex, Zenith, Girard-Perregaux, Jaeger-LeCoultre and Glashutte are all true manufacturers that make all of their watch movements in house. While numerous other brands produce some of the movements for their watches entirely in house, most of them outsource movement parts from Swatch and other manufacturers.
The threat of Swatch no longer supplying movements to various watch brands is what has led brands like Breitling into investing millions upon millions of dollars towards producing in-house movements. If Swatch decides to completely stop supplying other manufacturers with movements, it would certainly stir things up in the watch industry. Each brand would have a much stronger individual identity.
Some watch collectors and enthusiasts are very particular about the movements used in their watches. Others care more about aesthetics and case materials. What matters the most? I think the answer varies depending on whom you talk to. We all have our different values. Regardless, I think it is crazy to undervalue the art of watch movement production. Nick Hayek clearly agrees.
The Hourology Report 
Excellent! Well written and thought provoking.
I had no idea. It will be quite interesting to see what companies come up with to set themselves apart.