Quartz crisis

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The Quartz Crisis a/k/a/ the Swiss Watchmakers’ Crisis of the 1970’s a/k/a the Second Technological Crisis and sometimes, perhaps euphemistically, referred to as the Quartz Revolution was a period in time in the 1970s and early 1980s which coincided with the advent of quartz oscillator technology watches, a general economic down-turn and, the low point of the Swiss watch industry which chose to remain focused on traditional mechanical watch technology rather than embrace the new quartz watch technology.

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[edit] Swiss Hegemony

During World War II, Swiss neutrality permitted the watch industry to continue making consumer time keeping apparatus while the major nations of the world shifted timing apparatus production to timing devices for military ordnance. As a result, the Swiss watch Industry enjoyed a well protected monopoly. The industry prospered in the absence of any real competition. Thus, prior to the 1970s, the Swiss watch industry had 90% of the world watch market.

[edit] The Fall

When new quartz technology was developed by Swiss Firms (notably Girard-Perregaux[citation needed]) and offered to the industry, most Swiss manufacturers refused to embrace the technology. Others, outside of Switzerland, however, saw the advantage and further developed the nascent technology.[1]

The first mass-produced quartz watches with analog display and integrated circuitry were introduced in 1970. By 1978 quartz watches overtook mechanical watches in popularity, plunging the Swiss watch industry into crisis. This period of time was marked by a lack of innovation in Switzerland at the same time that the watch making industries of other nations were taking full advantage of emerging technologies, specifically, quartz watch technology, hence the term Quartz Crisis.

Ironically, the very technology which caused so much of the turmoil in the Swiss watch industry was pioneered by Swiss firms but rejected by the more conservative and tradition oriented watch industry. As a result of the economic turmoil that ensued, many once profitable and famous Swiss watch houses became insolvent and/or disappeared. The period of time completely upset the Swiss watch industry both economically and psychologically.[2]

The Swiss lost market share to the less expensive quartz watches produced mainly in Asia. During the 1970s and early 1980s, technological upheavals i.e. the appearance of the quartz technology, and an otherwise difficult economic situation resulted in a reduction in the size of the Swiss watch industry. The number of employees fell from some 90,000 in 1970 to a little over 30,000 by 1984, while the number of companies decreased from about 1,600 in 1970 to about 600.[3] However, as currently re-established the Swiss watch industry is vastly improved, producing watches in the higher ranges, mostly mechanical watches.

[edit] Factors leading to the Fall

Several factors combined to slow down the development of technology and production in Switzerland despite the fact that Swiss companies were at the forefront of the technology..[4]

[edit] a lack of conviction on the part of the industry leadership

The chief factors were a lack of conviction on the part of the industry leadership for either the need for or the possibility of the coexistence of electronic and mechanical watches, by the same brands,[5] in the same markets..[6]

[edit] the loss of the control of the mass production of watches with broad market diffusion

Another factor was the loss of the control of the mass production of watches with broad market diffusion.[7]

The years of comfortable revenues from the well protected monopoly from 1938 to 1952[8] cost the industry what had formerly been its most invaluable asset – its innovativeness. A handful of watch makers were disposed to make some copies of the quartz prototypes—history proves that they were capable—but they were not ready to launch into series production[9] until the Swatch watches in 1983 and Nicolas Hayek.

[edit] the renaissance & the Swatch

By 1981, crisis reached a critical point. In 1982, the first Swatch prototypes were launched. The Swatch would be instrumental in reviving the Swiss watch industry. Hayek, merged SSIH and ASUAG, a holding company that controlled manufacturers of movement blanks, assortments and electronic components for the entire Swiss watch industry, and gave a new bill of health to all brands concerned and gave rise to what would become the Swatch Group.

[edit] Psychological Impact

Notwithstanding that the Quartz Crisis completely upset the Swiss watch industry both economically and psychologically, as currently re-established the Swiss watch industry is vastly improved, producing watches in the higher ranges, mostly mechanicals.

[edit] Why does the “Quartz Watch Crises” strike the Swiss psyche so?

Why then, does the “Quartz Watch Crises” of the 1970s strike the Swiss psyche so? The peculiar emotions appear to have two causes. First, the watch making industry is an ambassador of the Swiss image of precision, punctuality, meticulousness, all the mythical features of Switzerland and quite real features of the watch industry. This Swiss mind-set finds particularly fertile ground in the watch industry. Second, the watch is not completely an industrial product like the other industrial products.

Watch making is indeed an industry and a science, certainly, but also and no doubt more than anything, it is an art. It has forever been intimately associated with the beauty of the timepieces it creates. It has always called on craftsmen and artists in numerous domains. Goldsmiths, engravers, miniaturists, sculptors and jewel-setters contribute to its greatness. The watch punctuates the time which carries it; it expresses taste and a sense of aesthetics.[10]

A wrist watch is worn close to the skin, and thus, the watch is a very personal object perhaps even carrying emotions. Indeed, when a mechanical watch is bought, one buys a name, a heart and the know-how. In comparison, a watch with quartz movement can be regarded as an instrument giving the time and sometimes an accessory of style but never as a "jewel” emphasizing the know-how of the watchmaker. Perhaps Landes said it best:

It is difficult to love a quartz controlled watch or clock. Very often, the cases do not even open to show the module (the term "movement" would not be proper, because, in the digital version, nothing moves). There is absolutely nothing to see. Whereas a movement, is another thing altogether! A fine movement, in particular if it is complicated, has the art and the grace of a living thing. The wheels whirl and engage. All the edges are carefully cut-back and beveled. The screws are sometimes heated until they take on a dark electric blue hue. The bridges and plates are gilded or embellished, and are often decorated, engraved or damascened. The jewels generally pressed in gold, gleam. The balance oscillates tirelessly; the hairspring breathes; the anchor goes to and fro and the pallets enter and exit as if alive. Landes, D. S., L'heure qu'il est, Paris: Gallimard, 1987 at page p. 479.

And watch making is one of the rare sectors that continue to employ skills that have elsewhere vanished while still finding new horizons to explore and new forms of expression. Traditionally, it’s not been the watchmaker’s aim to build bulk-and-brawn movements. Quite to the contrary. The real art of horology lies in the progressive miniaturization of complex mechanisms that combine sophisticated functionality with accuracy and dependability[11]

[edit] The First Technological Crisis, a background

The Quartz Crisis was introduced as “the Second Technological Crisis” thereby implying that there was a first technological crisis. The Quartz Crisis was, indeed, the second time the Swiss watch making industry fell into crisis.

The first crisis, known as the Technological Crisis[12], arose in 1876 and coincided with the American Centennial Exhibition held in Philadelphia. [13] At this event, American watchmakers showed off the fruits of their industrialized watch making factories, quite to the dismay of Swiss watchmakers in attendance. Most notable, Jacques David, an engineer and later a Director of the Longines Company was in attendance. He reported on his findings and the disparity of the industrial technology among the U.S. and Switzerland.

David, discovered, the technological advancements made by the fledgling American watch industry. Whereas Swiss manufacture was stammered by its piecemeal production system, which was the most widespread form of production, the American watch producers brought together the entire production of watches under one roof. The American System, as it came to be known, employed standardized, machine-made parts along with improved machines and tools. They thus, could reach a generally higher level of precision. Their chronometers were better than best produced during this nadir of Swiss production. [14]

[edit] A Third Crisis Looms on the Horizon? - a prediction

Nicolas Hayek who is viewed as the Savior of the Swiss watch industry (following the Second Technological Crisis), has raised concerns about a Third Crisis. In the context of 2005 proceedings wherein the Swiss Anti-trust Commission investigated allegation of the abuse of the overwhelming market control of his ETA watch movement production company [15] Hayek warned that there could be another crisis in Swiss watch industry unless there is more innovation and investment. Hayek, observed:

"[t]ere was no innovation, no new development, and when I pushed them to start doing new production, everybody started shouting... I said I was not going to deliver any more of my movements unless they try to do their own production...Otherwise the Swiss watch industry will suffer exactly the same problems it had before and it will go down."

This lack of innovation, essentially quartz technology has been at a standstill for approximately thirty years, ensures that the chronometer watch remains a prestigious item, produced only by the more exclusive watch brands. A million such watches are produced each year (most of which are mechanical) and comply to various time keeping regulations imposed by the COSC. The quartz chronometer watches contain third generation quartz ebauches (developed in the 1970's), but this technology is still generally unavailable to the average consumer.[16]

No advances have been made towards a so-called "fourth" or "fifth" generation quartz watch, thus keeping time a precious (and expensive) commodity.

[edit] References

  1. ^ Cooke, P. and Hastings, J., New Industries: Imperative for Agriculture’s Survival, Regional Australia Summit, Oct 27-29, 1999 at page 8.
  2. ^ Le Rouage dégrippé, at page 12.
  3. ^ The Swiss Watch Industry - A short tale of history
  4. ^ Hieronymi, O., Gabus, A., Hattemer, H. and Sallin E., La diffusion de nouvelles technologies en Suisse, Editions Georgi, Saint-Saphorin, 1983 at page 89.
  5. ^ Longines Legendary Watches, at page 13. Longines was a notable exception and from 1970 ran parallel production lines of quartz and mechanical watches
  6. ^ Hieronymi, et al.
  7. ^ Hieronymi, et al.
  8. ^ Jaquet, E. and Chapuis, A, Technique and History of the Swiss Watch, Spring Books, New York, 1970, at page 252
  9. ^ Landes, D. S., L'heure qu'il est, Gallimard, Paris, 1987 at page 474.
  10. ^ Centre culture de la haute Horlogerie, Fondation de la Haute Horlogerie http://culture.hautehorlogerie.org/en/
  11. ^ Lips, T., Slight of Hand, Patek Philippe- the International Magazine, Vol. 2, No. 6, p. 43.
  12. ^ "American and Swiss Watch making in 1876" http://www.watkinsr.id.au/Art1876.pdf
  13. ^ Compare, "Report on the Philadelphia Exhibition 1876" http://www.watkinsr.id.au/favre.html ""
  14. ^ Le Rouage dégrippé, Les crises horlogères, une fatalité en voie de disparition? Convention patronale, La Chaux de Fonds, 1995.
  15. ^ Hayek warns of impending crisis in watch industry - swissinfo
  16. ^ Prometheus Bound

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