Markets in Time; A. Young

The mass production of the Industrial Rev olution reduced costs, but there has always remained the cherished element of handwork in a Swiss watch. In 1793, Isaac and David Benguerel along with Julien and Fran90is Humbert-Droz established the first watch movement-blank factory in Fontainemelon, hard against the Neuchatel mountains. (A Anthony Young is a freelance writer based in Miami who has written previously for The Freeman. 45 movement-blank is an unfinished, but diffi cult-to-make watch movement.) This region of Switzerland became a magnet for the watch parts industry. Companies specializing in cylinder, pin lever, and jeweled-lever mechanical movements made possible the establishment of small watch companies that did not have to manufacture every part of the movement themselves. The twentieth century has had the most profound effect on Swiss watch companies. Two world wars and the Depression in between reduced the demand for Swiss watches, but the industry always recovered.

The postwar economies of the world eagerly sought Swiss pocket watches and wristwatch es, from inexpensive mass-produced hand wound watches to self-winding, or automatic movement, watches. By 1974, exports of Swiss mechanical watches and movements had risen to 84 million units. In this euphoric and seemingly irreversible climate, a quiet revolution was brewing in Switzerland. It was a revolution mostly of its own making, and it would shake the Swiss watch industry to its very foundations. The Quartz Revolution Work on an electrical watch began in the 1950s. Development of both the electro mechanical movement and ~he battery to 46 THE FREEMAN/IDEASON LIBERTY • JANUARY 1999 power it had to progress concurrently. In 1954, Swiss engineer Max Hetzel developed an electronic wristwatch using an electrically charged tuning fork powered by a 1.35 volt battery. The tuning fork resonated at precisely 360 Hz and powered the hands of the watch through an electro-mechanical gear train. This watch went on to become the famous Accutron by Bulova, which was introduced to the market in 1960. It used a proprietary design that was not adopted by the watch industry. However, the Accutron was beaten to the market by the American-made Hamil ton 500, which appeared in 1957; this was the first battery-driven watch in production.

In 1962, a research center, the Centre Elec tronique Horloger (CEH), was established in Neuchatel to develop a Swiss-made quartz wristwatch. Why quartz? An electrically charged quartz crystal has the ability to achieve stunning accuracy in a watch "mecha nism. Research and development took five years, but the center succeeded in reducing the size of the components to fit into a watch case. The Japanese, however, were also hard at work on an electronic watch and had the financial footing to conduct their own research and development of quartz technolo gy. The Japanese were no strangers to watch making. Citizen and Seiko are much older companies than many realize. The first Japan ese watch plant was built in Seikosha near Tokyo in 1892, at first making wall clocks. Pocket watches and wristwatches followed. An earthquake in Tokyo destroyed the Seikosha plant in 1923, but it was rebuilt. In 1924, this factory introduced the Seiko brand name. The Citizen Watch Company had its roots in the Shokosha Watch Research Labo ratory founded in 1918. The Citizen name was adopted in 1930. All watches produced at these two companies were mechanical until the 1960s, when work was begun on an elec tronic watch.

The Swiss Neuchatel Observatory, which was responsible for certifying mechanical watch chronometers for accuracy, held a com petition in 1968. Swiss and Japanese watches competed. The Swiss entrants swept the first ten places and the CEH was awarded the Prix du Centenaire. As a result, Japan, with a long range commitment to consumer electronic products, threw its industrial might behind quartz watch development and production. Seiko was the first company to bring an ana log quartz watch to the market, the Seiko Quartz Astron, introduced in 1969. The Swiss, however, were not far behind. The Ebauches SA Beta 21 quartz watch appeared in 1970. Swiss Slowdown Swiss companies, steeped in the mechani cal tradition, were slow to embrace quartz technology. Mechanical movements had proven their durability and reliability for cen turies. This reluctance of the Swiss to adopt quartz technology initially cost them dearly.

Exports of Swiss mechanical watches plum meted from 40 million in 1973 to only three million ten years later. While some Swiss watch companies did manufacture quartz watches, Japan and Hong Kong dominated the quartz segment and decimated the Swiss industry. Many small-to medium-sized watch companies in Switzerland closed their doors by the end of the 1970s. The number of work ers in the industry plunged from nearly 90,000 in 1970 to 47,000 by 1980. In 1979, the management of the Swiss ASUAG group (Societe Generale de I'Hor logerie Suisse SA) embarked on an ambitious" plan to produce its own inexpensive line of quartz watches to counter the Far East jugger naut. To produce an accurate, rugged, and water-resistant watch for less than 50 Swiss francs demanded a paradigm shift in thinking regarding materials, manufacturing, and mar keting. The micro-molding of plastic parts, reduction in the number of parts in the quartz movement, and ultrasonic welding were but a few of the cutting-edge technologies applied to the program.

This revolutionary watch line, known as Swatch, was launched in March 1983. The inexpensive watch, offered in myriad styles and colors, took the consumer world by storm. In less than two years, more than 2.5 million Swatches were sold. The Swatch was a phenomenon that put Swiss watches back on consumers' wrists. As the brand went from victory to victory and sales passed 10 million, it had a profound effect on the Swiss watch industry as a whole and the world's perception of the industry. The technological fallout of the Swatch permitted the Swiss watch companies to mar ket quartz watches in virtually all price ranges. But quartz was not necessarily the answer for every Swiss watch company. Many companies felt honor-bound by their tradition of making mechanical watches, while others were simply leery of quartz for the long term. As the quartz movement took hold among Swiss watchmakers, articles appeared in watch journals proclaiming that the end of the mechanical movement was in sight. Witness ing the dramatic decline of mechanical watch es exported during the 1970s and early 1980s, some pundits stated it was inevitable the mechanical movement would go the way of the horse-drawn carriage. This worried many watch companies; demise of the product would entail scrapping millions of dollars in precision machine tools, investing in the new technology, and retraining a very skilled work force.

Oris-One Company's Response One of the many watch companies facing the quartz/mechanical dilemma was Oris. Located in the picturesque town of Holstein southeast of Basel, this company had been making watches since 1904. Its founders, Paul Cattin and Georges Christian, chose Oris as the name of their company after a valley near Holstein; the word Oris was formed from the Celtic-Roman word aurisa, meaning river. In a crowded industry, Oris has more than a few innovations to its credit. In 1938 the company introduced the pointer calendar, with the days of the month running the circumference of the watch face and the day indicated by a needle type hand; the seconds were shown on a small dial at six 0'clock. During World War II, Oris produced watches with oversized winding crowns to permit Allied bomber crews to syn chronize watches with gloves on in the bitter cold environment at 30,000 feet. In 1952, the MARKETS IN TIME 47 company introduced a watch line with an automatic (self-winding) movement. Oris received full chronometer certification from the Neuchatel Observatory in 1968 for its cal ibre 652 movement.

Oris had survived and prospered for more than half a century making mechanical watch es. Nevertheless, it led electronic watch development on several fronts in the 1960s. It was in a small group of companies, including Rolex, that contracted with a Swiss state insti tute to research and develop an electronic watch. It also became a member of the ASUAG group. Oris was one of the first Swiss companies to sell an LCD (liquid crystal display) watch and did so for a number of years until Casio virtually took over this market. It had vast experience with mechanical movements, hav ing manufactured cylinder, pin and lever, and jeweled-lever mechanical watches. Its work force was skilled in the fabrication and assembly of such watches, and there was a certain romance to a mechanical movement. Moreover, quartz, while certainly accurate, had a problem mechanical watches didn't have: dead batteries. In most first-generation quartz watches, the batteries typically lasted only a year and obtaining a replacement could be difficult if not impossible in many places.

Thus mechanical watches would remain in the Oris catalog. At the same time, the company did not want to ignore what could be a large market for quartz watches. The company took the prudent course of adding quartz watches to its line. Oris was not convinced that the dire predic tions of some industry observers regarding the mechanical watch would come true. The decision to manufacture watches with both types of movements was a cautious one, as Oris waited to see which way the winds would blow. Many watch companies embraced the quartz movement totally and never looked back. Other companies remained faithful to the mechanical movement. During the 1980s, Oris was· part of the SMH group of watch companies, which included Omega, Tissot, Mido, and other brands. But Rolf Portmann, who had joined Oris during the 1950s and later steered the company through troubled 48 THE FREEMAN/IDEASON LIBERTY • JANUARY 1999 waters over the next three decades, orchestrat ed a management buyout, and Oris was once again an independent watch company.