Time Marches On: the Worldwide Watch Industry

case study Time Marches On: The Worldwide Watch Industry M. Edgar Barrett “…the clock, like t’s hard to imagine functioning other machines, is in today’s world without a brutal and callously efficient in its task. It watch. The modern business takes raw material, person may depend on the time- in this case time, and Ipiece in order to catch a train, processes and refines remember an important meet- it into something more useful to human ing, or download information. beings. It breaks time Watches serve as status symbols down into abstract and fashion accessories. They concepts called hours, keep near-perfect time in wildly minutes and seconds, and then doles them erratic climates from Siberia to out to us, always at Sudan, from thousands of miles the same maddening in the air to hundreds of feet 1 pace.” below the surface of the ocean— even on trips to the moon. Prices range from affordable to outrageous, making timepieces 1 From “Tyrant of Time, Master of Minutes” by Jay available, if not essential, to Bookman, Atlanta Journal and Constitution, Jan. 3, 1995. almost everyone in the world. Copyright © 1999 Thunderbird, The American Graduate School of International Management. All rights reserved. This case was prepared by M. Edgar Barrett, J. Kenneth and Jeannette Seward Chair in Global Strategy, and Research Assistants Jennifer L. Barrett and T. Hawk Sunshine for the purpose of classroom dis- cussion only, and not to indicate either effective or ineffective management. Thunderbird International Business Review, Vol. 42(3) 349–372 • May–June 2000 Published 2000 John Wiley & Sons, Inc. 349 M. Edgar Barrett But while the watch’s main func- The first watches were spring- tion—telling time—has not powered mechanical models, changed over the past 500 years, sharing smaller versions of the the worldwide watch industry same components found in has. The center has shifted clocks. Though the face was sim- among three different conti- ple, many were enclosed in elabo- nents, and while Switzerland, rate casings that were painted and Japan, Hong Kong, and the sometimes engraved. When the United States are the industry watch was wound, the motion leaders today, there is no guaran- was transferred through a series of tee that any of them will remain gears. These gears, in turn, on top tomorrow. moved the hands of the watch. Decorative, and often very expen- This case describes the evolution sive, the watch was kept in the of the worldwide watch industry pocket and treated like a fine from its inception in the early piece of jewelry—even passed sixteenth century to the mid- down as a family heirloom. 1990s. “The watch was far from accurate, but it was pretty, so it was THE EARLY EUROPEAN worn more as jewel- INDUSTRY ry than for time- keeping,” The world’s oldest known watches were made around wrote one watch expert, after 3 1500 in Germany. They consist- studying the early timepieces. ed of plated movements mount- ed in egg-shaped cases. Early Though the watch was invented watches made in Nuremberg, in Germany, the craft skills the German city widely regard- quickly spread into the neigh- ed as one of the first centers of boring countries of France and watchmaking, contained a sin- Switzerland. By the late 1500s, gle stubby steel arm that spun the French were leading the around a 12-hour dial. Knobs European watchmakers in design at each hour allowed the watch- and innovation. Over the next wearer to feel the hour in the century, however, many French dark. The watches never ran for and German (Protestant) more than 15 to 16 hours at a Huguenots, fleeing religious per- time, and had to be wound secution, moved to England or twice a day.2 Switzerland, taking their watchmaking expertise with them. 2 Jaquet, Eugene, Technique and History of the Swiss Watch: From its Beginnings to the Present Day, Otto 3 Bruton, Eric, The History of Clocks and Watches, Walter Ltd. (Olten, Switzerland, 1953), p. 21. Crescent Books (New York, 1979), pp. 109–110. 350 Thunderbird International Business Review • May–June 2000 The Worldwide Watch Industry Geneva proved especially appeal- By this time, there were so many ing to the religious refugees as watchmakers in Geneva that they the Swiss Protestants had formed their own guild and stormed its cathedral and driven began adopting statutes setting out Catholic religious authorities standards and regulating the in August of 1535. After the activities of local watchmakers. Protestant Revolt, Jean Calvin In 1701, new decrees forbade (founder of the Presbyterian foreigners from working in the creed) took charge. In 1541, he trade. introduced the Sumptuary Laws, moral legislation designed to put In addition, only Swiss citizens an end to the hedonistic lifestyle and residents of Geneva could then enjoyed by the Swiss living become master watchmakers in in Geneva. The laws forbade cit- that city. Applicants were izens from dancing or wearing required to submit an alarm jewelry and extravagant clothing. watch (traditional jeweled-lever In 1566, Calvin went a step fur- watches were considered too ther and prohibited the fabrica- ornamental) to a jury of guild tion of most jewelry.4 masters. If the watch was approved, its maker would be Many of the foreign watchmak- awarded the prestigious title. In ers who had sought refuge in 1746, there were 550 master- Geneva soon teamed up with watchmakers in Geneva. By Swiss jewelers, whose livelihood 1760, the number had grown to faced extinction as a result of the more than 800 and as many as rigid legislation. Working 6,000 Geneva citizens were together, they produced highly involved in some branch of the ornate, yet functional, watches industry.6 that were among the few accept- able accessories under Calvin’s Despite efforts by the Geneva strict edicts. government and the local guild to restrict the manufacturing of Swiss watches initially kept time watches to that city, the industry through an oscillating bar, with soon spread into nearby villages knobs at each end, called the and then into other regions all dumbbell balance. In 1675, the across the country, including the spiral hairspring was invented Jura Mountains in northwest which tremendously improved Switzerland. The Jura farming the accuracy of the watch when it families quickly picked up the was applied to the balance.5 watchmaking craft from their new neighbors and began mak- 4 Encyclopedia Britannica, 1983, Volume 4, p. 747. 5 Bruton, E., op. cit., p. 118. 6 Jacquet, E., op. cit., pp. 37–38. Thunderbird International Business Review • May–June 2000 351 M. Edgar Barrett ing watches to supplement their SWISS DOMINATION income from farming. Though Swiss watches sold well,9 As they relied increasingly on the English were widely consid- their new craft, Jura farm families ered the top watchmakers in banded together to form com- Europe and led the world in munity schools aimed at training watch production until 1840. young apprentices in various Zedler observed in the Universal aspects of the watchmaking Lexicon of 1746: “The English process. Specialized workshops watches are considered best of quickly developed in different all…. The Geneva watches are locales for various stages of the thought little of, because they manufacturing process. Often, are to be had so cheaply; they are separate families specialized in made in such quantities that one particular parts of the process. buys them in lots.”10 Many sold individual movements to watchmakers in Geneva, who Based near industrial areas in then assembled the watches. The London, Liverpool, and Jura watchmakers were also Coventry, the watchmaking quick to take advantage of the industry in England developed new tools and techniques being under a unique system of labor developed in England, as well as division. Watchmakers assem- 7 to design their own. bled parts made by specialists— each responsible for only one No large factories existed in watch component. Despite the Geneva in the 18th century in tedious nature of the produc- which a complete watch could be tion process, English watch- produced from start to finish. makers continued the method Most Genevan watchmakers for centuries, giving other relied on the watchmakers from countries the chance to catch nearby districts or the family-run up and eventually surpass them workshops in the Jura Mountain in watch production. villages for the watch components. As a result, by the end of The Swiss established their first that century more than 30 differ- full-fledged, mechanized watch ent categories of workers were factory in 1839, and the process employed in the Swiss watch- quickly allowed Swiss watchmak- making industry. The division of ers to overtake their English labor resulted in the production counterparts. By mid-century, of watches that varied in quality Swiss exports were estimated at as well as design.8 9 By the early 1800s, Swiss watch exports numbered about 50,000 units annually. Bruton, E., op.cit., p. 7 Ibid., p. 87. 124. 8 Jacquet, E., op. cit., p. 87. 10 Bruton, E. cp. cit., p. 123. 352 Thunderbird International Business Review • May–June 2000 The Worldwide Watch Industry about half a million watches a call, and even began developing year. Meanwhile, English watch- their own sophisticated machine makers were producing about tools.12 150,000 watches annually and employing 10,470.11 By the 1920s, watchmaking had become one of the most impor- Ironically, many of the high-pre- tant and lucrative Swiss indus- cision machine tools the Swiss tries. To maintain their used to cut and form the tiny technological advantage, the parts they designed were actually Swiss watchmakers formed the built in England. The English Swiss Laboratory for Watch- watchmakers, worried that the making Research (LSRH) in new tools would threaten their 1924.

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