The Swatchgroup & Eta To Restrict Supplies

[clockboy]

 

 

 

At a recent BHI meeting my worst fears were not only confirmed but increased with the news

that the company “The Swatchgroup Limited” will no longer be suppling watch parts to supply houses such as Cousins as from 2015. It was also confirmed that its subsidiary company ETA will also be following suit by not supplying movements or movement parts to supply houses. The knock on effect of this throughout the industry should not be underestimated.

 

The worry for all Holologists is companies such as “The Swatchgroup Limited” not only supply watch movements for over 20 makes of watches but also own companies that manufacture rubies, balances wheels, balance springs and they also own “Renata” (battery producer).  With some horological supply companies losing as much as 50% of their trade, it is not an exaggeration to say that some may not survive.  

 

It is my understanding that only selected watch repair companies who comply to specific standards and have specific test equipment will be supplied with replacement parts. For some well established repair companies this may not seem a huge transition. But as always, exclusivity always carries extra costs and restrictions of trade.

 

For hobbyists watch enthusiasts or even any small watch repair companies who willingly tackle the lower grade of watches they will no longer be able to offer a comprehensive service. Apart from success from surfing the net and scrolling through eBay for used parts, thousands of watches will now be sent to the steampunk scrape heap.

 

The reason for this decision is hard to explain as no official communication to the industry has yet been issued. 

It certainly is not for financial reasons “the Swatchgroup limited” reported for year 2012-2013 an increase of sales of 8.3% with a net profit of 1.9 billion Swiss francs (£ 1.3 billion). Worldwide sales of watches has also been remarkable with a steady growth since 2009 to 2012. Total sales of watches year 2012 worldwide was worth  over $7 billion. 

The decision may be an attempt to protect the brands through exclusivity. Whatever the reason or reasons for an industry that somehow survived the quartz era of the 70,s and is now in fine health I find it a very strange decision. The most important person being ignored is existing and future customers.

 

 

 

For those who have doubts about this and the dangers for the industry have a look at these web sites.

http://www.esquire.com/blogs/mens-fashion/best-chinese-watches-072011

 

or the web site http://www.parniswatch.net

 

Regards

Derek Ashenden

 

 

[mwilkes]

We just have to hope that the entrepreneurs in china will start making equivalent parts.... It's depressing, all right.

[Lee]

ya its a real sad turn of events, I've been really escalating my watch repair business & this news is painful to say the least! I think whilst it may take a few months/years for the industry to re-adjust I've no doubt it will.

[clockboy]

The reason I used the automobile industry as an example is the manufacturers of cars tried a very similar policy by not honouring car warranties without branded parts being fitted and these branded parts increased in cost. This policy failed and backfired dramatically with independent garages fitting pattern parts (many made in Asia) for half the cost of the branded named parts. The industry tried to counter this by propaganda that these parts were of inferior quality but money talks. Pattern parts are now very much part of the industry with Fords, Hyundai etc offering service deals to regain this lost and valuable business.

 

Because a customer is willing to spend £5k + on a watch does not mean he or she is not money wise. In fact quit the opposite applies to luxury goods,

value for money and good customer service still applies. Is £800 for service after 5 years wear real value ??? 

[Geo]

Is £800 for service after 5 years wear real value ???

Absolutely not, unless it is a one of mega complicated watch by the likes of George Daniels.

[mwilkes]

Dunno if you guys follow Christian's blog, but this article suggests that the Swiss watch industry thinks people have more money than sense: http://watchguy.co.uk/if-you-thought-of-buying-a-patek-philippe/

[clockboy]

milks,

This is exactly the danger, word spreads like a computer virus and customers with money are not daft.

Hopefully Omega,patek-philippe,rolex etc are taking note before the bubble bursts.

[southwesttimers]

I received an email from my supplier in Germany that IWC has also notified material houses they will not supply any more IWC parts/material.

[clockboy]

It just gets worse. Is this illegal practice?

[WillFly]

It just gets worse. Is this illegal practice?

 

No - it's just the mainstream European watch industry being very stupid. It'll be interesting to see how the market responds. My guess is that there will be opportunities for Asian manufacturers and other, non-Swatch manufacturers to make a killing by replicating essential parts and cocking a snook at Swatch.

 

I can also see movements sold as "for spares or repair" starting to be snapped up for stock...

Edited June 25, 2014 by WillFly

[clockboy]

That,s the way I see it at present.

I still just don,t understand why. As the saying goes if it not broke don,t try & fix it.

[WillFly]

From what I've read, it seems that the Swatch Group sees ébauches and other parts being sold to non-Swatch manufacturers as creating competition for their own branded products. Also, by restricting the sale of parts, they're forcing repair work to be carried out in their own authorised repairers, rather than by people like you and me.

 

I suppose, in the long term, if it forces other, non-Swatch makers to concentrate on creating their own movements - and there are other Swiss ébauches makers who are not part of Swatch - it might have some value. The worrying part is that around 90% of balances are made by Nivarox - who are owned by Swatch!

 

Might be worth laying in a stock of ETA movements, or even Asian ETA movements -  and creating your own watches...

[clockboy]

The more I read about this the more depressed I am getting. I have been gradually building my collection of watch repair tools (being on a limited budget) i.e only last  I week purchased a lovely Seitz jeweling tool with all the pushers & reamers etc.

Am I just wasting my money now?

This is a hobby & small income generator for me & I really hope this is not going to disappear as I really enjoy my time in my watch/clock room. Is it time for the NAWCC & the BHI to get involved before this lovely craft disappears to only the wealthy few.

[atimegoneby]

The more I read about this the more depressed I am getting. I have been gradually building my collection of watch repair tools (being on a limited budget) i.e only last  I week purchased a lovely Seitz jeweling tool with all the pushers & reamers etc.

Am I just wasting my money now?

This is a hobby & small income generator for me & I really hope this is not going to disappear as I really enjoy my time in my watch/clock room. Is it time for the NAWCC & the BHI to get involved before this lovely craft disappears to only the wealthy few.

 

Hi clockboy,

 

I've been thinking exactly the same !  in fact I couldn't have written your post any differently for myself  !

 

I wonder how many others feel the same ?   :unsure:

 

Phil.

[Mark]

Rolex parts have been restricted for many many years. But this is a blow for sure. 

 

I personally have no interest in aligning myself with a particular brand, e.g. Rolex accreditation - or Breitling. But the worry is the potential magnitude of this problem as most of the watches I work on (must be 99%) are using swatch group movements.

 

There are some good replica movements out there and maybe they will get better. But thats not to be relied on.

 

At the moment its getting very hard to find certain parts for vintage calibre chronographs, but I still take them on and I often end up sourcing parts from Australia, USA, Netherlands etc. etc.. this is how it will be if parts for 7750's and 2824's and 2892's etc dry up. These calibres have been around for years and years and so there is an abundance of stock to be had and from a selfish point of view I hope there will be until I retire.

 

The real problem is with new calibres where there has never been parts issued - thats where watch repairers will have to refuse to take on the work IMO.

 

And the Swatch Group - if they were not in Switzerland would this be legal, I think not!

[Lawson]

I've contacted the Australian Competition and Consumer Commission about this obvious push to monopolize the repair market.  These guys have teeth and the power of Government behind them.  For example: manufacturers can not sell a region fixed DVD player in Australia because of the ACCC stepping in and stopping them.  They took my phone call very seriously and said they will look into it, and if there is anti-competitive behavior happening that it would be address.

 

Furthermore I phone and then wrote letters to 2 members of parliament concerning this as well.

 

When I hear more I'll post more ...

[Lee]

at the BHI meeting did they mention anything they might be doing to see what could be done?

[ash145]

Who knows, this could be the kickstart the Britsh watchmaking industry needs.......10 -15 years from now we could be talking about eta movement watches in the same vien as seiko. On the other hand, replica parts made in the far east will find there way to market at a fraction of the price for the small independent to repair it. They don't own your watch after you've bought it!.

[Lee]

its certainly one of those conversations that will go round & round & round. but ultimately theses two many people earning a living out of watch servicing for it to have a dramatic effect. solutions will be found.

[mwilkes]

I suspect that (a) the small minority who bother to get their watch serviced will spend more to take it to an authorised dealer, (b) everyone else will put their watch in a drawer and buy a new one, and © either used movements for parts will get very expensive, or (d) the mechanical watch revival, brief though it was, will finally die...and Swatch STILL won't lose out. Depressing for the folks who appreciate the beauty of a mechanical movement but aren't millionaires.... Sigh...

[mwilkes]

Pesky smileys....

[clockboy]

The only way to resolve this issue is to name & shame. TV programes such as "watch dog" could be interested and even if "the swatch group" put up a valiant argument the seeds of doubt will be set with the public domain.

[WillFly]

The only way to resolve this issue is to name & shame. TV programes such as "watch dog" could be interested and even if "the swatch group" put up a valiant argument the seeds of doubt will be set with the public domain.

 

From what I've read, the whole matter was investigated by the Swiss equivalent of the Monopolies Commission and, after much discussion, they allowed the Swatch Group to go ahead with their plan. Basically, it eliminates competition from those non-Swatch companies who use Swatch-produced ebauches for their movements. They'll either have to tool up elsewhere or go under. It's a protective move for the Swatch Group's profits.

 

Whether it works in the long term is something we'll have to see but, given it's a private move by an industrial group which is not in the EEC, there's sod all you or I or anyone can do about it.

[clockboy]

I disagree the people who matter is the customer. If the general public are made aware of the restrictions sales will fall

[watchwork99]

A terrible state of affairs.  I am now turning away the majority of eta repair work due to unavailability of parts.  Almost all the top end repair work  has now disappeared.   The trade should be petitioning the government to ban the import of all eta product if the parts are not going to be made available the trade as a whole.