Friday, November 30, 2007

History - The Quartz Crisis

The Quartz Crisis also known as the Swiss Watchmakers’ Crisis of the 1970’s 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.

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 devises 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.

The Fall
But when a new quartz technology was developed by Swiss Nationals and offered to the industry, Swiss manufacturers refused to embrace the technology. Others, outside of Switzerland, however, saw the advantage and developed the technology.
The first mass-produced quartz watches with analog display and integrated circuit 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 Nationals 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 brands became insolvent and/or disappeared. The period of time completely upset the Swiss watch industry both economically and psychologically.
The Swiss lost market share to the less expensive quartz watches produced outside of Switzerland. 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. However, as currently re-established the Swiss watch industry is vastly improved, producing watches in the higher ranges, mostly mechanical watches.

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. Swatch was originally intended to re-capture entry level market share lost by Swiss manufacturers during the aggressive growth of Japanese companies such as Seiko in the 1960s and 1970s, and to re-popularize analog watches at a time when digital watches had achieved wide popularity. The launch of the new Swatch brand in 1983 was marked by bold new styling and design. The quartz watch was redesigned for manufacturing efficiency and fewer parts. This combination of marketing and manufacturing expertise restored Switzerland as a major player in the world wristwatch market. Synthetic materials were used for the watch cases as well as a new ultra-sonic welding process and the assembly technology. The number of components was reduced from some 100 to 51, with no loss of accuracy.
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.

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, arose in 1876 and coincided with the American Centennial Exhibition held in Philadelphia. 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.

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 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 30 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 3rd generation quartz ebauches (developed in the 1970's), but this technology is still generally unavailable to the to the average consumer.
No advances have been made towards a 4th or 5th generation quartz watch, thus keeping time a precious (and expensive) commodity.

based on articles from Wikipedia, the free encyclopedia

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