Watchmaking Industry

Is there a “watchmaking industry” strictly speaking? Or should we only refer to the “horology sector,” as one would say the “new technologies sector”? In reality, it all depends on one’s perspective – and especially on the country from which one observes it. For a watchmaking industry only exists when there is a large number of companies, manufactures, and organizations involved in the design and production of watches, as is the case, of course, in Switzerland, but also in France. Let us examine the mechanisms of this industry in this guide to watchmaking.

The many Facets of the Watchmaking Industry

In reality, there isn’t just one watchmaking industry, but several. Over time, and thanks to the transformations that affected it after the great quartz crisis of the 70s/80s, the horology sector has reorganized itself around two major industries:

• Mass-market watches, which represent approximately 90% of total production (about 1.2 billion units produced worldwide each year). These models are predominantly manufactured in Asian countries, on low-cost production lines. They are sold to the public for amounts ranging from a few euros to several hundred euros.
• Watches manufactured for the high-end and luxury market: mechanical models, assembled by hand, in companies or manufactures that can be independent or belong to large watchmaking groups. The high-end watchmaking industry primarily originates from Switzerland, its cradle; but also from France, Germany, and Japan. We are referring here to timepieces sold for anywhere from a few hundred to several thousand, or even tens of thousands of euros.

It is clear that the Swiss watchmaking industry primarily operates in the luxury and high-end sectors: the most expensive (and most coveted) watch brands are almost all based in this small country. The global reputation acquired by Swiss movements is so significant (and so profitable) that the competent authorities have established a “Swiss made” label, which companies producing their timepieces within its borders can benefit from. Visit the website of the Federation of the Swiss Watch Industry to learn more.

Nevertheless, as most production is mass-market, the majority of watches produced by the watchmaking industry come from Asian countries. Even timepieces stamped “Swiss made” regularly source components from Chinese or Japanese workshops (which have acquired an excellent reputation for movement quality).

The Watchmaking Industry and its Stakeholders

Overall, the watchmaking industry is divided among several key players:

• The watchmaking groups (which own several brands, such as Swatch Group);
• Case assemblers (who do not produce their own movements but provide a finished, cased product);
• The manufactures (which adopt verticalized production and handle a maximum of tasks, from component design to casing: for example, Vacheron Constantin or Longines in Switzerland, but also Seiko in Japan);
• Subcontractors (who supply parts to case assemblers and manufactures);
• The brands (emanating from groups, companies, and manufactures);
• Retailers (from whom consumers purchase models);
• Federations (which ensure compliance with and enforcement of watchmaking industry regulations, such as the FHS);
• The control bodies (which issue certifications, such as the Swiss Official Chronometer Testing Institute, or COSC).

The Horology Sector and its Economy

The horology sector is in excellent health – generating several billion euros annually, although these indicators have shown a tendency to decline in recent years. In 2012, the global watchmaking industry generated approximately 40 billion euros and employed several hundred thousand people worldwide. Despite a slight decrease in workforce, particularly in the Swiss market, and declining sales figures (due to global economic uncertainty), the watchmaking industry remains a significant financial boon and an indispensable market.

The impact of the watchmaking industry on national economies varies greatly depending on the country. It is obviously crucial for Switzerland, the cradle of modern watchmaking and the epicenter of the high-end segment globally: in 2012 and 2013, watch exports amounted to 21 billion Swiss francs (19.5 billion euros), or €10.5 billion annually. While this amount has certainly decreased – 9.4 billion Swiss francs in 2016 (8.8 billion euros) – it remains high and is predominantly driven by Asian countries (source: Deloitte 2016 study).

To a lesser extent, the significance of the watchmaking industry is also considerable in France, Germany, China, and Japan. Each country possesses its own “watchmaking industry,” with its unique specificities!

Is there a “watch industry” to speak of? Or should we just mention the “watch industry”, as it looks like the “new technologies sector”? It all depends, in fact, from what point of view we place – and especially from what country we look. Because there is a watch industry only when there are a large number of companies, factories and organizations involved in the design and manufacture of watches, as is the case, well sure, in Switzerland, but also in France. Let’s see what the wheels of this industry are in this watchmaking guide.

The many Facets of the Watch Industry

In reality, there is not a watch industry, but several. Over time, and thanks to the transformations that affected it after the great crisis of quartz in the 70s and 80s, the watchmaking sector was recomposed around two major industries:

Mass market watches, which account for about 90% of total production (about 1.2 billion units produced worldwide each year). These models are mainly manufactured in Asian countries, on low-cost production lines. They are sold to the public for sums ranging from a few euros to several hundred euros.
Watches manufactured for the high-end and luxury market: mechanical models, mounted in an artisanal way, in companies or factories that can be independent or belong to large watchmaking groups. The high-end watch industry comes mainly from Switzerland, its cradle; but also from France, Germany and Japan. We are talking here about timepieces sold between a few hundred and several thousand, even tens of thousands of euros.

It is clear that the Swiss watch industry operates mainly in the luxury and high-end sectors: the most expensive (and most popular) watch brands are almost all based in this small country. The worldwide reputation gained by the Swiss mechanisms is so important (and so profitable) that the competent authorities have put in place a “Swiss made” label which can benefit the companies that produce their timepieces within its borders. Visit the Federation of the Swiss Watch Industry website for more information.

Nevertheless, most of the production being mass, most watches produced by the watch industry come from Asian countries. Even timepieces stamped “Swiss made” are regularly supplied in parts by Chinese or Japanese workshops (which have acquired, in terms of movement quality, an excellent reputation).

 

• Watch groups (which own several brands, such as Swatch Group);
• Case assemblers (who do not produce their own movements but provide a finished, cased product);
• Manufactures (which adopt a verticalized production and support a maximum of tasks from the design of the parts to the casing: for example Vacheron Constantin or Longines in Switzerland, but also Seiko in Japan);
• Subcontractors (who supply parts to case assemblers and manufactures);
• Brands (emanations of groups, companies and manufactures);
• Resellers (where consumers buy models);
• Federations (which ensure the respect and application of the rules of the watch industry, such as the FHS);
• Control bodies (which issue certifications, such as the Swiss Official Chronometer Testing Authority, or COSC).

The Watch Industry and its Economy

The watch industry is in excellent health – and is brewing several billion euros a year, although these indicators have tended to decline in recent years. In 2012, the world watch industry was turning some 40 billion euros on its dials, and was giving work to hundreds of thousands of people on the planet. Despite a slight decline in the number of employees, particularly in the Swiss market, and declining sales figures (due to the global economic uncertainty), the watch industry remains an important financial windfall and a key market.

The impact of the watch industry on national economies varies greatly by country. It is obviously crucial for Switzerland, cradle of modern watchmaking and epicenter of the high-end segment in the world: in 2012 and 2013, watch exports amounted to 21 billion Swiss francs (19.5 billion euros), or €10.5 billion annually. This amount has certainly decreased – 9.4 billion Swiss francs in 2016 (8.8 billion euros) – but it remains high, and is mainly pulled by the Asian countries (source: Deloitte 2016 study).

To a lesser extent, the weight of the watch industry is also important in France, Germany, China and Japan. Each country has its own “watchmaking industry”, with its specificities!