The Swiss watch industry almost died in the late 1970s. Cheap, accurate quartz watches from Japan, mostly Seiko and Citizen, took the bottom out of the market, and Switzerland’s two biggest watch companies collapsed with it: SSIH, the group that owned Omega and Tissot, went insolvent in the late 1970s with its creditor banks taking control in 1981, and ASUAG, which controlled most of the country’s movement and parts production, failed in 1982. A group of those banks hired a management consultant named Nicolas G. Hayek to liquidate the wreckage. Hayek looked at the numbers and refused, convinced the industry could be saved, and in 1983 he engineered the merger of ASUAG and SSIH into a single company, betting everything on a cheap plastic quartz watch called the Swatch. The company he built from that bet, renamed the Swatch Group in 1998, is now the largest watch company in the world, and it owns Omega, Longines, Tissot, Breguet, Blancpain, Harry Winston, and the factories that supply most of the Swiss industry’s movements.
A Swatch from 1985, the plastic quartz watch that saved Swiss watchmaking. Photo: Wikimedia Commons, CC BY 3.0.
The collapse
To understand what Hayek walked into, you have to picture how complete the collapse was. Japan did not just undercut the Swiss on price, it industrialized the quartz movement first and cheapest, and the Swiss industry, which had spent decades perfecting the mechanical watch, had no cheap answer. SSIH had been Switzerland’s largest watch producer and the third largest in the world, and it went insolvent anyway. Tens of thousands of jobs vanished from the Jura valleys. By the time the banks seized control of SSIH in 1981, they owned a corpse, and they hired a consultant in Zurich to perform the autopsy. My understanding of all this comes from books and Wikipedia, and I am exactly the kind of person who would bore you about it at a party, so let us keep moving.
The merger and the man
Hayek was Lebanese-born, raised in Beirut, and had founded his own management consulting firm, Hayek Engineering, in Zurich in 1963. He had spent twenty years turning around big European companies. When the banks asked him to liquidate ASUAG and SSIH in the early 1980s, he told them the industry could be competitive again if it was restructured and its brands repositioned, and he diagnosed the rot as problems in products, policies, distribution, and leadership. He was not gentle about it. ASUAG, he said, owned more than 100 separate companies, most of which did their own marketing, R&D, and assembly, and he called the whole arrangement crazy. In 1983 he merged the two companies into one. In 1985 he took it private with the backing of Swiss investors, including Stephan Schmidheiny and Esther Grether, and the merged company was renamed SMH, the Société de Microélectronique et d’Horlogerie. His strategy had two halves that people tend to remember separately: fight the Japanese at the cheap end with cheap quartz, and push the heritage brands upmarket into mechanical luxury. The second half is the romantic part. The first half paid for it.
The Swatch itself
The Swatch launched in 1983, engineered by Ernst Thomke, the CEO of ETA, and his team. It was a quartz watch redesigned from scratch for cheap manufacturing: 51 components, assembled on automated production lines, sealed in a welded plastic case you could not open, with a Swiss Made movement inside. The pitch was the “second watch,” low cost, high tech, artistic, emotional, sold in constantly changing designs so that one was never enough. It sold in the millions, and the cash it generated funded everything else the group did for the next forty years. Here is the paradox, and it is the whole point of this brand: the Swatch is a disposable quartz fashion product, the enemy of everything mechanical-watch enthusiasts claim to love, and it is also the reason the companies that make mechanical watches survived to keep making them. If you own an Omega, the plastic thing underwrote it. I own several Swatches. The exact number is a number I keep to myself.
The empire
SMH was renamed the Swatch Group in 1998, and through the 1990s and 2000s it kept buying names: Blancpain and Frédéric Piguet in 1992, Breguet, Glashütte Original, Jaquet Droz, and eventually Harry Winston. The portfolio now runs the full ladder, from Swatch and Flik Flak at the bottom through Tissot, Hamilton, Certina, and Mido in the middle, Longines, Rado, and Omega in the prestige tier, up to Breguet, Blancpain, and Harry Winston at the top. Underneath all of it sit the production companies, ETA and Nivarox-FAR, which make movements and the hairsprings and assortments that go inside them. ETA is the largest producer of ébauches, unfinished movement kits, in the world, and that fact has been a fight for twenty years. In 2002, ETA announced it would stop selling ébauches to third parties by 2006 and keep them for the group. Switzerland’s competition commission, COMCO, ruled that the plan violated cartel law, since ETA dominated the market and there was nowhere else for small Swiss watchmakers to go. The 2013 settlement staged a gradual reduction in supply through 2019. In 2019, COMCO moved to prohibit ETA from supplying third parties entirely in 2020, which the group called incomprehensible and unacceptable. By then the landscape had already shifted: Sellita had become the dominant independent movement supplier, making about a million movements in 2019. Both sides had a point. Hayek’s argument was that ETA was being ordered to arm its own competitors, and that counterfeiters were building fake prestigious watches on genuine ETA ébauches. The regulators’ argument was that one company should not hold the industry’s throat. The regulators mostly won, and the Swiss industry now runs on Sellita and in-house calibres. One more honest note: with this many brands under one roof, the group’s own mid-tier names compete with each other, Tissot and Hamilton and Longines all fishing in similar waters, and a few of the revived heritage names trade on history they sat out for decades. Nicolas Hayek died of cardiac arrest on June 28, 2010, while working at the group’s headquarters in Biel. His son Nick Hayek had become CEO in 2003, and his daughter Nayla Hayek succeeded him as chairwoman.
The MoonSwatch
On March 26, 2022, Swatch and Omega released the MoonSwatch: eleven quartz chronographs styled on the Omega Speedmaster, named for the sun, the moon, and the planets, built in Swatch’s bioceramic, priced at $260. They were not limited editions, but they were sold only in Swatch stores, and the result was lines around the block in London, Geneva, Singapore, Melbourne, and New York. A store closed in central London. There were arrests in Geneva. The purchase limit was cut from two watches per customer to one. Resale prices ran to multiples of retail. And then came the complaints, the best known being that the dark blue Neptune model left blue stains on people’s wrists in humid weather, which is the kind of detail that makes a $260 plastic watch feel exactly like what it is. Nick Hayek said the collaboration boosted sales of the actual Omega Speedmaster by roughly 50%, which tells you the strategy worked even as the chaos embarrassed everyone. A Blancpain version, the Scuba Fifty Fathoms, followed. The whole episode is marketing genius wearing a quartz watch, and it made collectors lose their minds for a weekend, which was probably the point.
The MoonSwatch Mission to Jupiter, the $260 quartz Speedmaster lookalike that caused the 2022 launch chaos. Photo: Wikimedia Commons, CC BY-SA 4.0.
The eleven-model MoonSwatch collection, named for the sun, the moon, and the planets. Photo: Wikimedia Commons, CC BY-SA 4.0.
Why it matters
Without Hayek’s bet there is no modern Swiss watch industry, and that is not marketing copy, it is the history. The Swatch Group owns the brands that define the idea of Swiss watchmaking for most of the world, and it controls the movement supply those brands depend on, which was a rescue and became a stranglehold, and the regulators spent twenty years loosening it. The paradox of the plastic watch stands: quartz won the actual business of telling time, and Switzerland won the story you tell about it, and the story is worth more. Hayek deserves the credit he gets. The vision was real, the execution was ruthless, and it worked. And the stakes stay honest: outside this hobby, almost nobody knows any of this, and the MoonSwatch lines were the closest the outside world ever came to caring, and what they cared about was a $260 plastic watch. The cheap plastic watch saved the expensive mechanical one, and the company it built now owns half the Swiss industry. Whether you love the watches or not, that is the history.
Official site: swatch.com
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