An Overview of Recent Horological History
In the Nineteenth century accuracy in time keeping was driven by the need for world navies to have a navigation tool to keep track of their geographic longitude. How times have changed. In this century the need for accuracy has been balanced by the consumer's desire for low costs and high fashion.
1850 to 1900
The English and Swiss dominated the world time keeping trade up to the middle Nineteenth century. That leadership would be threatened by innovations taking place across the Atlantic. An American machinist named Edward Howard upon examining 1850's watch movements could not believe the low quality of the machined components used in watch manufacture. The tools used were primitive and produced large variances in each part. This required each watch to made individually by hand with each piece crafted and fitted for a single movement in an artisan's workshop. Howard, with no background in the watch trade, set out to improve the manufacture of movement components and founded the American Watch Company (later Waltham Watch Co.) in Waltham, Massachusetts in 1859. The Civil War in the United States drove increases for production as the military demanded large numbers of accurate timepieces from industry to fight the rebel insurgents in the south. Wartime output increased production from a total of 14,000 watches in 1858 to 118,000 by 1864. This large increase in production allowed many processing refinements to occur which further lowered costs and improved performance. Other U.S. watch companies founded during this growth period including Howard in 1857, Elgin in 1864, Illinois in 1869, Hampden in 1877, Waterbury in 1879, and Hamilton in 1877. At first, this improvement in the manufacture of machine made watches in the 1860s did not threaten the Swiss. The Europeans did not believe that anyone would want to buy a machine made watch, especially after the European failures at such attempts in the 1830s and 1840s. This is a classic case of those inside an industry not understanding the threat from outside entrants using new technologies. History would repeat itself nearly a century later when the Swiss failed to realize the significance of quartz technology! The impact to Swiss industry from the U.S. emergence was staggering, exports dropped from a peak of 18.3 million francs in the 1860s to 4.8 million francs in 1876, a decrease of 74%. In response the Swiss sent Edouard Favre-Perret to the U.S. to investigate this new technology. Upon arriving in the U.S. Mr. Favre-Perret found low cost, easy to repair watches, with interchangeable parts. This was a major shock to the Swiss who did not believe that watches could be anything but hand made, much less have interchangeable parts. Having learned their lesson, the Swiss now set out to modernize their factories and gain back market share with precision machining of their own. Unfortunately for the Swiss, their timepieces now had a very bad reputation for accuracy and quality in the U.S. marketplace. It would take many years for the Swiss to gain back their good name. In order to penetrate the U.S. market and confuse consumers of the Swiss origin, the Swiss used fake American company names such as New York Central Watch, the Ohio Watch Co., and the Pennsylvania Watch to sell their watches. This is a humorous anecdote when one considers the meaning of a "Swiss fake" was entirely different from what it means today. The Dingley Tariff Act of 1888 was passed to create truth in origin labeling of watches imported into the U.S.
1900 to 1950
The turn of the Twentieth century saw a resurgence in Swiss efforts to control the watch industry. The Dingley Tariff Law was circumvented by the introduction of U.S. assemblers. Assemblers were companies such as Bulova, Benrus, Gruen, and Longines-Wittnauer that were formed to assemble watches in the U.S. with Swiss movements. The Swiss established precision machining and factories based on the experience of Mr. Favre-Perret's visit to the U.S. The Swiss focused on incremental improvements to mechanical movements by introducing "complications" such as calendars, chronographs (stop watches), and self-winding models. Rolex lead the way with the introduction of the first water resistant watch in the 1920s and the first automatic winder in 1931. The Swiss decreased watch sizes, increased reliability, and by the end of World War Two the Swiss had gained back an 80% share of the world market. Even after the war when Allied factories retooled to watch production from war supplies and reentered the market the Swiss share of the world market in the 1950s was still over 50%. By the end of WWII with competition from the Swiss and U.S. assemblers most of the U.S. watch companies founded in the 1860s and 1870s were out of business.
1950 to 1970
The Swiss would again face competition from the U.S. after the arrival in 1942 of Norwegian refugee Joakim Lehmkuhl. Mr. Lehmkuhl took over running Waterbury Clock Company which would later become United States Time Corporation and then Timex. Timex introduced cheap, un-jeweled movements that were made possible by hardened alloys. Up until this discovery watches used jewels for pivot points to prevent the wear of metal on metal. Mr. Lehmkuhl also introduced innovative distribution channels outside of the traditional jeweler's network. In 1962 one out of three watches sold in the U.S. was a Timex and by 1973 they controlled 45% of the U.S. market and 86% of domestic production.
1970 to present
The two major events that have had the greatest impact on the watch industry in this half of the Twentieth century are first the quartz movement and second the marketing of watches as fashion accessories rather than just timepieces. The introduction of the quartz movement in 1969 by Seiko lead to market domination by the Japanese, specifically Seiko and Citizen, in the world market and Timex in the U.S. market in the middle 1970s until the mid 1990s. In 1995 the Swiss took over the lead in world watch production with 38 million units shipped versus 30 million for Japan a decrease from 39 million in 1994. It was a very different story in 1984 when Swiss world production of watches dropped to less than 10% from 40% in 1974 before the dominance of the quartz design. In 1984 the business press observed that "The Swiss watch industry has been in decline ever since it delayed switching over to electronic watches in the early seventies.". The Swiss had failed to understand what consumers wanted and had poor distribution channels. The Swiss took over the lead in world watch production after they changed their focus from technology to fashion. The leadership shift back to the Swiss took 13 years starting with the introduction of the Swatch in the early 1980s.