The Swatch Counterattack — How Plastic Saved Switzerland

In the early 1980s, the Swiss watch industry was gasping for breath. Swept under by the wave of quartz, it had lost jobs on a scale of tens of thousands, and the two great groups binding its distinguished brands — ‘ASUAG’ and ‘SSIH’ — were both on the verge of collapse under enormous debt. ‘Omega,’ ‘Longines,’ and ‘Tissot’ alike, together with these illustrious houses under their wings, are said to have been on the brink of being sold off piece by piece to foreign capital.

Switzerland’s banking consortium consulted a single consultant on how to liquidate these two giant groups — that is, on how to wind them down. The man’s name was Nicolas Hayek, born in Lebanon, who led a management consulting firm in Switzerland. Yet he returned not the ‘deathbed vigil’ the banks wanted, but the exact opposite answer. The Swiss watch industry still had a future. Rather than winding it down, it should fight and win it back.

The Revolution of 51 Parts

What underpinned Hayek’s conviction was a single prototype. Engineers Elmar Mock and Jacques Müller, among others, had been developing at ETA (later a key movement maker under Hayek’s wing) a quartz watch with parts reduced to the limit.

Whereas an ordinary wristwatch was made of over a hundred parts, this watch had just 51. What is more, it was a bold design in which the plastic case back doubled as the watch’s foundation (the main plate), the movement was set in from above, and the crystal was ultrasonically welded. It almost entirely eliminated fine assembly by human hands, allowing mass, cheap production by machine. This was the technical core of the birth of the ‘Swatch.’ The name ‘Swatch’ is said to be a contraction of ‘Second watch,’ carrying the idea of a watch you change as casually as clothes, rather than a luxury item used for a lifetime.

Swatch, the Watch You Change

Swatch launched simultaneously in Switzerland, West Germany, the United Kingdom, and the United States on March 1, 1983. The launch price was roughly 40 to 50 Swiss francs, cheap enough for anyone to afford.

What Hayek set in motion was not mere discounting. Vivid colors, playful design, collections that rotated with the seasons. He marketed the watch not as a ‘precision machine’ but as a ‘fashion accessory.’ Collaborations with artists and limited models drove young people wild. Stop competing on accuracy and compete instead on fun and self-expression — it was an entirely new proposal of watch value in the age of quartz.

The strategy hit home. Swatch is reported to have sold about 1.1 million in its first year and about 3.5 million worldwide the following year, in 1984. Swiss-made watches had returned to wrists around the world once again. The merged company SMH (later the Swatch Group) born of this regained the power to earn through mass-produced watches, and began to send blood coursing through the dying Swiss watch industry.

Pushing Mechanical Watches Up to ‘Luxury’

The most important fruit that Swatch’s success brought was, more than the sales themselves, the ‘margin’ it created. As the cheap quartz division began turning a profit, the group regained the strength to rebuild and polish its distinguished brands under its wing — ‘Omega,’ ‘Longines,’ ‘Breguet,’ and others.

What Hayek saw through here was a shift in the measuring stick of value. Mechanical watches could no longer beat quartz on precision. If so, then they should stop being a ‘tool’ competing on accuracy and redefine themselves as ‘art’ and ‘an asset’ that sells craftsmanship, tradition, and the joy of ownership. The beauty of moving gears, the durability to be handed down for generations, the story a brand carries. These were values that cheap, accurate quartz could never imitate. Switzerland stepped down from the field on which it had lost, and rebuilt a field on which only it could fight.

The Country of Watches Returns

At the end of the 1980s, the Swiss watch industry was emerging from winter. Secure your footing with Swatch, push mechanical watches up the luxury path — Hayek’s two-tiered strategy led the entire industry, reorganizing it, toward a sure rebirth. The ‘country of watches,’ once nearly a relic of history, gained a new role and breathed again.

What is intriguing is that this revival came not by ‘making more accurate watches.’ Rather, Switzerland deliberately withdrew from the competition for accuracy and revived itself by persuading the world that value lay precisely in mechanical watches — ‘more inaccurate, more expensive, and more labor-intensive.’

And here a curious phenomenon began. In a world where quartz, the cheap and accurate watch, had already spread everywhere, people came to be drawn to expensive, outdated mechanical watches and to pay large sums for them. Why did people return to mechanical watches when a more accurate one existed? Next time, we close in on the mystery of this ‘mechanical renaissance.’