Falling Behind Time

Watchmaking has long been a vocation as innately Swiss as yodeling and cheese making. Last year the country produced 79 million timepieces, nearly 40% of the world total. But that figure is not so pleasing as it might seem; the industry is in a slump that looks more like a depression than a recession. Swiss exports, which take 97% of production, fell 22% last year--40% in the key U.S. market. Red ink has turned up in the accounts of most manufacturers, and more than 16,000 skilled watchmakers, or 21% of the industry's labor force, have lost their jobs in the past 18 months. More than two-thirds of those still employed are working less than a full day. Sales have been hurt by the global recession and the astronomical rise of the Swiss franc on world money markets, which has added 70% to the dollar price of a Swiss watch since 1971. But the most ominous development has been a marketing blunder: Swiss watchmakers failed to appreciate the sales potential of electronic digital watches.

Their own engineers did not let the watchmakers down. The first quartz-based wristwatch was produced in Neuchatel in 1967, and Switzerland's chemical industry led in developing the liquid crystal displays used in many digital watches. But U.S. manufacturers got a technological lead, using miniaturization techniques largely developed for the space program, and began mass production that sent prices tumbling. Texas Instruments recently announced that it will market a digital watch for $20. Swiss watchmakers had held back, believing digital timepieces would be only a fad.

"There were people in Switzerland who thought one could never do away with the hands on a watch," admits Georges-Adrien Matthey, director general of Societe Suisse pour l'Industrie Horlogere S.A. (S.S.I.H.), which makes Omega and Tissot watches. Result: of the more than 4 million digital watches produced in the world last year, fewer than 500,000 were made in Switzerland.

Cottage Industry. The Swiss are now scrambling to catch up. Ebauches S.A., with a license from Hughes Aircraft Co., plans to produce more than 1 million digital watches this year. Before the end of 1976, S.S.I.H. will produce digital watches in the $15-$30 range. Meanwhile, the Swiss are applying their considerable know-how to improving electronic technology. At the Basel Fair last weekend, two manufacturers showed off the world's first electronic watches that do not require a battery.

Even such advances cannot solve the social problems that have resulted from the watch industry's decline. To a large extent, watchmaking has remained a cottage industry, with production divided among more than 1,000 firms scattered throughout the foothills of the French-speaking Jura region. Unemployment among the workers has inevitably affected Switzerland's normally strike-free labor relations. In January, 189 workers at a U.S.-owned Bulova plant in Neuchatel went on strike to oppose plans for consolidating production in Bienne, 20 miles down the road.

Even if business picks up, the prospects are grim. The average electronic watch requires only half as much labor as a mechanical watch, and present watchmaking skills, maintained through generations, are sometimes not transferable. Only time can tell whether or not the Swiss industry's belated push to go electronic can prevent the disappearance of a way of life.

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