Swatch to stop selling ETA movements to outside companies in 2010???

[stuffler,mike]

Most watches companies do not make their own movements. Quality watch makers buy their movements from mostly ETA, the quasi-government owned movement powerhouse. In 2010 however, ETA will stop selling its movements to outside companies. It will continue to provide movements for it’s house brands, of which there are several. ETA is part of the Swatch Group which makes a number of brands as seen in the link. When ETA stops providing movements to out-side brands, they will have to go elsewhere for movements.

Sellita is a growing movement maker in Switzerland, but has had a bit of a copycat history. They mostly copied ETA movements. Can they do this? Well, probably, at least in the US. Most ETA movements have been around for a while and in the US Patents last for 20 years only. Because movements are machines, they only intellectual property protection they would have is a patent, and presumably the European patent laws are similar to those of the US. Take the ETA 2824-2 movement, which has been around since the 1970s. Because over 20 years has passed since the, copycats are free to make the movements, the only barrier would be technology. Meaning Sellit and other movement makers would have to have the proper machinery to produce the delicate movement parts. China on the other hand would never even think to check on infringing intellectual property rights before copying something.

We can assume that Sellita has such technology because large brands such as Invicta have been buying from them at large for years. It is predicted that Sellita will step in ETA’s shoes and start providing movements on a mass scale in the next few years. Right now, Sellita has a reputation for being a bit lower quality, but that will change in the coming years with high production, and consumer demand. We shall wait and see what role Sellita has in the next few years.

I can´t agree that Selita has a reputation for beeing a bit lower quality. The SW 200 even has one more jewel

You may also read here: sellita sw200 and 300

[Xaltotun]

The SW 200 even has one more jewel

To *me*, it seemed the Sellita in my Oris had slightly inferior finishing. Bien sûr, I can't speak for all movements produced ( LOL ), but at that time, intrigued, I researched this and many posts in various forums were pointing towards the same conclusions as mine.

And, we all know one more jewel won't be the guarantee of a better movement, just an indication that an additional jewel was used in the movement. After all, haven't I seen somewhere that some Chinese movements even have 30 jewels.... ?

[RickH86]

Maurice LaCroix has built a new factory (1 hour from where I live) and are making their own movements now. Assuming they can meet demand, I'm sure some of the smaller companies will buy from them and others developing their own movements.

[Uncle Bill]

Interesting thread, one wonders if Switzerland has restraint of trade laws in regards to Swatch Groups business practices. I tend to subscribe to the Nature abhores a vaccuum school of thought. While Sellita need to make an upfront investment to increase capacity, I think it would be in the interests of the independent watch companies see that this company prospers so they can get a secure source of movements.

Lets not forget what Swatch is running after which is the high end and high margin watch market. Considering the state of the economy in North America depending where you live and what you do, a brand spankin new Omega Planet Ocean may not be on your shopping list if you are in financial services sector and you just got laid off.

One demographic that Swatch group counts on as customers are hurting big time at the moment so one wonders if moving super high end is the right business model to embrace at this point in time.

[larsy]

I think dibetu has it nailed.

Maybe we Swiss, and others, will begin to innovate more again instead of perfecting ETA casing.

By innovation I don't mean ridiculous complications or the n-th tourbillon variant.
I mean innovation in developing new materials, oils, alloys etc - the boring stuff

And I wouldn't mind a Seiko, Citizen or other movement in Swiss watches.
Seiko is one of the few manufacturers who can even make the main spring.
Serves us right for only concentrating on the bling instead of substance.

[artec]

Far too much sensationalism here guys! Swatch are not going to stop selling fully assembled ETA movements, but what they are going to do is to stop selling movement "blanks"

Here is an extract from the Swiss Competitions authority's annual report

In the watch industry, the investigation into ETA SA Manufacture Horlogère Suisse (hereinafter: ETA), a subsidiary of the Swatch Group, was concluded with the finding that ETA was abusing its dominant position. ETA had had the intention to discontinue its supply of ébauches (movement blanks) from January 2006 and thereafter to supply only fully assembled watch movements (“phasing out”). The investigation revealed that ETA held a dominant position in the market for Swiss made mechanical ébauches up to a unit price of CHF 300.--. The termination of supplies has to be regarded as an unlawful refusal to do business and therefore as an abusive practice. For numerous competitors, the implementation of the phasing-out within such a short time meant in practical terms that they had been deprived of the basis for their business activity, as there was no alternative supplier. In an amicable settlement, ETA has undertaken to supply the ébauches until the end of 2008 at the current volume and thereafter for two further years at a reduced volume. This will create a situation in which alternative production plants may be set up (RPW 2005/1)

This is the culmination of several competitions decisions and is probably the reason that Breitling and others are developing their own movements.

ETA (who also encompass Valjoux and Unitas) will stop selling movement blanks completely by 2010 and will only sell fully finished movements to third parties.

I know this one was last edited well over a year ago and no-one may be paying attention any more, but I can always hope!

First, I guess I don't know the difference between ebauches and blanks. But if non-Swatch companies are refused access to one, but not the other, the difference in price would simply be passed on to the market and life would go on. From what I've seen on the subject of even the retail price of ETA movements, wholesale prices must be derisory, so the difference between ebauches and blanks can't be very serious anyway.

If ETA movements are not going to be available to the likes of Breitling who are essentially dependent on them, and if this situation has been known to be pending for at least five years, I can't believe that alternative suppliers haven't been furiously churning away, developing new movements to take ETA's place.

I also can't believe that people like Breitling themselves haven't been developing the capability to make the their own movements, ETA movements under license, or close equivalents themselves.

And finally, I don't think I can believe that ETA would deliberately deprive themselves of what must be an extremely lucrative source of income...... and for what purpose? If they put the companies who now are dependent on their movements out of business in order to snatch the business for themselves, will they necessarily get that business? What would be their motive?

[Eeeb]

I know this one was last edited well over a year ago and no-one may be paying attention any more, but I can always hope!

First, I guess I don't know the difference between ebauches and blanks. But if non-Swatch companies are refused access to one, but not the other, the difference in price would simply be passed on to the market and life would go on. From what I've seen on the subject of even the retail price of ETA movements, wholesale prices must be derisory, so the difference between ebauches and blanks can't be very serious anyway.

There is no difference in the terms as used between ebauches and blanks. After 2010 Eta will not supply non-Swatch companies with ebauches, which are partially finished movements. You will only be able to buy a complete movement if you are a non-Swatch company. (You can modify it to your heart's content after that... and many will.)

If ETA movements are not going to be available to the likes of Breitling who are essentially dependent on them, and if this situation has been known to be pending for at least five years, I can't believe that alternative suppliers haven't been furiously churning away, developing new movements to take ETA's place.

Stella(?) and a few others have been doing just that. But producing reliable, accurate, quality movements in quantity at low cost is harder than it seems... I don't think the Chinese have been able to do it yet. And Stella charges more than Eta for essentially the same movement.

I also can't believe that people like Breitling themselves haven't been developing the capability to make the their own movements, ETA movements under license, or close equivalents themselves.

A lot of the popular Eta mechanicals are out of patent and don't take licensing. The SuperQuartz would be a lot harder to build and I suspect will continue to be sourced from Eta.

And finally, I don't think I can believe that ETA would deliberately deprive themselves of what must be an extremely lucrative source of income...... and for what purpose? If they put the companies who now are dependent on their movements out of business in order to snatch the business for themselves, will they necessarily get that business? What would be their motive?

The problem that Swatch (and thus Eta) was facing was others buying partial Eta movements (ebauches) finishing and encasing them in Asia, and then saying they were just the same as Swiss watches since they were Eta movements. I am sure this was never aimed at Breitling. Swatch did this to protect it's profit base in quality mechanicals. They didn't want to get only the slice of the pie which is wholesaling movements... they wanted the whole pie which is selling the entire watch. Continuing to supply ebauches was, in their view, having Peter compete against Paul when they owned both... and made more money off Paul's complete watches.

I am sure Breitling will continue to be able to buy thermolines... indeed, they may be the only vendor using them! They may have to buy even more to convince Eta to keep the line open

[artec]

Thank you EEEB...... I'm surprised and pleased that anyone was still paying attention!

I understand and agree with much of what you say, but Peter and Paul have got me baffled. If Peter and Paul are both owned by Swatch, they'll continue to be supplied with ebauches even if the degree to which they modify the bits and pieces varied, won't they?

And if Peter is owned by Swatch and Paul isn't, and Paul isn't allowed by buy ebauches, hasn't ETA lost all the sales formerly made to Paul? I'm assuming that the non-Swatch Paul is not really Paul-san.

Do Asian manufacturers advertise to the general public that a product has an ETA movement? I wouldn't have thought that the kind of buyer most Asian manufacturers who buy ETA movements are aiming at would ever find out that the movement was ETA, would know what ETA was or would even know that the movement was any different from the rest of the watch?

I understand that developing high quality, easy-to-manufacture-cheaply movements from scratch isn't easy, but with a good movement as a starting point, most ambitious designers would be delighted to be offered the opportunity to update and improve, I'd have thought?

By the way, I only gave Breitling as an example of some-one who I knew relied on ETA. Of course, it's also true that I like their Superquartz, but I'm not in the market for any more....... all the new ones seem to get bigger while I wasn't looking!

Do you think Seiko and Citizen would be interested in filling ETA's voids and supplying ebauches to European manufacturers? Or would the lack of "Swiss Made" labels lose too many of the non-collector buyers? I know there are a lot of people who aren't interested in watches but just want something the consider "good" and who wouldn't buy anything except with a "Swiss Made" label, but there must also be a lot of people who just want a watch and never even look at the maker's name, let alone where it was born or whethrer the movement and case were from the same source.

It's an interesting field for endless speculation, isn't it?

[Eeeb]

...

By the way, I only gave Breitling as an example of some-one who I knew relied on ETA. Of course, it's also true that I like their Superquartz, but I'm not in the market for any more....... all the new ones seem to get bigger while I wasn't looking!

Do you think Seiko and Citizen would be interested in filling ETA's voids and supplying ebauches to European manufacturers? Or would the lack of "Swiss Made" labels lose too many of the non-collector buyers? I know there are a lot of people who aren't interested in watches but just want something the consider "good" and who wouldn't buy anything except with a "Swiss Made" label, but there must also be a lot of people who just want a watch and never even look at the maker's name, let alone where it was born or whethrer the movement and case were from the same source.

It's an interesting field for endless speculation, isn't it?

I think all of this was aimed at Paul-san not Paul... Being able to say "Swiss" in connection with "watch" adds a great deal of panache to the general sales effort. This is one of the reasons the Swiss are trying so hard to protect their name in the market.

I agree on the size of modern watches... I have a very large wrist and a lot of these watches look like pie pans on my wrist... but we live in an age of bling and being ostentatious it seems.

I think everyone is expecting the Chinese to soon dominate the "I don' care what name is on it" market... in the meantime Mitoya seems to be providing lots of cheap quartz for Chinese encasements...

[Militarywatchdude]

I think this whole deal with ETA is a good thing. It will force watch companies to become more creative and come up with some great in-house movements.