Time out: Swatch Group to cease ETA movement supply by 2019
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  1. #1
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    Time out: Swatch Group to cease ETA movement supply by 2019

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    It came as a body blow to the industry a few years ago, and now it’s becoming a reality. Watchmakers, watch marketers and ETA movement makers and suppliers the mighty Swatch Group will no longer have to sell its ETA watch parts to any other company as from December 31, 2019. Permission has been granted to gradually reduce, and ultimately cease supply of watch parts to its Swiss rivals. The agreement follows the reversal of a decision first made in July by the Swiss competition authority, known as Comco in French and Weko in German.

    Over the next two years Swatch will be expected to deliver just 75% of parts to rival companies from average levels between 2009 and 2011. The supply of parts will then be dropped further to 65% in the years 2016 and 2017 and to 55% in 2018 and 2019.
    A clause in the agreement is designed protect "hardship" cases where the denial of parts might be detrimental, even disastrous to smaller companies. Also, the agreement may be reassessed if market conditions evolve differently in the years to come.

    The permission has been granted after Comco initially rejected a deal with the Swatch Group back in July over the issue and the latest agreement has be renegotiated. Presently Swatch supplies around 60% of the movements used by the Swiss watchmaking industry and the Swiss Cartel Act was put in place to stop the company cutting supplies. Swatch initially expressed a desire to reduce the levels of supply to other companies under the aegis of their late Chairman Nicolas Hayek.

    Commenting on the latest decision the Swatch Group said:"The Swatch Group considers the Competition Commission's decision to be a positive, albeit a tentative, first step toward finally making it clear to all the brands and groups in the Swiss watch industry that they have to invest in their own mechanical movements and assume the associated industrial risk themselves. This is not a luxury but a step necessary for the long-term success of the Swiss watch industry."

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    In recent years several high-end brands have started to focus on developing their own in-house movements, or developing or adapting movements based on some of the ETA hardworking standards such as the ETA 2824-2 or 7750 for chronographs. ETA has 20 production sites located in the foothills of Jura and the Swiss cantons of Valais and Ticino. Their production and assembly of movements and watches are considered global benchmarks for their reliability and performance.

    Visit the ETA website
    Last edited by Michael Weare; November 5th, 2013 at 03:21.
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  2. #2
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    This has been known for many years now and i expect that it will do absolutely nothing to watch brands that do not invest on in-house movements, with the advent of Sellita (who made a million movements last year), TC, Soprod and countless number of other derivatives of the ETA movements, not to mention the movements sourced from the far east (Seagull, Miyota, Seikos' NH etc). The greater issue here is that they plan on cutting parts supply to its competitors as well; the Swatch group owns many of the critical part manufacturers that even it's Swiss clones depend on like Nivarox FAR's hairsprings and mainsprings.

    ETA has already begun cutting Nivarox hairspring supply to Sellita and now even a big movement maker like Sellita is having trouble finding an alternative (it has asked comco to delay the reduction). The only options here are to spend decades to develop a Nivarox alternative (like Rolex, which spent years to make its own hairsprings) or outsource and lose part of it's 'Swiss-made' reputation. This problem rolls down to all the companies that use Nivarox hairsprings, like Patek Philippe, Nomos, Federique constant, ALS etc and many of these, switching over to an Asian counterpart would be unthinkable. The repercussions would be endless.
    Last edited by yifu; November 5th, 2013 at 03:39.

  3. #3
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    With so many companies using ETA movements why would this be beneficial? Why would Swatch Group want to give up such an enormous market share?

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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    How will this impact service intervals for non-Swatch watches fitted with ETA movements after 2019? Will independent watchmakers still be able to source parts?
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    I don't think this will be as devastating as most watch afficionados believe it will be.

    There are already alternatives in the market for ETA, the most common being Sellita and Miyota.

    I believe the micro-brands and other corporate watch companies will rely on these alternatives when the time comes ETA stops supplying the movements in 2019.
    They will be able to continue to improve/enhance/fine-tune the Miyota/Sellita movements as much as the ETAs.

    Besides, I really think this is a positive thing for the future of watch movements development.
    It promotes the growth of the ebauche industry.
    For decades, watch companies have relied too much on ETA, resulting in the stagnation of innovation of watch movements, Haute Horlogerie aside.
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    You are asking for the hidden corporate agenda and to that we can only speculate. My guess is that it is to protect Swatch group brands, especially the entry to mid range offerings by Longines, Hamilton, Oris etc, who use exclusively ETA movements. There are competitors out there using the same movements at a lower price so they are essentially taking market share by using Swatch group's own weapon (ETA movements).

    I guess when Swatch first decided to proceed with this many years ago it had not quite anticipated that Sellita (a contractor) would immediately step up and fill the void by using ETA's own movements produced on their own machines and that it would do this legally (since patents have run out) and consistently, producing a million movements a year, essentially all ETA clones, from the SW200 to the SW500. To counter this, ETA has now begun reducing parts supply to Sellita (and others) in order to retain the dominant market position is has now, pretty much forcing Sellita to outsource and lose part of its Swiss made appeal. This has a FAR great knock-on effect than cutting movement supply since pretty much 95% of the Swiss watch industry depend on ETA parts. This percentage was close to 100% a few years ago but some (most notably Rolex) have begun making their own hairsprings in anticipation of this.
    Quote Originally Posted by Mike_Dowling View Post
    With so many companies using ETA movements why would this be beneficial? Why would Swatch Group want to give up such an enormous market share?
    Last edited by yifu; November 5th, 2013 at 03:57.
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    When do the patents on the various Nivarox alloys expire, or have the even expired already?

    This may be bad news for Swiss microbrands and entry level luxury brands (which aren't owned by conglomerates), but using Asian movements or parts won't be as bad non-Swiss microbrands. So perhaps we'll see: American, Asian, etc. brands rise to rival the entry level swiss brands.

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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    Deja vu all over again.

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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    With so many companies using ETA movements why would this be beneficial? Why would Swatch Group want to give up such an enormous market share?
    1) Because they are creating competition for their own watch brands.
    2) Because they can't innovate or improve the movements when doing so helps their competition equally, so they stagnate while others advance.

  11. #10
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    Re: Time out: Swatch Group to cease ETA movement supply by 2019

    Maybe those ETA based non-Swatch watches will now become highly collectible...;)

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