This meant that literally all the components of the watch, with the exception of the movement, which had to be Swiss for 50% of the value of the components, could be foreign, provided the assembly and final checking of the watch took place in Switzerland. The Swiss proportion of some specific “Swiss Made” watches was therefore very limited. As indicated above, this is drastically out of step with consumer expectations.

The new law now requires at least 60% of the manufacturing costs of a watch (as a whole, not only its movement) to be incurred in Switzerland. It also requires engineering and prototyping to be carried out in Switzerland for all mechanical and electronic watches. Therefore, it reassures the consumer that a major proportion of their “Swiss Made” watch really is Swiss-made and that the technical development of the watch takes place in Switzerland. This process, combined with the assembly and final checking of the watch in Switzerland, ensures that all the important steps in manufacturing a Swiss watch take place in Switzerland itself. At the same time, the minimum 60% level of production costs that have to be generated in Switzerland still allows the manufacturer–if it so chooses–to buy components from abroad to a certain extent, but much less than before. It will be up to the manufacturer to use this possibility responsibly by maintaining an adequate level of quality. As a matter of course, manufacturers who do not comply with the new rules still have the option to produce in Switzerland without using the “Swiss Made” symbol.

Thanks to the new rules, every single buyer of a “Swiss Made” watch now knows that his product is strongly linked to Switzerland and that all the important steps in production took place in the country. This is unique and now in line with high consumer expectations. Consequently, consumer trust will be safeguarded in the long term and all Swiss manufacturers will benefit from the tighter rules in the future. And last but not least, adequate rules in Switzerland will also help obtain better protection of the term “Swiss Made” abroad.

by Yves Bugmann
Head of Legal Division, Federation of the Swiss Watch Industry FH

What would have been a better solution, guaranteeing consistency with Swiss values and work as an incentive in keeping a high degree of Swiss brainpower and know-how linked to Swiss Made watches? Compare the added value in Switzerland to the imported value. This way, all cost elements originating in Switzerland would be the Swissness contribution to the product and the services linked to it.

How do watch manufacturers deal with the new law? As expected, there is hardly any change for companies in the higher price bracket and for industrially verticalized big groups. A certain part of the collection for most brands will stay unchanged, as certain models fall into the framework of the new law. Certain models will see a price increase, and you will see a certain downgrade in quality when a manufacturer can achieve Swiss Made by buying an imported part, such as a watch case, at a lower cost by avoiding certain things such as screws on the caseback or using mineral crystal  instead of sapphire crystal.

The new rules are focusing on a purely materialistic view of certain cost elements, a, dare I say, backwards approach, compared to embracing and supporting the innovative brainpower in marketing, distribution and long-term promises a typical Swiss product is expected to have. In companies such as ours, the part of not-material/production related costs, mainly manpower, is considerably higher than the production cost of that manpower. But this cannot be included as Swiss cost when calculating for the Swissness declaration.

Time is important for watches and timing was not on the industry’s side because the law was debated during a phase of economic euphoria. Talking to federal politicians, I hear that the law would not pass in its current form nowadays.

Wrong concept and wrong timing make the survival of many brands and factories more difficult. Only some big Swiss and non-Swiss Made companies will eventually benefit. But companies surviving beyond the technological, Internet and economic challenges, as well as the new law, will be truly long living. In all modesty, I count our brands among these achievers.

www.mondaine.com

by Ronnie Bernheim
CEO, The Mondaine Group