Debunking the Quartz Crisis

"a watch manufactured in Switzerland would cost three times as much in 1978 compared to a decade earlier" this statement is missing a very important point: During the same period, value of the Japanese Yen and German Mark have doubled against the US Dollar. The issue wasn't CHF increasing in value, it was USD losing value.

In the early 80's, Japanese Yen appreciated against every other currency and I don't think it caused a crisis for Casio or Seiko...

Excellent points! Doubling vs tripling still puts the Swiss at a relative disadvantage though not as great an absolute one.

I also wonder how important the sizeable Japanese domestic market was in the 80s in offsetting the appreciating Yen somewhat.

I have always thought that the history of wristwatches in the 20th Century was essentially an economic history and that we miss the point by talking too much about marketing, technological improvements, and the broader culture. This article can be part of that discussion.

What I found interesting was the assumption by the writer of anti-market positions that were never really questioned or explained. For example, what exactly is "overproduction" and why is it bad? More products means competition and lower prices to the consumer. Consumers benefit, even if it lowers profit margins for the manufacturer. The Swiss watch industry has operated like a cartel for a century and yet this is just accepted uncritically.

If you step back just a bit an argument can be made that the Vietnam War was just as responsible for the crisis in the watch industry as Nixon taking the US off of the gold standard. In 1960 the United States produced about 60% of everything made in the world. 60%. Europe, the USSR, and Japan had been destroyed. The Swiss made watches and the US made everything else. Re-industrialization in Europe and Japan and Vietnam eating into post-WWII growth changed the trajectory of the US economy. The Swiss industry's largest market was cooling off just as Seiko and Citizen were becoming players.

It is never just one thing.

Great article. Thanks for sharing. It seems there were a lot of factors going on, contributing to how we got to today with any one thing being an over simplification.

Agreed. Economic factors are also of course a more palatable explanation for the Swiss watch industry's 70s travails than missteps in execution when moving to quartz as they can say "it wasn't our fault". And I imagine the main readership of Europa Star, then and now, is the Swiss watch industry.

I find there are some fascinating parallels between the Swiss watch industry and the German camera industry. Both were market leaders in making complex mechanical products, both were decimated by the rise in Japanese innovation and manufacturing in the 60s and 70s especially in electronics.

Nowadays both have only survived in dramatically changed form by focusing on the high end and even then are highly dependent on outsourced production in one form or another.

Chinese components and cross-border migrant labour for Swiss watch companies and production in Portugal or Asia for Leica and Zeiss.

There is a video on YouTube that purports to explain the "Quartz Crisis" and lumps the demise of the American watch industry in there as well. The American watch industry's demise had nothing to do with quartz (Gruen and Waltham bankrupt in 1958, Helbros bought by Elgin in 1961, Elgin bankrupt by 1968, Hamilton buys Buren and moves to Switzerland by 1969). That video drives me over the edge.

I was arguing with someone on here ages ago about Timex. His point was that Timex innovated its way out of trouble in a way that Elgin and others did not. Timex did innovate, but the reality was that Timex owned Polaroid. It was Polaroid that kept Timex in business until the next business cycle when the watch side of the business could turn a profit again.

Even people's understanding of what Seiko was doing with quartz is oversimplified. The quartz movement was developed to avoid patents that Hamilton and Bulova had on other forms of electronic watch movements. The Ventura and Accutron are part of the quartz story even though they are not quartz movements.

Edit: to my Timex point. Look at the portfolios of LVMH and Richemont. Both are much larger and healthier than Swatch. It is the non-watch parts of those groups that will allow them to survive and thrive. Bulova was owned by a hotel chain for decades. They survived.

It's so often presented as if quartz suddenly emerged from nowhere as a product of Seiko genius, completely forgetting the quartz timers (1952 Olympics, Longines, Omega) and marine chronometers (1965, Longines, Seiko) already developed.

I feel a tinge of admiration and sadness when I look at movements like the transistorized balance ESA 9150. So much development expenditure, so rapidly obsolete.

You find economists who claim to be infallible experts on both sides of any question. This sounds like one of those.

Personally I think the original proposer is off the mark.