Why the Quartz Crisis was a reckoning for Swiss luxury watchmakers

Why the Quartz Crisis was a reckoning for Swiss luxury watchmakers

The Quartz Crisis was one of the most singularly important periods in horological history, ultimately defining the future of an entire global industry. The genesis of the Quartz Crisis, or the Quartz Revolution (your choice of term for it probably depends heavily on your perspective), lay in a relatively simple thing: the development of a new type of watch movement.

Now, today it’s widely accepted that there are three main types of watch movement: manual, automatic and quartz. Manual is the oldest, and watches with this type of movement require daily winding to ensure that they keep accurate time. Automatic (self-winding) luxury watches build on this technology by harnessing kinetic energy, powering the watch through the movement of the wearer’s wrist. Quartz is by far the newest, having only been invented in the later half of the 20th century. Battery-powered watches with quartz movements are generally regarded as the least prestigious of the three.

Despite that though, there was a time when it looked like it might even end up being the only type of movement on the market, encompassing the other two completely. That period was the late 1960s through to the early 1980s, when the Quartz Crisis caused huge economic upheavals to the Swiss watch industry, as it threatened to make mechanical watches entirely obsolete. Here’s how it all unfolded.

1900s – 1960s: Swiss watches reign supreme

The first wristwatch was made sometime in the 19th century (although there’s some debate as to exactly when), watchmaking had always been a highly artisanal craft, handmade by men and women who’d often dedicated their entire lives to perfecting the art. That naturally made them almost exclusively available to the nobility and aristocracy, but the onset of the Industrial Revolution in the early 1900s meant that for the first time, they could be factory made. However, outside of their traditional target market, they didn’t evoke a huge amount of interest from other demographics. At least, not until the World Wars.

We’ve previously covered (in the post linked above) the extent to which both World Wars accelerated watch production. Since Switzerland remained neutral, established watchmakers there could continue to manufacture undeterred, while those in other countries concentrated their efforts on equipping their respective militaries. They became literal lifesavers for many soldiers, as they were frequently used to co-ordinate troop movements, and they took that newfound appreciation back home with them. By the end of the Second World War, wristwatches had become the must-have accessory for every self-respecting businessman and housewife.

By now, Switzerland had unquestionable sovereignty over the global industry, with well over half the market share. The overwhelming majority of all mechanical watches came from Switzerland, whose watchmakers had now firmly established their reputation for technological ingenuity, flawless quality, and unparalleled craftsmanship. Rolex, Breitling, OMEGA, and course Patek Philippe had already gained worldwide renown, and many were enjoying fresh success with recent expansions into America.

quartz watch movement

1969 – 1980s: The Quartz Crisis begins

On Christmas Day, just over 50 years ago, the Japanese manufacturer Seiko introduced the Astron, a quartz wristwatch that would go down in history as one of the most important (or notorious) that the industry has ever produced. Depending on who you ask, it wasn’t technically the world’s first quartz wristwatch, but there’s no arguing that it was certainly the one that drew the most attention.

The Astron didn’t rely on a manual or automatic movement to function, but was instead powered by an electromechanical movement. At its heart was a vibrating crystal that oscillated at exactly 32,768 per second, fulfilling the role of a balance wheel. The result was a watch that boasted a greater precision and more reliable accuracy than many of its mechanical contemporaries. The lack of complex mechanical technologies also made them accordingly easier to produce, so they were notably cheaper and more durable than their manual and automatic counterparts, too.

Seiko and other Japanese companies also pioneered canny new marketing strategies for their new timepieces too, with a lighter and cheekier tone that focused on unrivalled accuracy and affordability over craftsmanship or heritage. By doing this, they aimed to subvert the established notions associated with watchmaking, hoping to turn ‘prestigious’ into ‘antiquated’, and ‘traditional’ into ‘obsolete’.

The reaction for the rest of the industry was largely one of dismay, as Swiss watchmakers initially struggled to keep pace with the price, precision and sheer production number of the quartz watches suddenly dominating the market. Over the next 13 years, the Quartz Crisis would cost almost two thirds of the industry’s employees their jobs, leaving many who remained perpetually worried for their livelihoods.

That’s not to say that they didn’t make the effort to adapt. OMEGA took the initiative in 1974 by releasing its Marine Chronometer, which was the first quartz watch to be COSC certified. It followed it up a few short years later with the first analogue-digital chronograph, with a quartz movement. But other brands were understandably reluctant to follow suit, with many in fear of diluting their reputation and heritage. That left them with a seemingly impossible question: should they move into quartz movements at the cost of their lovingly-made mechanical watches, and sacrifice their reputation for craftsmanship? Or should they stay true to their company’s heritage and vision, and risk collapsing entirely?

Meanwhile, Seiko showed no signs of being knocked off the top spot. By now, it was the world’s largest watch company in terms of revenue, earning $700 million with a production of 18 million pieces every year.

1980s: The men who saved an industry

To keep the issue in perspective, it’s important to remember that for Switzerland, watchmaking is not a niche sector. In the 1960s the sector directly or indirectly employed about 90,000 people, in a small country with a population of just over 6 million at the time. So – and we’ll save you from counting on your fingers here – that meant the survival of the watchmaking industry affected roughly 1 in every 70 people. The Quartz Crisis caused the country’s entire economy to take a major hit, to the extent that the state banks had to bail out the biggest Swiss manufacturers. Many smaller ones, unfortunately, suddenly found themselves bankrupt.

The situation looked dire, and today the survival of the industry is largely credited to just a few key individuals: Ernst Thomke, Nicolas George Hayek, and Jean Claude Biver.

In 1978, Ernst Thomke was hired by ASUAG (Allgemeine Schweizerische Uhrenindustrie AG), the second largest watch group after SSIH (Société Suisse pour l’Industrie Horlogère). His mission was to restructure the production of movements, which he did by consolidating the production process and amalgamating its suppliers to form a new company: ETA SA. The newly-formed organisation benefitted from a streamlined production process, reduced costs, and a smaller and more focused team.

But that wasn’t yet enough; the industry was still hemorrhaging money. In the early 1980s, Swiss banks commissioned the owner of Switzerland’s best known management consultancy, one Nicolas George Hayek, to analyse what was rapidly becoming a seemingly hopeless situation, and come up with a solution.

The one he found was ambitious, but elegantly effective. He united the brands of the two Swiss watch groups, ASAUG and SSIH, into a single umbrella brand. Once formed, the new company needed a brand new watch collection that could offer customers Swiss quality, at an affordable price. The genesis of the idea came from Thomke, who envisioned a low-cost rapid-production unit that could be retailed at an affordable price. With the financial backing and support of Hayek, he was able to turn that vision into a reality – one that we all know today as the Swatch.

Hayek pursued a provocative marketing strategy that was unusual for the industry at the time, which he may have partially modelled on the techniques that Japan had pioneered a decade or so earlier. Swatch watches were light, flat and colourful, and successfully capitalised on pop culture aesthetics to become a trendy accessory in multiple nations worldwide. Eventually, its success became such that ASUAG/SSIH renamed itself after its most popular creation, taking on the much catchier moniker of the Swatch Group. At the time of writing, the Swatch Group remains the biggest watch manufacturer, and is the parent group for household names like OMEGA, Longines, and TISSOT.

mechanical watch movement

1980s: The survival of mechanical watches

So, you may be wondering, with Thomke and Hayek having successfully saved the industry from disaster, where exactly does Jean Claude Biver come in? Well, not everyone was fully convinced by the move to quartz, with Biver being prime amongst them. He bought the rights to the Blancpain name from OMEGA, and revived by focusing purely on mechanical movements. In doing so, he found that there was still a healthy appetite amongst consumers for vintage mechanical watches, and countless customers were perfectly willing to pay the extra price involved in purchasing watches of exceptional craftsmanship.

That was an encouraging sign for traditional Swiss brands such as Patek Philippe, Rolex, Cartier and Vacheron Constantin, who are still renowned the world over for the quality and ingenuity of their mechanical movements.

Today, most watch manufacturers maintain a diverse mix between mechanical and quartz timepieces – Breitling, OMEGA, and TAG Heuer all have quartz versions of their watches available to buy. However, watchmakers primarily known for their mechanical expertise (such as Patek, and the others we’ve touched on above) obviously focus their main efforts on manual and automatic movements.

In 1969, one of Seiko’s marketing slogans for the Astron boldly proclaimed that “One day, all watches will be made this way.” We don’t know about you, but here at Leonard Dews we’re personally grateful that prediction turned out to be wide of the mark – the industry as a whole is far better for it.

Just like the major watch manufacturers, we take care to stock a well-balanced mix of mechanical and quartz watches in our Blackpool showroom, so whatever you want for your personal collection, you can be sure that we’ll have plenty of options to suit you. And if you’ve ever got any questions, don’t hesitate to ask one of our friendly team. We’ve been established since 1877, giving us more than 140 years of experience to draw upon, and several of our colleagues have received specialist training with Patek Philippe watches. If you ever need any advice, you can count on us to help!