Is Swatch ETA Cornering the Swiss Watch Market
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Let’s start with a bit of history and context. ETA, a division of Swatch, supplies almost all of the Swiss market be it quartz or automatic. In the automatic arena, they have a near monopoly. Small players like Soprod and Sellita do exist and reportedly some ETA marked movements are in fact made by Sellita but ETA output far outmatches anybody else in output.
This has worked well so far since the renaissance of mechanical watches. ETA moved into this position because of how ubiquitous the 2892 and 2824 (Read an in-depth comparison here) movements have become in Swiss watches. They also moved themselves into this position because they gobbled up firms like Lemania and Unitas that were primarily movement makers. Lemania most famously made the awesome 5100 chronograph movement and the legendary Lemania 187x family of movement used in the Omega Speedmaster Pro series of watches. The Lemania 5100 served as the basis for Swatch’s brand new automatic chronograph movement the C01.211. The widespread and inexpensive availability of these two ETA movements was one of the primary reasons mechanical watches were able to make such a strong comeback. The entire Swiss watch industry owes a huge debt to the actions of Swatch’s boss Nicolas Hayek and ETA.
This also means most watch buyers out there who are looking at what sort of movement is being put in the watches they buy look to see that a base minimum is being met. This is what makes the ETA movements so strong.
The acquisitions by Swatch though left very few viable movement makers in the lower sub $3000 end of the market. ETA was pretty much the only game in town until Sellita started also producing legal copies of ETA’s designs. The SW200 which is a near but not exact copy of the 2824-2 is a big hit among both small and big makers like Bathys and Invicta. From all reports so far, the Sellita movements are just as good as new production 2824-2 in accuracy and reliability. Sellita is also hard at work making a copy of the ETA 7750 movement which should ease some reported supply issues for this common chronograph movement used from Tag Carreras all the way to IWC Pilot’s Chronographs.
In one specific example, some time around 2007, IWC (International Watch Company) has stopped receiving un-assembled ETA kits (ebauches) for their movements. Traditionally, IWC refinished, replaced, and further QC’d ETA parts to achieve a much higher standard in all their ETA based movements and even replaced whole regulation components like in the 7750. This meant that they even replaced the main springs with a weaker one because the more precise assembly required less friction to run which results in longer lasting parts and generally a more accurate watch.
It seems sometime later in 2007, they started getting full ETA movements even for their highly modified seconds at six 7750 based movements. It isn’t clear if this was simply a cost cutting measure since it would be much cheaper to have ETA deliver completed movements or if they were anticipating the change. My bet is probably a bit of both.
As stated by Nicolas Hayek, Chairman of Swatch, ETA is only stopping delivery of ebauches which are not assembled movement kits. They are Not stopping delivery of complete movements to other watch makers.
If you have a good relationship with ETA/Swatch, you can easily order whatever you like from them to spec especially if you’re a big deal like IWC or Breitling. I think if you’re a smaller buyer, it’s much harder to establish a reliable partnership with ETA and you might be better off from one of the other manufacturers who are trying to gain market and mind share. Unless you’re placing big number orders it seems its hard to get ETA sales reps on the phone and you have to go through a middle man. Its also been reported that there is a lot of New Old Stock ETA movements out there being distributed through middle men channels used in new watches. This is a big problem as you have movements that need immediate complete service because their lubrication has dried and gummed up.
Lately we’ve also been seeing a resurgence in adoption of Citizen’s Miyota movements in watches. Companies like Magrette are using these in newer watches since it seems tenuous to get ETA movements at a small scale. In raw movement costs, Japanese movements will usually cost about 40%-70% less than a Swiss ETA but will also have fewer features such as bi-directional winding or a bit rougher of a finish. They do keep decent time though (if not quite as nicely as a regulated 2892) and are fairly robust. Magrette specifically seems to offer a mix of movements available for their watches which I think is ideal.
There have been comparisons made to what if Intel did this to PC makers. This metaphor doesn’t apply because Intel does not make PCs, they make integrated circuits. When it is all said and done, I find this to be a good change. It’s going to compel innovations in the field of lower end mass production mechanical movements. Breitling is producing their own B01 movement and even Tag Heuer, the butt of many WIS’s jokes, has licensed a Seiko chronograph design that they have modified and will be producing in house. It wasn’t a healthy relationship for ETA to be the only source to all Swiss made watches and I’m glad that is changing and we’ll see some new movements instead of decades of stagnation.