Omega, a Swatch watch brand
Swatch steps up campaign to cut watch component supply
By Sonia Nair
The world’s largest watchmaker Swatch Group has initiated an investigation that may finally allow it to reduce its deliveries of mechanical watch movements and components to third parties.
The group enlisted the services of the Swiss Competition Commission (COMCO) to conduct the investigation and create a mutually agreed solution that will allow the group to step back from its role as a movements and components supplier.
The Swatch Group currently supplies movements and components to third parties including its competitors, Richemont and LVMH. Swatch said the move would be “in the interest of the entire watch industry”.
Sydney-based watchmaker Nicholas Hacko said the restricted supply of spare parts would disadvantage independent watchmakers.
Many independent watchmakers would have to switch from repair to retail, service vintage models instead of newer ones because it will be easier to obtain parts, or focus on clocks and pocket watches instead – none of which is ideal for them, according to Hacko.
“All options require additional working capital or investment in new tools and equipment to cater to a market segment that is continuously shrinking,” Hacko said.
“Watch repairing skills are unfortunately under-utilised and many watchmakers are being forced to retire early,” he added.
Hacko said the restricted supply of spare parts had caused average repair service costs for medium quality Omega watches to increase from $200 to over $600, while average repair service costs for Rolex watches had increased from $450 to $1,200 in the past 10 years.
Watchmaker and jeweller Dennis Coleman, who operates Victoria-based Balwyn Jewellers, performs watch repairs and said the move would affect him greatly as 50 per cent of his watch repair business is centred around Omega and Longines – both of which are Swatch brands.
However, Coleman said that while the move would be problematic for local watch repairers, it would not be as serious a problem as it would have been a few years ago.
“A lot of watchmakers are not taking in repair orders like they used to because of the scarcity of watch parts. Most watch repairers these days just ask customers to take their timepieces back to where they bought it from,” Coleman said.
He said he could understand the rationale behind Swatch’s decision.
“The reason the group is doing this is because there are too many sub-standard watchmakers out there who want to buy Swatch parts but don’t know how to fit them or fit them into fake watches, which is not good for Swatch,” Coleman said.
“I don’t think Swatch is a total bogeyman. It’s just hard for them to differentiate between the good and bad watchmakers. The move will have negative effects for watchmakers who do a good job,” Coleman added.
Coleman said he now sources his watch parts from material supply houses in California and New York.
Ultimately, Hacko said consumers would be the ones most disadvantaged by Swatch’s move.
“The loser in this game is ironically the consumer. Left with no option, the consumer is not only facing high repair costs but extended servicing time too; a three to six month turnaround is now common practice,” Hacko said.
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Posted June 21, 2011