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Swatch wants to reduce its supply of mechanical watch movements to third parties
Swatch wants to reduce its supply of mechanical watch movements to third parties

Swatch forced to ease component restrictions

In what is said to be a victory for independent watchmakers, the Swatch Group has been prevented from dramatically cutting distribution of its watch components to other companies next year.

While Swiss competition authority, Weko, agreed that Swatch should be allowed to gradually reduce its supply of mechanical watch movements to third-parties, it had only proposed a 10 per cent reduction in 2014. The commission reportedly believed it was too early to significantly cut deliveries due to a lack of sourcing alternatives for watch movements and compartments.

As reported previously by Jeweller, the world’s largest watchmaker initiated an investigation in June 2011, seeking a way to allow it to step back from its role as a watch part supplier.

The company was said to have felt that it was spending too much time and money on developing movements while other companies that manufacture competitor brands were pouring their resources into marketing.

Weko and Swatch reached a tentative agreement where Swatch would reduce supplies of finished movements made by the company’s subsidiary, ETA, by a small percentage in 2012 and 2013. The provisional measures will expire at the end of 2013, meaning Swatch will have to negotiate a new deal with the competition authority by that time.

Local impact

Nicholas Hacko, Sydney-based watchmaker
Nicholas Hacko, Sydney-based watchmaker
While the latest developments are said to be reassuring for Swatch’s rivals like Richemont and LVMH, which own watch companies including TAG Heuer, Jaeger-LeCoultre and Baume et Mercier, some local watchmakers believed it would have minimal impact on the Australian market.

Sydney-based watchmaker Nicholas Hacko, who has been heavily involved in initiatives aimed at maintaining a local watchmaker’s right to access Swiss watch parts, said it was important to understand that the case was dealing with a line of supply between manufacturers.

“It is only marginally affecting small independent watch repairers. In Australia, we have no watchmaking facilities or manufacturing industries. We are therefore not really impacted by the issue,” Hacko told Jeweller.

Nevertheless, it appears that some local watchmakers are already looking at alternative suppliers. Dennis Coleman, who operates Victoria-based Balwyn Jewellers, said he decided to source another watch part-supplier after finding the Australian Swatch subsidiary difficult and expensive to work with.

Dennis Coleman, Balwyn Jewellers
Dennis Coleman, Balwyn Jewellers
“About two years ago I found a supplier in Switzerland who can supply almost anything I need,” he explained.

“Many watchmakers in Australia do not have this luxury so they are using cheaper generic parts out of China and India. They may look similar but lack the integrity of the original part.”

Coleman added that supply restrictions were not only imposed by Swatch, “but almost every importer of watches.”

“That is the reason the number of competent watchmakers in Australia is shrinking daily.”

Swatch Group designs, manufactures and sells finished watches – including Omega, Longines and Tissot – jewellery, watch movements and components.

More reading:

Swatch Group continues restrictions
Australian watchmakers take a stand
Swatch trims watch supplies to rivals
Swatch steps up campaign to cut watch component supply

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Sunday, 18 August, 2019 08:53am
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