For about 20-30 years, Swatch has been the supplier of mechanical movements and their components for most of the Swiss watch industry. Despite its historical relationship, Swatch would like to reduce deliveries of calibers and assortments.
In the Western World, when a monopolistic stakeholder decides to cut supply, antitrust authorities protect smaller players, giving them time to organize themselves. However, in this case, the Comco (the Swiss antitrust governing authority) immediately awarded the Swatch Group an ability to reduce deliveries up to 30%. “The decision of the Comco came as a bombshell in the Swiss watchmaking industry” says Peter Stas, co-founder and CEO of Frederique Constant.
So, do independent watchmakers have to give-up? “Certainly, a number of smaller manufacturers will be forced out of business.”, said Peter Stas. Fortunately, Frederique Constant is large enough to develop its own watch calibers. Moreover, Frederique Constant started its first caliber development already back in 2001. Still, despite this early start, the company considers it needs another 5 years before it can produce the critical assortment, the watch oscillating system.
Frederique Constant is aiming to have two suppliers for all its components by 2015, thereby assuring its full independence. All key components are in development, including a new watch oscillating system. The company plans to continue close collaboration with its specialist component suppliers.
While some independent brands are accelerating development and production plans, the short-term future is in the hands of the court (Tribunal Administratif). Indeed, nine companies are challenging the approval by the Comco to allow Swatch to reduce supply. The decision of the court is expected by end of December 2011.
