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Nick Hayek Sr., Swatch Group chairman and Breguet CEO, has a favorite joke he loves to tell about his adopted country. (Beirut-born Hayek is of Lebanese and American descent.) It goes like this: Someone asked Einstein in what country he would prefer to die. The genius immediately answered, “Switzerland!”

“Why Switzerland?”

“Because,” Einstein said, “everything happens 20 years later there.”

Hayek’s joke came to mind when I read news reports about the latest

developments in the Swiss watch industry’s chronic gabfest about its

“Swiss made” designation.

At its annual meeting in June, the Federation of the Swiss Watches Industry

(FH) voted to propose a stricter definition of “Swiss made.” Essentially,

the industry agreed to boost the percentage of total production

costs on a mechanical watch made in Switzerland from 50 percent

to 80 percent to qualify for the label “Swiss made.”

I recalled an article I had written on the “Swiss-made” debate. “A

fierce debate has broken out among watch producers in Switzerland

over the proper definition of their prized ‘Swiss made’ label,” the article

began. “The result could be a new, stricter definition of the term.”

The article ended thusly: “The debate has prompted the industry to

seriously review its definition of ‘Swiss made.’ Industry bigwigs met with

the FH in Bienne and created committees to examine proposed changes

in the definition. Chances are good that the industry will eventually opt

for a tougher definition requiring a higher percentage of Swiss components

in the movement and some external parts. Tougher requirements

may be phased in over a period of years. But change is definitely in the

air and most likely on the way.”

Yeah, well, as Hayek’s joke notes, things happen later in Switzerland.

I wrote that in early 1999.

But let me not carp. Yes, it took a while, but the new, more rigorous

“Swiss made” rule is now, to quote my dust-covered, eight-year-old

prediction, “on the way,” right?

Well, not exactly. The good news is that in a vote on June 28, 87% of

FH members supported the stricter standard. The bad news is that implementation

is going to take a while longer. First, the FH submits its

draft proposal for a stricter definition to the Swiss Federal Council. Then

the council must pass a bill making the new regulations the law of the

land. Moreover, the strengthening of “Swiss made” must also be approved

by the European Union in the framework of a free-trade agreement

between Switzerland and the EU. FH president Jean-Daniel Pasche

told Switzerland’s SonntagsZeitung newspaper that he expects it will

take eight years before the new regulations are implemented. That includes

a transition period of five years to give manufacturers time to

comply with the new rules and for the industry to develop a sufficient

supply of Swiss-made components.

The “Swiss made” maneuvers are not an academic exercise. As a

marketing tool, the “Swiss made” label is a powerful guarantee of quality

for consumers around the world. That’s why the steps the FH and the

industry are taking to strengthen the requirements are important. The

definition as it currently exists is too loose. Passed in 1992 by the Federal

Council, it stipulates the following for a mechanical watch:

o the watch movement has to have at least 50% of the value of its

components made in Switzerland;

o the movement has to be assembled and cased in Switzerland;

o final quality control of the finished watch must take place in

Switzerland.

It’s worth noting that it took 20 years for Switzerland to come up

with that definition. Between 1972 and 1992, the definition was even

looser, allowing watches cased overseas with a movement containing

just 50 percent of Swiss parts to be stamped “Swiss made.”

Under the new proposed regulations for a mechanical watch, 80% of

the value of movement parts must be made in Switzerland. In addition,

technical construction and prototype development also have to occur in

Switzerland. For the complete watch, 80% of the production costs for

the watch must be attributable to operations conducted in Switzerland.

The stricter definition of “Swiss made” is a good thing. The sooner it

comes, the better. Sooner, however, is not in the cards (see Hayek’s

knee-slapper above), and later is better than never.

For more detail please visit Swiss Watches Store

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