When the State saved Swiss watchmaking – Part one

We will, instead, focus on earlier crises which arose from economic contexts and were decisive in shaping the Swiss watch sector in the twentieth century Writing at the time, Prof François Scheurer of Neuchâtel University notes how, "During the first months of 1920, the rise reached and surpassed its apogee.

The contraction came, slowly at first then ever stronger At the same time, signals were given to slow production and soon orders were being cancelled apace It was a time of terrible crisis.

Of a violence never seen before." Watch production at that time was broken down into a multitude of local activities, all interdependent within an industrial process known as établissage, whereby component manufacturing was separate from assembly In parallel, and in response to falling prices and the prohibitive import duty levied by certain markets including the United States and Japan, Swiss manufacturers began large-scale exports of unassembled movements that were then put together in the importing country and sold as Swiss watches The State injected massive amounts of money into the sector, on top of which the Swiss Confederation passed a series of laws, for example to control the creation of new companies or prevent manufacturers from undercutting prices, that would govern the branch and provide a legal basis for the cartel that followed as part of a vast reorganisation, referred to as the Restauration horlogère.

In the space of a decade, five new employer federations saw daylight, covering movement manufacturers, component manufacturers and manufacturers of Roskopf movements As noted by the historian Pierre-Yves Donzé, "Until the early 1960s, Swiss watch companies operated not in a free-market environment but within a dirigiste-type economy." This widescale and unconditional State intervention had a precise objective: limit proletarianization of the population and its displacement towards large urban centres, which would create a favourable environment for the development of trade unionism and communism Ultimately, did the sector benefit from this restructuring? In the face of crisis, concludes Johann Boillat, "Employers formed powerful groups whose motivations were to strengthen positions by limiting competition and to confirm the value of industrial expertise by protecting a territory" Or to answer the question in quantified terms, between 1939 and 1956, annual dividends paid to shareholders by watch companies amounted to an average of 14% compared with 78% for the Swiss industrial sector as a whole. Source