H. Moser: Making Swiss Made Great Again? Should it Matter?

Towards the tail end of 2016, H Moser & Cie, makers of a genre of chic conservative timepieces and fairly recent media masters released yet another thought provoking invective  – a letter whose rallying cry can be summed up thusly “no to Swiss Made, yes to Swissness.” Within the spheres of social media, #MakeSwissMadeGreatAgain carries the synergistic (if simplistic) “patriotism” of Trump’s own 2016 presidential election slogan and while no demographics are available on the split between left-leaning, right-leaning and centrist watch collecting elites, H. Moser’s highly effective letter touting “removal of  Swiss made from their dials” to the public (and by extension, the watch covering media) is palpably discomforting (given that most journalists tend to lean left or centre-left).

H. Moser’s open letter comes in the wake of announcements from the Swiss governing body that from January 1st, 2017, tougher legislation will come into effect before watchmakers are allowed to use the Swiss Made label – shifting from the previous value requirement where 50% of watch components value must be of Swiss origin in order for a watch to be considered Swiss Made and increasing it to 60%.

In Moser’s “no to Swiss Made” letter, they argued that “there is a big gap between end-consumers’ perception of the label, who generally take the Swiss Made designation to mean the item is 100% Swiss, and the reality that brands manufacture many components in other countries.” Citing their own production processes, H. Moser & Cie felt that with over 95% of H. Moser’s components manufactured in Switzerland, the Schaffhausen boutique Manufacture would have prefered a stricter standard, especially criteria which approached their own higher standards – disappointed by the apparent lax standards,  H. Moser & Cie. has decided to forgo the Swiss Made label, and from 2017, the label will no longer appear on the dial of any new H. Moser timepieces.

“a time measuring device where its movement does not exceed 50 mm in width, length or diameter and its movement is not thicker than 12 mm including the main plate and bridges. Additionally, a ‘Swiss Made’ wristwatch has to have a ‘Swiss’ movement, has to be cased up in Switzerland and the final quality control inspection by the manufacturer has to take place also in Switzerland.” The Swiss law states that a ‘Swiss’ movement, is: “a movement that has been assembled in Switzerland, that has been controlled by the manufacturer in Switzerland and that at least 50% of the ‘value’ of all its components/parts were made in Switzerland—without taking into consideration, the cost of labor for its assembly.” – Law ordinance governing Swiss Made

What is Swissness? Defining Swiss Made

Conditions are exactly as they were almost 100 years ago. Let’s see: a backlash to globalisation has gained strength across the world, free trade deals which dramatically lowered the costs of production (and by extension costs of goods) are now taboo because politicians and citizens believe they benefit only foreigners whose countries benefit from increased manufacturing and exports or the global elite whose financial holdings allow them to project assets to grow their incomes in those countries. There’s a ground swell of support for world leaders championing import tariffs and curbing immigration amidst calls for renewed isolationism; meanwhile, international trade agreements and cooperative blocs are being looked at and decisions are underway to disregard the terms should they not prove beneficial to either party. Sound familiar? No, I’m not describing 2016, I’m actually describing 1914, the period leading to World War I which ended decades of globalised expansion following the industrial revolution.

So here’s the context of the economic environment in which we live, one which pioneering economist Adam Smith aptly described 240 years ago in his 1776 theory of comparative advantage- the ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that same good or service. Thusly, we are looking at these key issues – is it a Swiss watch because of the raw metals within? Or is it a Swiss watch becomes the artistry and competencies of Swiss hands have made it so? How do you define Swiss Made?

Therein lies the conundrum – what defines “Swiss made”?

Problem 1 – Defining Swissness: Do the watchmakers have to eat only locally sourced and produced Swiss food? Do the watchmakers have to prove ten generations of Swiss genealogy in order to be considered Swiss artisans? Are the cows used to make the leather straps pure Swiss bovine feasting on the finest Swiss grass, breathing the freshest Swiss air? This is pretty much an exaggeration ‘slippery slope’ argument but it also serves to provide a point of discussion for the futility to defining Swissness.

Problem 2 – Defining Swiss Made: Let’s get serious for a moment – is the measure of ‘Swissness’ contingent on the artisanal skills of a watch’s maker? If yes, then how many watchmakers are actually French/German/Insert European and drive across the border to work at the various manufactures across Switzerland? Does the resulting toil and sweat from the myriad of European hands make such a watch any less Swiss? By that extension, if a Lemania 2310 calibre is reworked into a Patek Philippe calibre CH 27-70, does it make it any less of a Patek movement?

Problem 3 – Defining value of the watch components: Even before the other two problems are addressed, we also have the thorny issue of brands having to assess the values of its own components – presently, there’s no objective standard when it comes to addressing value – a basket of subjective values all come into play. Without the overarching guidance of a neutral legislative body, you can see why the different weights and value systems from each individual maison might lead to very different definitions of what makes up 50% (or 60% for that matter) of a watch’s value.

Taking H. Moser’s definition at face value

“We are strong believers in Swiss values and we fight to defend traditional mechanical watchmaking every day. In our Manufacture, we design, develop and produce all of our components from start to finish, including the hairsprings and regulating organs from our sister company, Precision Engineering AG. Anything that we cannot achieve internally is sourced from Swiss suppliers,” – Edouard Meylan, CEO of H. Moser & Cie.

“With over 95% of our components produced in Switzerland, we far exceed the requirements of the Swiss Made standard, and yet, the same label on our dials is used by those brands barely complying, who benefit from the flexibility of the label to manufacture a large proportion of their components in other countries. Today, the Swiss Made label is devalued because it is used by entry-level brands to justify their very existence or price point. Ultimately, our own image is undermined by this. In fact, we need no justification from this label, because our products speak for themselves”.

H. Moser has proven to be quite effective at public relations in the last five years; from the letter to the bank of Switzerland re: exchange rates and the sardonic interpretation of the Apple Watch with their Swiss Alps Watch, CEO Edouard Meylan is probably the first Executive at any level to make international news by simply announcing their continued (or discontinued) use of the Swiss Made label.

Kudos? Is H. Moser’s conclusion logical?

Well, yes and no. At face value, somehow a decision to justify continued use of “Swiss Made” by raising total watch values from 50% to 60% devalues the Swiss Made label begs the question – was it somehow fine when it was 50%? That said, if one were to follow the trend of high profile PR ‘stunts’, then this makes logical sense – a protest which literally makes no impact on sales from people in the market for a Moser (if you’re already shopping for H. Moser, a good chance you have already progressed beyond mere brands and labelling); conversely (and arguably), the people who actually care about Swiss Made labels are likely the guys who are familiar with the heavily marketed brands and have no interest in a Moser at best. Then, the argument becomes “is Swiss Made really important? and to whom is it important?”

“Get a German Car, a Swiss watch and an Italian suit. Once you have these, you are set.” – Anonymous

How the idea “Swiss Made” Became Important

New York Times has a fascinating read on “How the Swiss came to dominate Watchmaking” but if you’re time starved, I will sum it up for you here:

• When Cadrans Flückiger, one of Switzerland’s oldest dial factories, opened, the Swiss were not the dominant watchmakers in Europe. It was the French.
• The first watch wasn’t even from Switzerland, instead it was made by Peter Henlein, a clockmaker who lived in Nuremberg. It was essentially a miniature clock which could be worn as a pendant.
• The French were become truly artisanal watchmakers when Huguenots fleeing persecution in France brought great transfers of knowledge and technology to Geneva. The savoir-faire shot in the arm would set the stage for Geneva to became a mecca for watchmaking (at least while guild rules were in place until a man named JeanRichard circumvented these and set himself up in the Jura region).
• 17th century innovations such as the fusee chain and balance spring where respectively German and Dutch horological inventions.
• 18th century technical innovations by English watchmakers James Cox, George Graham and John Harrison prepared the foundations for chronometers and robust time-keeping components which would time-keeping a real practical necessity rather than luxurious curio for the wealthy. They would also provide the foundations of basic architecture for mechanical movements.
• A French watchmaker born Jean-Antoine Depigny but you’d probably know him as Jean-Antoine Lépine would invent a simplified flat calibre with bridges in 1770 – the Lépine calibre is not only the turning point in England’s dominance in the field but also the herald of a new genre of watchmaking – thin watches.

“In Switzerland, every valley has an owner or organization that has a dynamic, small city center. That created a very natural extension of the traditional watchmaking way. It was not the same case in England, Germany or France, where it was very much centralized in big cities.” Using the établissage system, the Swiss turned out far more timepieces than their European counterparts, who had yet to grow beyond a cottage industry.” – Jerome Lambert, former CEO of Montblanc

It would be nearly 300 years before the Swiss would challenge the supremacy of their European neighbors. But if not for JeanRichard circumventing Genevan watchmaker guild rules, it would have been unlikely that the Swiss would flood the markets with their watches. Comparatively, England and Switzerland both produced 200,000 timepieces in 1800. By 1850, the JeanRichard’s établissage model had allowed Switzerland (and not just Geneva) to outproduce everyone. However, noted Horology Historian Christiansen is quick to point out that quality did not match the quantity and that the Swiss were producing “fake watches” which looked like the lauded English or French variety but were actually of lower quality.

Why Comparative Advantage in Watch Production mattered then (and probably still does)

Geneva Guild rules which didn’t allow watchmaking members to import parts or use components from outside Geneva was what drove JeanRichard to the Jura region where he was able to take the immense numbers of off-duty farmers in the autumn and winter, apprentice them and turn them into competent specialists for individual components. This led to two synergistic improvements – because each part-time watchmaker was a specialist in his field of manufacture, they became really good at it. More importantly, there were so many of them making so many pieces that the établissage model made production much cheaper in the Swiss Jura in 1691.

Meanwhile in Geneva, artificial limits on numbers of watchmakers and apprentices made it difficult for the industry to grow at any scale or produce at any scale. Each singular watchmaker made everything in a watch from start to finish, this meant that with supply kept artificially low, the guild eventually undermined itself and its members. This led to the primacy and the rise of many notable brands in the Swiss Jura during that period.

195 years later, Georges Favre-Jacot would build a vertically integrated factory named Zenith in 1865. LeCoulture would follow suit in 1866 while Auguste Agassiz would modernise Longines in 1867 by bringing all its watchmaking activities under one roof. By strength and virtue of the uniform production standards and in-house excellence, Zenith and Longines would go on to form 2 of the original Big Three. The third would be Omega, which at the time, still kept to the etablissage model to a fair degree (with some adaptation).

Back in the day, the question of in-house manufacture or etablissage (assembly from various suppliers) didn’t matter. Comparative advantage simply meant that whoever produced the better watch utilising whichever means necessary, became the most popular one. Allegorically, the question of Swiss Made versus German Made isn’t typically an issue at the highest or most interesting tiers of watchmaking e.g. Patek Philippe vs. A. Lange & Sohne or Longines vs. Nomos Glashutte.

Do labels even matter?

Watch idiot savants will note that there was a significant period in history where watches were sold either unbranded or bearing the brand name of the jewellery store which distributed the watch rather than the watchmakers themselves. Back in the day, even a watchmaker of Patek Philippe’s stature would find their names on watches taking a place of secondary importance to a name like Tiffany. This sort of branding would extend to watches of all genres including military aviation chronographs like the Type XX or Type 20. It might seem like an implausibility but during the era, the watchmakers were unknown to buyers, but the jeweller, was well known, present and trusted.

What changed?

• Literacy dramatically increased. Branding and messaging used to be wasted on people who couldn’t read. When they could, it didn’t matter as much because word of mouth promotion was still stronger with reputation and provenance providing much inertia.
• Amount of knowledge for each brand grew and became available with the advent of the printing press. Education also meant that consumers were beginning to make informed choices beyond branding and labelling alone.
• Rapid growth of wealth (and income inequality) meant that unlike the good old days where rich people in a town or city likely knew each other, most of the wealthy elite today only have scant acquaintances with other ultra-wealthy. Before the 20th century, all watches were considered high end and the only consumers for these watches were the ultra-wealthy.

Here, Meet Other WIS aka Parallel situations in other industries

Wine Idiot Savants are dealing with a similar issue as well. Up until recently, a appending “Napa Valley” label onto a bottle of red wine was enough to improve sales as it was synonymous with quality. When many other vineyards attempted to distort the Napa Valley designation by hijacking their Napa grown grapes with percentages of “inferior” grapes from other regions or worse, only bottling a red in Napa while the grapes are grown elsewhere, “true” Napa vineyards fought for legislation to use the “Napa Valley” designation – today, a Napa Valley wine must consist of 85% Napa fruit (which at least is policeable and enforceable as it is not a subjective attribute like value).

But of course, for some WIS, this wasn’t hardcore enough so new classifications to demarcate the Napa Valley into areas of “good” Napa and “not so good” Napa wine was born: Stags Leap, Oakville, st. Helena, Rutherford, Spring Mtn, etc. Eventually, “Estate Grown” became the term for purist vinters who owned their vines and grapes.

Meanwhile, Whiskey Idiot Savants are waxing lyrical about a similar situation re: whiskey and scotch. Present rules for distillers dictate that you are not allowed to reference anything but the youngest age when marketing your scotch. Thusly, a typical 12 year old single malt might actually have some 15 or 18 year in the mix for flavour consistency since each barrel and batch are bound to have different flavour profiles yet, a distiller can only name the youngest in order to “protect consumers” from evil distillers attempting to label a 5 year old as a 21 year old based on its oldest.

Compass Box, a blender of small batch whiskeys goes the extra step of violating the letter of the law but keeping the spirit of the law by indulging in full disclosure. How? They actually reference their entire list of blends of their scotches – thus, not only the youngest is named but all of them. That said, this level of transparency is not well accepted by the big distillers, some of whom have already taken Compass Box to court but other distillers like Bruichladdie have adopted Compass Box’s practices by providing more information to the consumer in the form of base expression batch number and the percentage from each barrel, complete with barrel description, age/type and other interesting factoids, all available for reference when you enter the batch number online.

Where do we go from here?

As a journalist, I’m but a mere commentator and occasional spectator of the on-goings of the watch industry; that said, given the fairly analogous symmetries across the centuries, nations, genres and industries, it’s safe to say that the issue of “Swissness” and the definition of “Swiss Made” or any other appellation for that matter is not a simplistic or even arbitrary one.

Terms and labels need to be objectively defined by a neutral body (and not the brands themselves) and they have to bear meaning that are indicative of the letter and spirit of the regulation (like what Compass Box does in the whiskey industry even though it does contravene current laws governing Scotch).

Or like whiskey and wine industries, the Swiss could adopt a standard which governs 100% True Swiss Made to a “percentage of Swissness” system where a watchmaker must clearly state what percentage of Swiss parts, labour and design have gone into some of their watches – anything from a spectrum of “Designed in California, Made in China” like the Apple iPhone to a detailed breakdown similar to how Bruichladdie provides information on provenance of each bottle with batch and barrel information.

Then, there’s also the element of social economics – the unintended consequences of control and regulation have been seen not just in the Geneva Guild system but also in many other pre-Free Trade economic systems when countries were protectionist and isolationist; the effects of which are that when corporations are no longer allowed to maximise production efficiencies and lower costs, the unintended consequence is another industrial or technological revolution where pressure to manufacture everything locally while competing (via Comparative Advantage) with cheaper labour and components from other countries only accelerates investment in self-automated machines often leading to lower local employment.

In fact, MIT Technology Review recently addressed president elect-Trump’s blatant lie about bringing manufacturing jobs back. The fact is – manufacturing jobs aren’t coming back – in fact 88% of the lost jobs came from automation and other efficiencies and only 13% were lost due to overseas manufacture.

At the end of the day, in this age of interchangeable components, AI, CNC, 3D printing and ease of knowledge transfer, does it really matter where anything is made? The iPhone is made in China but the tech industry considers it the benchmark for a high end smartphone, for all intents and purposes the iPhone is the Rolex of phones, edging out even Vertu in terms of mindshare. All facts point to current business concerns that where something is made matters largely from a financial and logistics standpoint. For “Swiss Made” and “Swissness” to truly matter, luxury Swiss watches have to continue to leverage on the romanticism and emotional appeal of high crafts and finishing. In short, to matter, the Swiss Made watches have to be timepieces which nobody can make but the Swiss.