Buy Watches - Is The Only Way Up For Swiss Watch Prices?

Source - http://www.watchpro.com/
By - Press Release
Category - Buy Watches
Posted By - http://tinyurl.com/BuyWatches1

Buy Watches

ETA SA, the movement maker of Swatch Group and most of its Swiss competitors, enjoys the sort of market share that would have most countries hounding them through the courts for restrictive practices. Its Swatch Group stable mate Nivarox, which makes precision mainsprings for mechanical movements, is even more dominant.

However, such is the dependence of the majority of Swiss watchmakers on the components produced by ETA and Nivarox, they have lobbied for more than a decade to ensure that the manufacturers never turn off their supply. Even colossally wealthy groups such as LVMH and Richemont will remain hooked on their output until they can build or expand their own component factories.

There would be a misconception to imagine that the ETA monopoly is jealously guarded by its parent Swatch Group. In fact, the group has been trying to wean other watchmakers off its movements for 10 years. Back in 2002, the late Swatch Group president Nicholas Hayek announced that it intended to stop supplying ébauches (the term of French origin for a watch movement without its mainspring, dial or hands) to any companies that were not owned by Swatch Group.

Hayek argued that it was vital for the long-term health of the Swiss watch industry that it begin to create its own mechanisms, but Swatch’s competitors successfully claimed that they would be driven out of business if they had to move immediately away from using ETA’s parts.

The Swiss Competition Commission (Comco) opened an investigation into the issues in 2003. Two years later it concluded – broadly – that both Swatch Group and its competitors were right. Turning off the ETA taps too quickly would indeed be detrimental to the health of the wider Swiss watchmaking industry, but forcing ETA to keep making everybody else’s movements indefinitely would stifle innovation, competition, and ultimately lead to stagnation.

In 2005, Comco ordered that ETA continue to supply movements at the levels of the time until 2008. Supply could then be reduced at an agreed rate by ETA to the competitors of Swatch Group.

The draw-down from 2008 to 2010 was only partially successful, so the SCC recalibrated the rules – effectively giving ETA’s customers more time to get their acts together. As things stand today, ETA is permitted to reduce supplies by 30% by 2015, 50% by 2017 and 70% by 2019. The supply of Nivarox mainsprings can also be reduced by 70% from current levels by the year 2023. However, even these revised deadlines look set to be missed and amended as part of an ongoing negotiation between Comco, Swatch Group and customers of ETA and Nivarox.

The end to this parts war may be in sight, according an article in the Financial Times in November. Comco spokesperson Patrik Ducrey said progress was being made following a consultation with 60 companies that use ETA and Nivarox components.

The results of this consultation, which remain confidential, were sent to Swatch Group in October, and could lead to a new roadmap being outlined as early as January.