Why the Quartz crisis was a blessing for some Watchmakers
We need your imagination. What if from one day to another every watch from sought-after brands like Rolex and AP would plummet in value?
No one wants to buy them anymore because there is a new technology that is way better and a lot cheaper.
Nowadays this would be unthinkable. But this has indeed happened once.
For this was the bitter reality in the 1970s at the time of the then dreaded quartz crisis.
But why and how did it get this far in the first place?
The Quartz crisis was triggered by the development of the Quartz Movement in the 70s. The Swiss Watchmaking Industry, which was focused only on mechanical movements, heavily underestimated the impact that a Quartz movement could have. This made it very easy for their competitors from the US and especially from Japan to take over the entire watch market. Therefore, the demand for mechanical watches plummeted in just a few weeks, which we now call the Quartz crisis.
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The early origin of the Quartz crisis
The Quartz crisis was one of the most important events in the history of watchmaking.
During which, mechanical watches were declared dead.
But of course, we need to talk about how the Swiss watch industry even managed to get into this miserable situation.
Up until the early 70s, everything seemed to be going well. Mechanical watches were known to be the best watches out there and especially Switzerland was known for their timepieces. No one thought of a new technology that could destroy the traditional watch market that had existed for hundreds of years.
To explain why the Swiss Watch Industry was that strong in the first place, we need to dive a little bit into the history of Europe, namely into the years after the Second World War. In these very years, Switzerland benefited from their political neutrality during the war which gave them a big head start compared to the watchmakers from their neighboring countries.
For example, the German watchmaker A. Lange & Söhne was expropriated after the Second World War. Meanwhile, all Swiss watchmakers continued to exist as they did before. Therefore, big names like Rolex , Breitling, and Omega became a lot more popular. The Swiss Watch Industry became one of the biggest in the world, even managing to push into the American market, where they were known for their accuracy.
Similar to the Germans, Japan also suffered from the Second World War. Their watch industry suffered from a commodity tax introduced in the Dodge Plan.
It was only until the 1950s that the Japanese watch industry saw some light at the end of the tunnel. It was during the Korean War, that Japanese watchmakers were able to import Swiss watchmaking machines. With the help of these machines, they were able to increase both quality and productivity. During this time, the mechanical watches from Orient and Seiko were just as good as their Swiss counterparts, only lacking the prestige of the Swiss brands.
But soon a new technology came up that would change everything. The race for the Quartz watch began. It is important to note that the technology of the Quartz watch has been around since 1927, but for a long time, it was way too big and way too expensive for a wristwatch. It was only with the rise of the semiconductor that it became possible to reduce its size. And this is why in the 1970s both Japanese and Swiss watch manufacturers raced to be the first to produce Quartz watches.
In 1964, Seiko was finally able to introduce their first Quartz watch, the Crystal Chronometer QC-951. This was indeed only a pocket watch but just 5 years later they introduced their first Quartz wristwatch, the Seiko Astron, marking the beginning of a new era.
In the early 70s, Omega and later Rolex were also able to introduce their first Quartz watches, but in the beginning, the market had no significant demand for those watches, due to their high price.
Excurse - How a Quartz watch functions
If you don’t already know how a Quartz watch works, it might be hard to understand the significance of this development. So, let's briefly explain how it works and what makes it special.
Powered by a battery, the Quartz watch has a lot fewer parts and is therefore less expensive to produce. At the same time, these watches are a lot more precise than their mechanical counterparts, especially when viewed over longer periods of time.
In the Quartz movement, the current of the battery vibrates a Quartz crystal. Thanks to a physical principle called the Piezo effect, the Quartz crystal always oscillates with the same speed, which results in a constant rhythm for calculating the time. You could say that the Quartz crystal replaces the balance wheel of a mechanical watch. The frequency of the Quartz crystal is not only a lot more uniform but also a lot higher than the frequency of a mechanical balance wheel, resulting in a more accurate watch.
This is only a very short version of how a Quartz movement works; for a more in-depth explanation, we recommend you check out our blog on “How a Quartz Movement Works”.
Back to the history of the Quartz crisis:
Since there was no big demand for the early Quartz watches, the Swiss watchmakers thought that it would not be worth it and went back to their mechanical watches.
Since they had the best reputation and had a very large market share, they were very confident in their decision.
Unfortunately, they were wrong; later it would be exactly this decision that would break their neck, leading them into the Quartz crisis.
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What happened during this time
Driven by their arrogance, the Swiss bet on the wrong technology.
After a hard start, Quartz movements hit like a bomb. After a while, the new technology became a big hype with everyone fascinated by the never-before-seen precision of the Quartz movements.
From 1970 to 1983, two-thirds of all Swiss watch manufacturers had to shut their doors. In the process, thousands of skilled watchmakers lost their jobs.
For the Swiss industry, this was a serious crisis. The demand for mechanical watches was close to zero.
Quartz watches were not only more precise, but after just a few years of development, they could also be produced a lot cheaper, leaving no reason to buy a mechanical watch anymore.
Other than the Swiss, American and Japanese watchmakers have invested a lot in quartz technology, taking over a very large market share. Since they invested a lot more in this technology, they quickly figured out a way to produce these movements in large quantities and for a very low price. For example, in 1974 the computer manufacturer
Casio began the production of quartz watches. I think it’s clear that this played out very well for Casio.
At the time, experts were sure that mechanical watch movements were dead forever.
There was almost no watchmaker that did not start selling his last stockpile and tried to get rid of his expensive machines.
For some, this time was a golden era, but for the Swiss industry, this was absolute hell. We could even say it was a heavy blow for the whole nation of Switzerland and its sense of culture in relation to the art of watchmaking.
Winners and losers
At first, it seems obvious, the Swiss watchmaking industry seems to be the clear loser. Meanwhile, American and Japanese watchmakers have been gifted with a huge market, profiting from making the right choices at the right time.
And at the time this was actually the case.
But in another context, some also speak of a quartz revolution rather than a quartz crisis.
If we look back on this time, the quartz crisis did also bring some good things for the Swiss watch industry.
Mechanical watches were declared dead, but in truth, they were experiencing a renaissance at that very time, gaining even more recognition than ever before.
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The mechanical Renaissance
After a lot of hard years, the Swiss watch industry was able to save themselves from the deadly claws of the quartz crisis.
There are two names that played a significant role in doing so, Ernst Thomke and Nicolas G. Hayek. Thanks to these 2 businessmen, the Swiss watch industry was restructured in a short period of time, which soon made it competitive again.
Thomke led the “General Swiss Watch Industry Ltd” ASUAG (In German it is called Allgemeine Schweizer Uhrenindustrie AG -> ASUAG). In the process, he combined all watch part suppliers into one single company, the ETA SA. To this day, ETA produces base movements for other watch manufacturers, both mechanical and quartz. This led to a significant increase in productivity and helped to ensure a faster and more competitive access to the market of quartz watches.
But it was not enough to only combine these companies into one. The watch industry was heavily depending on loans from Swiss banks. It was Nicolas G. Hayek, who took care of saving the most important watch brands, he did this by merging the then-largest Swiss watch group, the SSIH (Société Suisse pour l'Industrie Horlogère) with the ASUAG into one big group.
The result was the Swatch Group SA, which has become the biggest watch group in the world.
The Swatch Group later went on to launch the Swatch brand, which was the first brand to directly compete in the market of quartz watches. Their first watch was cheap, easy to produce, and had a big margin. After its introduction in 1983, the watch soon became very popular, mainly due to its outstanding design and the low price tag.
And this is how Swatch went on to claim back a significant market share, which made the return of the Swiss watch industry possible.
But the Swiss watchmakers wanted to stay with their tradition. Therefore, many Swiss watch brands decided to restart the production of mechanical watches, which was something no one had thought would happen.
This was thanks to Jean-Claude Biver, who is nowadays known for his incredible capability to save watchmakers from bankruptcy. While Thomke and Hayek were convinced that the future of watchmaking lay in quartz movements, Biver didn’t want to accept this fact and decided to invest in mechanical watches once again.
To do this, he bought up the name rights from Blancpain and Omega and revived these brands.
At the time the whole watch market was dominated by quartz watches, still, Biver was convinced that mechanical watches would find their way back.
The first mechanical watches came from Blancpain and Chronoswiss, closely followed by a mechanical caliber from Rolex, who also didn’t want to give up on their tradition. After a while, many other manufacturers joined this trend, slowly bringing back mechanical watches.
And after a while, the sales started to increase again. With excellent marketing, Swiss watchmakers slowly began to convince people of the excellence and charm of mechanical watches.
Slowly but surely, people started to pick up interest in mechanical watchmaking as a luxury good.
To further increase interest in the technology behind watchmaking, brands began to incorporate glass backs into their watches through which the movement could be admired. In some cases, watch manufacturers have even started producing skeletonized watches that show even more of the watchmaking that went into them.
In a way, the whole perception of the watch industry changed, with quartz watches becoming a functional piece of equipment that was precise and cheap. On the other hand, people recognized that the art lay in mechanical watches, which made them more of a luxury item than a functional necessity. This trend has continued to this day, I mean, who needs a watch?
It's really just a luxury item! The result of this development is that after the quartz crisis, the demand for luxury watches is as high as never before.
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Long-term effects
We have already touched on this subject briefly but would now like to go into it again in more detail, because the quartz crisis has certainly left its mark.
The watch industry has transformed itself completely. Since the quartz crisis, nothing is as the way it was before.
The result of the quartz crisis or quartz revolution was a structured change in the international watch market.
Not only the untouchable image of Swiss watchmaking was changed, but also the meaning of wristwatches themselves.
Today, quartz watches have become a cheap mass-produced product that generates huge sales due to the high volumes.
However, mechanical watches still enjoy the better reputation.
This is how mechanical watches have become a luxury good, with customers that like to spend a lot to get a high-quality product. In the watch community, quartz watches are even considered mass-fabricated junk, or at least are not appreciated.
Basically, quartz watches cover the economic side of the watch industry, with mechanical watches, taking over the artistic side and the cultural aspects.
Could the Quartz crisis be prevented?
Just like with every other crisis, it is important to examine in retrospect whether the crisis could have been prevented.
In this case, the answer is a clear yes.
Like so much in history, this crisis could have been very different with a few small changes here and there.
But we must never forget that we are speaking in the subjunctive and that things have turned out the way they have, and in most cases, that is a good thing.
We even think that without the quartz crisis, the watch industry would never be where it is today. Nevertheless, the quartz crisis wouldn’t have to take place on such a devastating scale. The Swiss watch brands should have recognized the dangers and potential of quartz movement earlier.
How does the beautiful saying go? Pride goes before a fall.
But afterward, you're always smarter, and we think that the Swiss watchmakers made the right decision based on the situation known to them at the time.
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Conclusion – was the Quartz crisis a blessing?
After all, it can be said that mechanical watchmaking experienced its death as well as a rebirth due to the quartz crisis. And this rebirth was not necessarily bad for the watch industry, being the start of a new golden era.
Sometimes you only learn to appreciate things when they are no longer there, and that is how it was with mechanical movements.
The Quartz Crisis or Quartz Revolution has completely transformed and recomposed the world of luxury watches. Through them, the mechanical chronometers finally enjoy even greater recognition.
Source cover image: pexels
About the author
Alexander Weinberger
For me, the most fascinating thing about watches is the interplay between precise craftsmanship and artistic development. In a watch movement, hundreds of small parts have to be put together precisely so that they form a large whole.
