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Swiss and Japanese watchmakers lose time

By Margaret StuderSpecial to The Christian Science Monitor / November 24, 1982



Zurich

Time ticks heavily for the world's traditional watchmakers. The industry is winding down against a background of saturated markets and tougher competition.

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Ironically the Japanese, who pushed the Swiss off their comfortable spot at the top of the timepiece pinnacle during the last decade, now have their backs to the wall as Hong Kong diligently floods the globe with inexpensive watches. Adding to the problem is a stream of watches from the Soviet Union into Western Europe at very low prices.

Today, says Seiko's managing director in Switzerland, Takamitsu Muto, ''The two biggest watch manufacturers in the world are sitting in the same boat.''

Only last year the watch industry still looked as if it was out to grow forever. Producers merely battled over who would get the biggest slice of the pie. Some 368 million watches, movements, and parts poured onto the unsuspecting world in 1981.

For the first time Japan pushed its output over 100 million pieces with Hong Kong's backstreet factories in hot pursuit and Switzerland bent on keeping in the race.

Then the fat balloon sprang a leak. Consumers just did not want all those watches. Stocks built up alarmingly, now an estimated 80 million unsold pieces are out to lure Christmas shoppers.

A further ironical twist: Japan and Switzerland supply the parts that workers in Hong Kong assemble. Once seen as a lucrative addition to company profits, that strategy is biting back and now has both Japan and Switzerland shaking their heads.

Not only has the world recession hit this industry hard. The electronic watch boom that kept sales spiraling has passed its peak. To grow at an acceptable clip some innovation is needed to kick consumer fancy along. So what about watches that take your pulse or with television screens? Maybe, but not that many people want to keep constant tabs on health or watch wrist-tele.

The Swiss, noted more for their upmarket elegance than mass manufacture, have just announced a major technological breakthrough: a throwaway plastic quartz watch for around $20. The watch is unique because the plastic mold forms the base for the components. The idea: a Swiss product at Far East prices; cheap to produce on fully automated production lines; and a fashion item with plastic colors to match any outfit.

Knowing that Japanese watchmakers also face enforced holidays is little consolation to Swiss workers. For years, their industry, troubled by Asian competition, has restructured painfully. (It sustained a 30,000 employee drop between 1970 and 1981. Last year's reductions brought the total to 46,000.)

But this new crisis is accelerating the process dramatically. Local newspapers headline their watchmakers' fight for ''sheer survival.'' ASUAG, Switzerland's largest watch concern, has 41 percent of its workforce on short time after sales dropped 20 percent in the first half of this year. With debts estimated at around $200 million, a bailout by the banks could be in the offing.

Thousands more jobs will have to go. Some experts estimate that employment could drop to 25,000 to 30,000 in the next few years. Long famous for its industrial peace, Geneva recently saw protesting workers occupy a factory. And in Biel, the center of the watch industry, workers staged a mass demonstration.

The watchmakers' plight is a telling contrast to the country as a whole. Total unemployment in this nation of 6.4 million people is a remarkable 0.5 percent. This makes dismissed workers feel even worse. A woman who had worked in the sector all her life said, ''I am no use anymore. No one wants me.''

Swiss foreign trade specialist Benedikt von Tscharner says there is a lesson to be learned from the Swiss watch industry: State help does not help but just puts off the evil moment.

''If the government had not helped the Swiss watch industry after the war, it would have had to adapt and would not be in the position it is today. Government help stops necessary structural change,'' he explains.

Rumblings within the European Community to protect local watchmakers by cutting Hong Kong imports is strictly opposed by the Swiss. France has already limited its intake of Crown Colony watches in defiance of GATT rules.

''Protectionism is a catastrophe,'' exclaims von Tscharner. More than 90 percent of Swiss-made watches are exported - a good Swiss reason for keeping trade doors open.