Watches and Clocks
SIC 3873
NAICS 334518
The global watch and clock industry comprises the manufacture of clocks, watches, watchcases, and clock and watch parts.
In 2004 the Federation of the Swiss Watch Industry (FHS) estimated the number of timepieces produced worldwide at around 1.2 billion, down slightly from 2003. The world's largest consumers of clock and watch materials were Hong Kong, the United States, Japan, Switzerland, and China. These countries, as reported by the FHS, accounted for more than 70 percent of global trade.
World clock production has steadily decreased since 1997, when an estimated 440 million units were produced, according to figures published by JCWA. However, the market was beginning to pick back up in the mid-2000s, albeit slowly, due to the changed purpose and use of household clocks. By 2003, production was at 360 million units, a 13 percent increase over 2002 totals. According to HFN, because most households have clocks in many locations, such as the microwave and VCR, clockmakers were challenged to create new demand for clocks as decorative items, including such technologies as sound chips.
The international watch industry produces three major types of watches: quartz analog, digital, and mechanical. Quartz analog watches represent the world's leading segment in the industry, accounting for the majority of the watches produced throughout the world. In the 1980s Switzerland's Swatch watch helped spark worldwide interest in inexpensive fashion quartz analog watches at a time when digital and mechanical movement watches overshadowed them. Consequently, the quartz analog watch became the industry leader even in the most prosperous developed countries, and producers of high-end mechanical watches such as Rolex started offering quartz analog watches.
Digital watches, which dramatically changed the dynamics of the watch industry in the 1970s, remained popular in the mid- to late 1990s but trailed quartz analog watches considerably in terms of sales. This market segment remained a steady one in the 1980s, registering modest annual upturns in production. However, because of the surge in production of, and demand for, quartz analog models, the digital watch annual market share dropped from about 50 percent in 1982 to less than 25 percent in the mid-1990s.
Production of mechanical-movement watches rebounded in the mid-1990s, after suffering declines because of competition from quartz and digital watches. While annual unit production has hovered around 100-135 million since the 1980s—when digital and quartz analog models swiped significant market share—mechanical-movement watches experienced renewed growth in the latter half of the 1990s. Swiss companies, long the industry leaders in the production of expensive watches, exported about 25.1 million watches in 2004 worth US$7.9 billion. A Federation of the Swiss Watch Industry report argued that the surge in exports indicated the recovery of the timepiece once thought obsolete. Industry analysts expect the high-end watch market will remain a viable one in the future.
The clock first emerged as a marketable product in the sixteenth century, though weight-driven clocks had already been in existence for several centuries. In the sixteenth century, however, the popularity of timepieces increased with the introduction of watches in Germany and France. Primarily regarded as ornamental jewelry at the time, watches slowly took on greater functional importance.
Clock manufacturers dominated the industry for years, however. Though most models were expensive, heavy, and delicate, they were also regarded as significant investments and important family heirlooms. The Industrial Revolution spurred the development of less cumbersome clocks and the growth of watch manufacturing. By the latter part of the nineteenth century, pocket watches, first produced in quantity by the American Waltham Watch Co., were popular possessions, and Switzerland had become established as a renowned center of watch and clock craftsmanship. The world's leading watch and clock maker in the 1990s was founded during this period as well. In 1881 K. Hattori & Co.—the company that eventually became Seiko Corporation—was established in Tokyo as an importer of clocks. By the early 1900s, the company was manufacturing wall and table clocks, pocket watches, and alarm clocks.
In 1918 the Shokosha Watch Research Laboratory, the precursor to Citizen Watch Co., was established in Japan. The organization manufactured its first pocket watch six years later and gradually emerged as one of Seiko's chief competitors. These two companies, as well as a few other Japanese manufacturers, battled for control of the Asian market. With the onset of World War II, however, they made no inroads into other markets until well after the conclusion of the war.
Industry giant Timex Enterprises, Inc., was founded in the United States in 1941 by two Norwegian refugees, who had fled their own country after the German invasion in 1940. They purchased the nearly bankrupt Waterbury Clock Co. in Connecticut and instituted a highly mechanized assembly process. The Timex watch became known as a dependable product, and the company quickly expanded despite its negligible presence in jewelry stores. Instead, Timex sold their watches through consumer outlets such as drugstores; by the 1960s the company had established a distribution network of 250,000 outlets and posted sales over US$70 million.
By the late 1960s Timex was dominant in the U.S. market, though international competitors such as Seiko and Citizen sought to expand their international sales. Switzerland, however, continued to reign as the world's watch production leader based on its control of the luxury watch market. The Soviet Union had become a significant presence in the industry as well via exports of low-cost, low-quality products to developing countries.
In 1967 the electronic quartz wristwatch was announced by the Swiss Horological Electronic Center; a number of Swiss firms had pooled together millions of dollars in research money to develop the watch. Yet it was Seiko—still known at the time as K. Hattori—that marketed the first quartz wall clock and watch. Japanese watch manufacturers proved more proficient at adapting to the popularity of the quartz watches and the new digital technology that swept through the industry in the 1970s. Both Seiko and Citizen tallied huge gains in the vital U.S. market during this period, and Japan slipped past Switzerland as the industry leader in unit production. Embattled Swiss manufacturers and U.S. companies such as Timex belatedly turned their attention to the new technologies that were proving so profitable for their competitors in Japan and Hong Kong.
Inexpensive brands proliferated around the world in the 1980s, and Japan became entrenched as the world's leading manufacturer of watches. By 1989 worldwide watch production reached approximately 690 million units; industry leader Seiko Corporation produced about 109 million of those units itself, in addition to another 32 million clocks.
In the mid- to late 1990s, mid-grade and high-end clock and watch sales benefited from rising disposable incomes in countries such as Japan, the United States, Germany, Italy, France, and the United Kingdom. On the other hand, low-price clocks and watches have benefited from income growth around the world and from fashion trends. These trends spurred new growth because of increased interest in watches that complement clothing, accounting for expanding sales of inexpensive fashionable watches such as those by Swatch. Consumers began buying more than one watch in order to have timepieces to complement both formal and casual attire.
...
To continue reading
Request your trial