Nicolas Hayek and the Plastic Watch That Saved Swiss Watchmaking

In 1982 the two companies that owned most of Swiss watchmaking, ASUAG and SSIH, were insolvent. Between them they held Omega, Tissot, Longines, Rado, Hamilton and the movement maker ETA, and between them they had lost so much money that the Swiss banks now controlled both. The industry had employed ninety thousand people in 1970; it would employ twenty-eight thousand by 1988. Sixteen hundred watch companies had become six hundred. The cause had a name, quartz, and a date, Christmas Day 1969, when Seiko put the first quartz wristwatch on sale in Tokyo, a story we told in our history of Seiko. Now the banks wanted out, and foreign buyers, Japanese buyers among them, were circling the famous names. This is the sixth of our stories from watchmaking, and it ends with the industry you know today.

The consultant who refused the brief

The banks hired Hayek Engineering, a Zurich consultancy run by Nicolas Hayek, born in Beirut in 1928 and Swiss by adoption, to advise them. Hayek later described, with some relish, what he believed he had been hired to say: produce a report concluding that it was impossible to make watches in Switzerland because the Japanese were cheaper, and recommend a sale.

He produced the opposite. His report said the two rivals should be merged into one company, that the famous brands should be kept and repositioned upmarket, and that Switzerland should build, and win with, a watch costing under fifty dollars. The banks accepted the merger, which created SMH in 1983. They initially rejected the cheap watch as absurd.

Fifty-one parts

The cheap watch was already half-built. At ETA, the group's movement factory, a manager named Ernst Thomke had been fighting the quartz war on its own terms. In January 1979 ETA had announced the Delirium, a quartz watch just 1.98 millimetres thick, made possible by an idea that turned out to matter far more than thinness: instead of putting a movement inside a case, the Delirium used the case back itself as the movement's main plate. Thomke told two of his engineers, Elmar Mock and Jacques Müller, to take that idea and make it cheap.

What they produced had fifty-one parts where a conventional quartz watch had ninety-one. The movement was built directly into a plastic case. The crystal was welded on ultrasonically. It was water-resistant and shock-resistant and it could not be repaired, because it could not be opened, and that was the point: it cost so little that repair was irrelevant. It was test-marketed in Texas in the autumn of 1982 and launched, twelve models at prices between 39.90 and 49.90 francs, in Zurich on 1 March 1983. The name was a contraction of second watch, the idea being that a person who owned a good watch might buy this one for the beach.

What happened next

People did not buy one for the beach. They bought one, then one in a different colour, then a third. Europa Star, reviewing the launch, noticed the collecting habit within months. Swatch sold 1.1 million watches in 1983, 3.5 million in 1984, 12 million in 1986, and celebrated its hundred-millionth in 1992. By the time Hayek died the total was around three hundred million. Artists designed limited editions; collectors queued overnight; a plastic watch that cost fifty francs was auctioned for tens of thousands. Hayek, asked about it, said that he was not making watches only to look at the time. He was making jewels.

Taking control

In 1985 Hayek assembled a group of investors and bought a controlling 51 per cent of SMH from the banks for 151 million francs. He became chairman and, effectively, the owner of Swiss watchmaking. His strategy was a pyramid: Swatch at the bottom selling in the millions, Tissot and Hamilton above it, Longines and Rado above them, and Omega at the top, its prices deliberately raised to restore its standing. The plastic watch generated the cash, and the cash rebuilt the mechanical brands. In 1998 SMH was renamed the Swatch Group, and in 1999 it bought Breguet, the oldest and grandest name in the trade, and set about rebuilding it, including, as we told in our story of the Marie-Antoinette watch, remaking Breguet's most famous piece from two-hundred-year-old drawings.

The irony

It is worth sitting with this for a moment. The mechanical watch survived the quartz crisis, and today thrives, because a quartz watch made of plastic financed its rescue. Every Omega Speedmaster, every Breguet tourbillon, every ETA 2824 in a Tissot or a Hamilton, was paid for in the 1980s by children buying Swatches. Hayek understood something the banks had not: that Switzerland's problem was not that it could not compete with Japan on cost, but that it had stopped trying, and that once it had a product that could, the prestige of the old names would be worth more than ever.

He also had a longer memory than his critics. In 2013, three years after his death, Swatch launched the Sistem51, an automatic mechanical movement of fifty-one parts assembled entirely by machine and sealed into a plastic case, priced like a Swatch. It was the original idea, run backwards: a cheap watch that ticks. We covered its place in ETA's story in our history of that company.

The man

Hayek was flamboyant, combative and often right. He wore several watches at once. He picked fights with competitors, regulators and occasionally his own customers; his 2002 decision to stop ETA supplying movements to rival brands started a legal battle that ran for eighteen years. He died at his desk in Biel on 28 June 2010, aged 82, and the company he built is now run by his son and daughter. The Financial Times and others called him the man who saved the Swiss watch industry, and for once the headline was accurate.

Why this matters to a beginner

If you are learning watchmaking in the 2020s, you are doing it in the world Hayek made, in which mechanical watches are not obsolete curiosities but a growing craft with schools, parts, tools, forums and kits. That world was not inevitable. In 1983 the reasonable view was that the mechanical watch was finished. The lesson, if there is one, is that a craft survives when someone decides it is worth the trouble, and then does the unglamorous arithmetic to make it pay. Building a Miyota 82S0 at your kitchen table is a very small vote in the same direction.

Sources and further reading

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