For the last week, I’ve been researching the decline of the American watchmaking industry. I find the topic interesting because many of the major American watch manufacturers – Hamilton, Elgin, and Waltham – either closed down or off-shored production during the 50’s and 60’s. You know, the time when 20th century American consumerism was at an all-time high. It just didn’t add up.
In the process of trying to grasp the untimely decline, I stumbled upon two US Senate Committee hearings – the first in 1954 and the second in 1964 – discussing the “essentiality of the American horology industry to national defense.” Though they don’t provide detailed explanations for the decline, we do get an interesting glimpse at some of the factors behind the implosion of American watchmaking. More specifically, we see how the American watchmaking industry made a bogeyman of their Swiss counterparts.
Desperate times called for desperate measures, perhaps?
One thing is clear from the testimonies, it’s easier to confront an enemy than it is to confront oneself. But before we dive into that, let’s first take a quick detour into some historical context.
The Historical Background
1950’s America saw protectionist policies (tariffs, import restrictions etc.) imposed to ensure industries essential to national defense remained “healthy”. This was considered fundamental to the basic needs of scaling up wartime efforts as the “threat of communism” loomed.
For the US watchmaking industry, everyone was coming off a decade of allocating huge portions of their resources to the the US military for WWII and the Korean War). This not only included timekeeping devices, but also fuses and other adjacent military products made with watchmaking machinery and tools. I could probably write a whole article on what the American watchmaking industry did to help the military during WWII. In short, it was a lot.
But the postwar world wasn’t that great for American watchmaking. Swiss watch imports were increasingly cutting into the US domestic market share at a rapid pace. By 1951, only ~15% of watches sold in the US were produced domestically – the Swiss had their foot on the gas pedal and they weren’t letting up.
With economic protectionism and shrinking market share in mind, it might be easiest to frame these Senate hearings as a cry for help from the American watchmaking industry. And we can see in the testimonies, that the pleas became a lot more aggressive and desperate in the decade between the first and second hearing.
The First Hearing in 1954: The Seeds of American-Swiss Tensions
In his 1954 testimony, Arde Bulova, Chairman of Bulova Watch Company, speaks pragmatically about the balance between domestic production and Swiss imports. Of course, part of this nuance is due to the fact Bulova owned and operated watchmaking facilities in Switzerland at the time of the hearing. As Arde says,
“The open and clear fact is that our company does not oppose Swiss imports. This would indeed be a foolhardy position for us to take. We depend on our imports from Switzerland for a large part of the volume of the goods we sell. We profit from the sale of watch movements which are made in Switzerland and which are cased in our American plants for sale to the American public.”
From Bulova’s perspective, there isn’t a lot of adversarial sentiment toward Switzerland – it’s firmly a partnership, a symbiosis. From the Senate’s position, there isn’t a lot of finger pointing at Switzerland either. But we can glean a bit of skepticism, or some seeds of tension, in the follow-up questions. Senator James Duff, Chairman of the Committee, touches on all the “difficult stuff” immediately following Bulova’s testimony. That includes, Swiss export restrictions on specialized machinery, German export blockades in WWII, and whether the US can depend on Switzerland during times of need. And the general conclusion is, probably not. An over-reliance on Switzerland is a vulnerability for national security.
Switzerland is not really at fault for this, but as time passes, the perception of the Swiss watchmaking industry changes dramatically.
The Second Hearing in 1964: From Ally to Enemy
Fast forward ten years, the language and tone toward Switzerland shifts from subtle ambivalence to overt animosity. Interestingly, the antagonistic position comes from the same company, Bulova, that testified in a balanced manner a decade earlier. From the opening statement of General Omar Bradley – the retired WWII hero was Chairman of Bulova Watch Company at the time of the hearing – notice the radical shift in tone and language:
“Our own domestic industry, the jeweled-lever segment, is now down to having only 14 percent of the U.S. market — the rest is supplied by imports. Since the hearing before this subcommittee 10 years ago, Waltham has disappeared, and two of the pin-lever companies have abandoned domestic production of wristwatches.
Even so, the Swiss and the importers are not satisfied. They are seeking before the Tariff Commission to secure a substantial reduction in duties. Why? The Swiss economy is already so prosperous that it is practically at the bursting point, and they are producing watches at absolute capacity, with a large segment of imported labor.”
Here, we can see that the Swiss transitioned from an unavoidable, strategic partner to a conspiratorial adversary for American watchmaking. Knowing that the decade between the two hearings was not a pleasant one for domestic watchmaking, there is an argument to be made that this shift in tone and language is a reflection of industry-wide desperation. I lean toward this theory due to the glaring absence throughout both hearings: no one ever directly addresses why American watchmaking was stomped on by the Swiss in the 1950’s and 60’s.
It’s a question left unaddressed, probably because it doesn’t make a compelling argument for government support. It’s a much better pitch to say, “the Swiss are the problem” than “we’re underperforming.” American watchmaking was in an unfair fight in terms of production costs, and government support was the industry’s last hope.
From my preliminary research on this topic, it appears that the American watch industry bet its future on higher tariffs and import restrictions on Swiss watches. And when they didn’t arrive throughout the 1950’s and 60’s, the American watchmaking industry disappeared gradually, then all at once. While I will continue to dig deeper into exactly how and why this is, the testimonies in both hearings make it seem like the biggest American watchmaking companies didn’t want to, or simply could not, address their own inadequacies in the domestic market. The scapegoating strategy was risky and did not pay off.
That’s not to say that the Swiss are necessarily innocent either. There’s more research to be done there, particularly how exactly the Swiss managed to be so successful in postwar America. I’m curious to get a better grasp on how Swiss manufacturer partnerships for sales and distribution in North America worked, like those between Patek Philippe & Universal Geneve, Vacheron Constantin & Jaeger LeCoutre. Also, the reasons behind why there were so many specific North America edition products from Swiss manufacturers during the 50’s and 60’s.
In the theme of industry decline, I’d like to close out with this final tidbit from Gen. Omar Bradley’s 1964 testimony:
“What [the Swiss] really want is to eliminate the technological capability of our industry in the United States. The Swiss realize that this technological capability was responsible for developing and producing the two major horological innovations of this century — the electric and electronic watches — and they seek to make sure that this technological ability is choked off.”
The Americans were the first to pursue quartz watches and they were not wrong about the threat quartz posed to Swiss watchmaking. As we all know, quartz did devastate the Swiss in the 70’s. But it wasn’t the Americans who led the quartz revolution – it was the Japanese.
Another day with the beast,
Excellent article, Mike. As usual, you have managed to take a topic I am somewhat familiar with and expand upon it with incredible context. I always enjoy learning from your writings!