From the horses mouth about ETA supply of movements

[FxrAndy]

ETA Withdrawal of Movement blanks reposted from watch lounge email

Posted: 10 Feb 2010 03:43 AM PST

Nicholas Hayek of the Swatch Group

In accordance with its strategic plans, ETA will withdraw the supply of blanks at the end of 2010. As the company currently has the monopoly on this market, it is reasonable to expect that many other players will be keen to jump into the gap left empty by ETA. But who really can?

To find out, we spoke to the people in the know, the movement makers themselves.

The Eight Year Withdrawal

Mr Hayek, the president of the Swatch Group, has never made a secret of his plans for ETA: ideally, in the long run, the company will not supply any component of its own creation to any third party, regardless of whatever or whomever it is. Understandably, the Swatch Group wants to guarantee that only the brands within the Group benefit from the exclusive use of its components, which seems reasonable from a business point of view.

Therefore, back in 2002, Swatch made the first move to put this plan into action, starting with blanks. But the Swiss Competition Commmission (ComCo) hadn

[valerian]

Very interesting read, thanks very much!

Val.

[Bike Mike]

Thanks for this! Great read for a Thursday morning.

I think the big thing to take away from this is that ETA movements are still going to be available as well as their parts.

Really the only thing that is changing, is ETA is stopping the sale of their movement blanks. If companies like Breitling, Tag and such wanted to purchase 100% complete movements from ETA, they still can.

[McRae]

Aha, I also was under the impression that they're were stopping completely with aftermarket supplies, but obviously not. Good for us!

[RWG Technical]

Great article, thank you so much.

One point to note, the comments by Sellita about interchangeability are wrong, ETA mainplates have "holes" for the alignment pins of the bridges and cocks, BUT Sellita mainplates have "pins" for the cooresponding "holes" on the bridges and cocks. So no, ETA and Sellita parts are NOT interchageable.

You would think that he would be aware of this basic fact.

As for the remainder of the movement parts, I haven't done enough testing to know if they are interchageable, but I would guess that less than 50% of a Sellita is interchageable with an ETA of the same caliber.

[hackR]

very nice read - and as always - a nice reality check from The Zigmeister!...

[Member X]

TWL: Do you think that Chinese industry will try to fill the gap?

MG: With regards to Sellita, there are no business relationships in the pipe-line with any Chinese company, however good they may be. We defend and believe in the

[gran]

see this link

http://www.rwgforum....lica-movements/

Not forgetting the mass-market, Sea-Gull have also introduced a wristwatch alarm movement, and a pocket watch movement. Responding to the shortage of ETA-type automatics, Sea-Gull are now offering their own version of the ETA 2824 and 2892, in direct competition with Swiss company Sellita. Continuing their push into Swiss territory, Sea-Gull are also supplying ST16 ebauches to Swiss movement finisher Claro Semag.

"Claro-Semag is Fossil's Switzerland based in-house mechanical movement 'manufacturer'. They produce a movement called the CL-888 which is used in Fossil's Zodiac Oceanaire divers, several other Fossils and is also sold to other brands. The watches are solid and most have reported nice solid performance from their movements.

http://www.ocean7wat...iles/CL-888.pdf

"However a few eagle eyed tinkerers have also reported that the movement is the same movement as the Chinese Tianjin ST16. Now Tianjin Sea-Gull is about the most respected Chinese brand at the moment... this particular movement does a good job of integrating some of the better ideas of several movements out there.

"The thing is that the CL-888 only differs from the ST16 in its finishing. Since most likely that finishing is performed in Switzerland, by someone getting paid swiss wages, it is quite likely that that is what pushes the value of the Swiss part of the watch past the magic 50% mark. The end result is that Fossil is able to use a Chinese movement in a (very nice) watch and legally call it Swiss. I have a feeling that much of the case work is probably achieved in similar fashion, thus allowing them to write Swiss Made on the dial." (what da ya think of this?????)

http://forums.watchu...highlight=Claro

Edited February 11, 2010 by Gran

[southcoast68]

This all sounds like "business as usual" to me, carry on.

[kronos twin]

Very good article, thank you for sharing. It appears to me that any withdrawal by ETA would only benefit non-Swiss companies at this point. If Sellita is not going to even conceive of the possibility that non-swiss markets will jump in to fill a vacuum (meaning they will try to market a cost-effective substitute) left by ETA, then they're missing a crucial element of the game plan, right? The evidence of it is here in the Rep community.

[wheaton26]

interesting read. i think sellita will figure it out ... anyone know their stock exchange symbol?

[P4GTR]

interesting read. i think sellita will figure it out ... anyone know their stock exchange symbol?

good question wheat.

[offshore]

Have been in discussions with Sellita for some time.

I believe demand, will hugely outstrip their ability to supply, and they are not a quartz supplier of note.

So don't go looking to them to be the saving grace on this one, especially if they don't see themselves partnering in China.

Don't forget that ETA had/have a number of plants in S E Asia.

In any buying negotiations on movements, the starting point for price negotiation, is 1000 units.

Any number below that, only attracts a premium, which is directly linked to the volume of other business done with that supplier.

And I do think we overlook the ratio of mechanical movements produced c/w quartz. That is where the big volumes in both quantity, and $$ value has historically been done.

Offshore

[Pugwash]

Thomas requested questions on Twitter, and it's nice to see he asked them, but he missed my one on how interchangeable the parts were. It'd be great if The Zigmeister could get an SW200 to compare with a proper ETA.

[slickdick]

Thomas requested questions on Twitter, and it's nice to see he asked them, but he missed my one on how interchangeable the parts were. It'd be great if The Zigmeister could get an SW200 to compare with a proper ETA.

I don't think that its a parts issue. It is clear for sellita to not make (all) parts exactly the same, as to create aftersales for parts only availleble through sellita. What is important for probably most of us, is the fact the stem height hand size and lignes match. As en alternative for eta, ie drop in replacement.

[Eton]

Wow, great information...thank you for the in-depth post!

[krpster]

Thanks for sharing.

I personally am having trouble understanding Swatch motives for this change. As a business model I cannot see this approach benefiting them at all. In effect they will be cutting off sales volume from their movement group ETA but I cannot see demand increasing for their own completed products so the result is a loss of annual sales for their movements = lost revenue. I don't get it

[allank]

Guys, you really have to see things Swatch group sees.

By cutting off supply of ebauches, it'll cut a lot of small brands (whether truly really Swiss or not) that are not belong to the group out of the loop, thus increases sales to Swatch group owned brands.

So, why not?

Sellita movement parts are not interchange-able with ETA's. But Sellita movement can surely fits the watchcase, dial, hands that were designed and make for ETA movements. However, it's still not the best solution to the ex-pact merchandisers' point of view.

Can Sea-gull be good enough as a reliable substitute of ETA or Sellita blank movements? Ask the members here. Read the posts reporting problems with the Asian clones.

Can Chinese make good enough movements that are of equal quality/durability to their Swiss counterparts? Maybe yes, but it'll surely take another decade or two.

[southcoast68]

Guys, you really have to see things Swatch group sees.

By cutting off supply of ebauches, it'll cut a lot of small brands (whether truly really Swiss or not) that are not belong to the group out of the loop, thus increases sales to Swatch group owned brands.

So, why not?

Sellita movement parts are not interchange-able with ETA's. But Sellita movement can surely fits the watchcase, dial, hands that were designed and make for ETA movements. However, it's still not the best solution to the ex-pact merchandisers' point of view.

Can Sea-gull be good enough as a reliable substitute of ETA or Sellita blank movements? Ask the members here. Read the posts reporting problems with the Asian clones.

Can Chinese make good enough movements that are of equal quality/durability to their Swiss counterparts? Maybe yes, but it'll surely take another decade or two.

Yes, they can, and they have already proven this. The Seagull ST-19 that is used in many reps is built tough, smooth operating, and even in a rep, comes from the factory pretty clean and lubed. As far as their ETA clone movements, I think the real problem is with their QC and finishing (except for the A7750 seconds at 6, which is poorly put together from the start). QC and finishing is where a lot of the extra cost comes in with the Swiss made gens. As said before, the Swiss get paid higher wages and have better facilities to work in and that reflects in the final product. Knowing that the Chinese ETA clone movements are destined to be used in rep watches, they will get no real QC, if it is running at assembly, in and off it goes. Some rep makers do real well in basic QC with fit and finish, and even mechanical quality, but many don't bother for the most part since they are "for novelty purposes only".

It has been proven that the Swiss are not the only watchsmiths of the world, China and Japan have proven their abilities every time. We just need to remember that there is a difference between something made for the high end main stream market and what gets slapped together in GZ that we see in this end of the watch hobby.

Cheers

[krpster]

By cutting off supply of ebauches, it'll cut a lot of small brands (whether truly really Swiss or not) that are not belong to the group out of the loop, thus increases sales to Swatch group owned brands.

That's the big assumption that I cannot agree with. By pulling the supply of ebauches the smaller companies will just go elsewhere, such as the afore mentioned Sellita or Seagull (in fact this is already being done by some companies such as Invicta). Hence the "small guy" watch company goes no where and continues to sell watches....I'm betting at close to the same volume. So in the end Swatch loses the revenue on the sale of ebauches and fails to increase market share. Sounds like a lose-lose to me. Perhaps they have some top secret market data that says otherwise.

[FxrAndy]

We just need to remember that there is a difference between something made for the high end main stream market and what gets slapped together in GZ that we see in this end of the watch hobby.

Cheers

A very valid point, i do a lot of work with asian 6497/8s and with uniats Swiss variants, and direct from the official factory supplier the Asian works are just as good and just as well serviced as the swiss that may have sat on a shelf for a couple of years. I see no reason to look down my nose at the official Asian movements.