Swatch Group’s ETA Galvanic Department Destroyed by Fire

Swatch Group's ETA Galvanic Department Workshop Fire Damage


by John Sealander  

Will a fire at main ETA workshop in Grenchen, Swizerland
decrease the availability of ETA movements in 2014?

Swatch GroupWhen a fire broke out on Sunday, December 29 and totally destroyed the Galvanic Department at Swatch Group’s ETA factory in Grenchen, Switzerland, the first question on everybody’s mind was whether anybody was hurt. The second question was whether the unexpected fire would result in a decrease in the availability of ETA movements, along with price increases in the year ahead.

Luckily, since the fire started at 9 AM on a Sunday morning, the Galvanic Department workshops were unoccupied at the time and nobody was hurt. The jury is still out however on whether the devastating fire will have a lasting impact on the production of the popular ETA watch movements. A trend towards consolidation in the Swiss watch industry in recent years has meant that many manufacturers have stopped building their own movements and rely on components made by the Swatch Group’s ETA division instead.

Since galvanic plating is an essential part of the manufacturing process for many popular movements, the Grenchen fire could have an enormous impact on the manufacture of Swiss watches. Not only does ETA supply the movements for Swatch watch brands like Longines, Omega, Tissot, and Breguet, it also supplies essential component parts for many other manufacturers as well.

Watch Industry Shakeup?

Since the Swatch Group has already decided to cut back and eventually end the sale of component parts like hairsprings, balance wheels, anchors and anchor wheels to their competitors, any further reductions due to the fire could be devastating. Weko, the Swiss competition authority, has already agreed to let the Swatch Group continue it’s gradual reduction in the delivery of finished movements, beginning with another 10 percent reduction in finished movement deliveries in 2014. This decreasing availability of parts has already had an impact on some manufactures who are still looking for other sourcing alternatives.

Swatch Group CEO Nick Hayek Addresses the Media Outside the Damaged Workshop Skeptics and industry pundits are already speculating about whether the Grenchen fire will give Swatch the excuse it has been looking for to accelerate its plans to end the sale of component parts to competing watchmakers.

If the Grenchen fire does have a lasting impact on ETA’s manufacturing capabilities, a further reduction in component sales to competitors might be inevitable. If, in the near term, ETA is only able to manufacture enough movements for its own use, other manufacturers who depend on ETA components are sure to suffer.

This loss for Swatch Group comes right on the heels of the company’s victory in its lawsuit against Tiffany, which now must pay Swatch Group $450M in damages. Nobody really knows what will happen yet, but this devastating holiday fire has implications for the entire watch industry.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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Tiffany Forced to Pay Millions to Swatch Group

Tiffany Watches


by John Sealander  

How Swatch Group and Tiffany & Company turned a “perfect”
partnership into one of the watch industry’s most bitter disputes.

When the powerful Swatch Group and luxury retailer Tiffany and Company agreed to join forces to produce Tiffany and Company branded timepieces in 2007, almost everybody thought that the relationship was a win-win situation for both parties. The Swatch Group was the world’s largest watch manufacturer, bringing us many of the most widely recognized high-end brands like Breguet, Blancpain, Harry Winston, Glashütte Original, Omega, Longines, and Rado. Tiffany and Company was one of the world’s most prestigious jewelry manufacturers and retailers. Together, it was expected that these two industry giants could dominate the all-important “jewelry watch” segment of the industry.

What actually happened was a surprise to everyone. When the Swatch Group debuted it’s first Tiffany and Company watch collection at Baselworld in 2009, Tiffany insiders were extremely disappointed. They felt that the collection wasn’t up to Tiffany’s high standards and were reluctant to sell the watches in their stores. Obviously, the Swatch Group didn’t agree. As the world’s leading watch manufacturer, they felt the new collection was exactly what Tiffany and Company needed to succeed.

The Fall of a Potentially Great Partnership

As the strategic alliance between Tiffany & Company and the Swatch Group began to deteriorate, it became apparent that Swatch did not want Tiffany watches to directly compete with its existing luxury watch brands. By designing Tiffany & Company branded timepieces to fit in a distinct market segment that was somewhere in between ultra luxury brands like Harry Winston and Breguet and mainstream high-end brands like Omega and Longines, Swatch believed it was maximizing selling opportunities without cannibalizing any of their existing brands.

Tiffany and Company simply felt that the Swatch designed watches were not as elegant and classy as they should have been and refused to promote them. Relations between the two companies went downhill from there when the Swatch Group filed suit against Tiffany and Company and Tiffany counter-sued. Each party claimed a range of contractual breaches that stemmed from Tiffany and Company’s allegations that Swatch had provided than with an inferior product and Swatch’s claim that by refusing to promote the watches, Tiffany had made it impossible for the Swatch Group to sell them.

After years of legal battles and binding arbitration, the powerful Swatch Group prevailed, winning an unprecedented $450 million dollar judgment against Tiffany and Company for breach of contract. This was only a small fraction of the 3.8 billion in Swiss Francs that the Swatch Group initially wanted in damages. The counter-suit filed by Tiffany and Company went nowhere and was eventually completely dismissed by the arbitration court in the Netherlands.

Lessons Learned

Even though the record $450 million dollar judgment was more money than Tiffany made during the entire prior year, the company will survive. Tiffany learned an expensive but very valuable lesson during this experience. If they want to make watches that live up to their own high standards, they’d better do it themselves. The Swatch Group apparently learned its own lessons as well. The company never abandoned its desire to become a major player in the jewelry watch segment and when the opportunity arose, it simply bought Tiffany competitor Harry Winston outright instead of attempting another partnership.

Now that this monumental dispute is finally over, there is a lesson that companies in every industry need to learn: when powerful companies join forces, there is always a danger in having shared decision-making power.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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The Importance of Mobile Commerce for Retailers

Shopping on a Smartphone


by Bonnie McEwan  

Retail is Going Mobile

The latest trend in retailing is m-commerce, in which the ‘m’ stands for mobile. Increasingly, customers are making purchases directly from smart phones. According to Forrester Research, retail sales made on smart phones reached $8 billion in 2012, comprising 3% of total e-commerce sales. For 2013, Forrester predicts that smart phone sales will rise to $12 billion (5% of total e-commerce) and in 2014 $17 billion (6% of total e-commerce). By 2017, m-commerce is expected to account for $31 billion, about 9% of the entire e-commerce market.

Why is Mobile Going Global?

These m-commerce customers told the survey firm comScore that they buy with their smart phones for a variety of reasons. The top four were:

  • On-the-go convenience, cited by 63% of respondents
  • To get special offers and coupons — 52% of respondents
  • Ease of comparing prices to find best deal — 48% of respondents
  • Product was not found in a brick and mortar store — 41% of resondents

What Retailers Can Do About It

This preference for m-commerce has some significant implications for retailers:

  1. You must be sure that your website — in this situation, referred to as a mobile site — is optimized for the small screen, whose average size is about 2.5 x 3 inches.
  2. You should also offer free ‘apps’ — short for applications — for all the major smart phone operating systems. [An app is a small piece of software that is downloaded to a mobile device to facilitate online activities.] Pay special attention to developing a good app for Apple’s iOS, since iPhone owners do substantially more mobile shopping than owners of other brands.
  3. You may also want to investigate selling watches and other products via a virtual store within one or both of the two most heavily trafficked m-commerce sites, eBay and Amazon. Consider this: eBay receives 6,400 unique monthly visitors, each of whom visits the site an average of 7.5 times for an average of 10 minutes per visit. Amazon is close behind, with 5,824 unique monthly visitors, each of whom visits an average of 5.6 times per month and remains on the site for about10 minutes. Some major retailers sell on these sites, including Target on Amazon and Brookstone on eBay.
  4. If you sell retail from temporary locations, such as outdoor kiosks, pop-up stores or Christmas village shops, there are m-commerce products for your smart phone that make selling more convenient. For example, a company called Square makes a small device that attaches to your smart phone and enables it to take credit cards. There’s no need for card machines or electrical access. Just slide the customer’s card through the Square device. It will record the sale, send an electronic receipt to the customer’s phone and that’s it.


An interesting mobile development for watch retailers is the budding popularity of smart watches, which are predicted to be big for 2013 holiday gift-giving. Several brands are already on the market, although there aren’t many apps available at this point. You can read all about the new smart watches at SmartWatchNews.org, and perhaps be one of the first retailers to create an app for these novel devices. (Very Dick Tracy.)

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

US Postal Service and Amazon Team Up to Inaugurate Sunday Deliveries

Amazon Delivery


by John Sealander  

Amazon Makes Two-Day Deliveries a 24/7 Promise

AmazonFor the first time ever, the world’s largest Internet retailer will now be delivering orders on Sunday. In an unprecedented partnership with the US Postal Service, Amazon.com has started offering its online customers Sunday deliveries in select US markets. The new Sunday delivery service has already arrived in New York and Los Angeles, and Amazon plans to expand it to a large portion of the US population in 2014, including Dallas, Houston, New Orleans and Phoenix.

Members of Amazon’s popular Prime Service will pay nothing extra for this new delivery option. They can now buy products on Friday and get Sunday delivery for free. Non-Prime members can also take advantage of free Sunday delivery on orders of at least $35.

Saving the US Postal Service?

This innovative partnership with Amazon is a welcome new source of revenue for the financially struggling US Postal Service. The fastest growing segment of our business is the package business,” Postmaster General Patrick Donahoe said. “The future of package delivery is a seven-day-a-week schedule. We’ve got the capacity to do it.”

Could private companies like Amazon help the US Postal Service become profitable again? It’s entirely possible. The postal service already expects to deliver 420 million packages this holiday season. This represents a 12% increase over last year, and the new partnership with Amazon could significantly increase these numbers.

Amazon Getting Even Quicker

Amazon is committed to service. It has been spending billions of dollars building new warehouses around the world so it can deliver products more quickly. By offering seven-day-a-week deliveries, they can keep these sophisticated warehouses working for customers on a 24/7 basis, becoming even more productive in the process.

“The three big pieces of growth for us are selection, lower prices and speed,” says Dave Clark, Vice President of worldwide operations and customer service for Amazon “Adding an additional day to our delivery schedule is all about speed. Now, an Amazon customer can order a backpack and a Kindle for their child on Friday and be packing it up on Sunday for school on Monday.”

Sunday deliveries will benefit Amazon, the US Postal Service and customers everywhere. It is a win-win for everybody and you can only wonder why nobody thought of this before.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

Swiss Citizens to Vote on Limiting Executive Pay

Five Cent Coins Airborne in Front of the Federal Palace, Bern Switzerland During an Event for Pay Equality


by John Sealander  

Will Switzerland Remain the World’s Watch Capital
If it Can No Longer Attract Top Executives?

The Social Democratic Party of Switzerland has collected more than 100,000 signatures in support of a referendum to limit Swiss executive salaries to 12 times those of a company’s lowest-paid employee. This would mean that nobody in a corporation could earn more per month than the lowest paid employee makes in a year.

According to Swiss law, this referendum can now be put to a vote of the Swiss people. Other European countries have already made attempts to limit corporate compensation, but the new Swiss initiative, if approved by voters, would institute more sweeping compensation changes than those seen to date in the European Union.

Swiss Companies are Far Away from 1 to 12


Harmful Side Effects?

Thomas Daum, director of the Swiss Employers’ Association, worries that these new rules, if enacted, would do serious damage to Switzerland’s attractiveness as a location to do business and could harm the country’s competitiveness by making it difficult for companies to attract top talent. “Interference like this would be very dangerous for the future success of Switzerland,” said Daum. “It should be up to companies and employers to design their own wage structure.”

A poll taken earlier this month by Isopublic showed 49.5% of respondents were in favor of the new initiative to limit executive pay. Top salaries at the largest Swiss companies were approximately 93 times those of the lowest-paid workers in 2011, and this growing wage gap angers many voters. There’s another side to this coin, however. One of the reasons for the resurgence of Switzerland as a global manufacturing center has been the ability of Swiss industry to attract the top talent from around the world with competitive salaries.

Effect on the Watch Industry

Switzerland currently has a well-deserved reputation as the watch capital of the world, with many of the industry’s most prestigious brands headquartered in the country. If salaries were capped, many of these companies would lose the ability to attract and retain the top-tier talent that allowed them to achieve their success.

This is a serious concern to Swiss Economics Minister Johann Schneider-Ammann, since some Swiss companies are already moving factories and manufacturing facilities offshore to control costs. “If salaries were fixed, Switzerland would lose a very successful model of setting salaries.” Says Mr. Schneider-Ammann. “Pay negotiations between unions and management, a traditional Swiss practice is preferable to government involvement in the process,” he adds.

In a global economy, any industry is free to locate wherever it feels is the most advantageous to their business model. For many years Switzerland has been a very desirable location for the watch industry. This could change quickly though if top Swiss watch companies lost the ability to attract and retain key executives. Some of these companies might decide that to stay competitive, it might be better to move their entire operation somewhere else. If the company leaves, so do the jobs for workers that the company employs. Swiss voters will soon have to decide if limiting executive pay might be limiting their own employment opportunities as well

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

In Memoriam: Paul Reichmann

Paul Reichmann Showing Former Canadian Prime Minister Brian Mulroney a Model of Canary Wharf in London


by Adrian Herscovici  

Philanthropist and real-estate industrialist, Paul Reichmann passed away on October 25, 2013. He was 83 years old.

Reichmann will be remembered as one of the greatest land developers in history – a man who transformed the skylines of Toronto, New York and London in a series of legendary and well-documented ventures.

His preoccupation with commercial real estate was rivaled only by his spiritual convictions; in fact, it was his achievements in Talmudic studies and family life that he was most proud. As a young man teaching Talmud in North Africa, Reichmann steered his students towards intellectual rather than commercial pursuits. However, in his own life, an unquenchable calling in the world of commerce would come to dominate his adulthood.

Paul ReichmannReichmann was tall and soft-spoken. He dressed as modestly as he lived, in combinations of dark suits and ties with white shirts. Beneath his unpretentious exterior he was a master negotiator and financier, with exceptional business acumen and seemingly limitless gumption and tenacity.

Amassing immense wealth was never Reichmann’s end goal – it was a byproduct of his passion for his work. In fact, the Reichmann family actively shed wealth, year upon year, as large-scale donors, giving generously in the tens of millions to both non-denominational and Jewish medical facilities, as well as yeshivas and schools. Even though the family was, at its apex, one of the wealthiest in the world, Reichmann never moved from his upper-middle-class home in Toronto.

Reichmann’s business life was undeniably busy; even still, he prioritized time at home on the Jewish Sabbath and holidays, joining his wife Lea and their five children for temple services. This respect for religion extended to the family firm, Olympia & York Developments Ltd. (O&Y). The company closed its construction sites on the Jewish Sabbath, paid overtime for Sunday labor and for working on Jewish and Christian holidays.

Building an Empire

Reichmann was born in Vienna, Austria on September 27, 1930, the fifth of six children. His parents were orthodox Jews who, after uprooting twice – the first time to escape Nazi occupation and, the second time, to escape anti-Jewish persecution as a result of the Arab-Israeli War in 1956 – moved the family to their new home in North York, Toronto.

The Reichmann Brothers, Paul, Albert and Ralph

Paul, his father Samuel, and brothers Albert and Ralph started Olympia Tile in Toronto that same year, renaming it Olympia & York in 1958 when the company expanded into local real-estate development.

Olympia & York built nearly 100 buildings in Toronto over its first 15 years, the jewel of which was First Canadian Place. After winning the contract, it took O&Y three years of lobbying to iron out the deal. First Canadian Place was named after Canada’s first bank – the Bank of Montreal – and still houses the bank’s head office. Clad in white marble, First Canadian Place was the tallest bank tower in the world when it was completed in 1975.

Reichmann, who by this time was the business’s chief decision-maker, showed his audacious spirit on an epic scale when, in 1977, he won his firm the contract to develop a desolate site at New York’s Battery Park. The risk was enormous, but, in the end, the four mammoth towers that comprised the new World Financial Center effectively led to the relocation of the city’s financial district.

At their peak, the Reichmann family held about eight percent of New York’s commercial office space, more than twice as much as their closest rival, the Rockefellers. Their company, O&Y, was the world’s largest private real-estate company and they were the seventh wealthiest family in the world.

Canary Wharf

Then came the infamous Canary Wharf. In the 1980s, Reichmann won the rights to develop a dilapidated remote area in east London known as the Isle of Dogs, later renamed Canary Wharf. Like the Battery Park site in Manhattan, Canary Wharf was a huge gamble.

Two principal factors conspired against the Canary Wharf development project: the cyclical nature of real estate and a handshake deal with then British prime minister, Margaret Thatcher, who had promised O&Y that the city’s subway would be extended to the remote area in time for its completion. When the Canary Wharf site was completed in the early 1990s, Britain was in a recession and the subway was nowhere near completed. The office space at Canary Wharf remained empty, and O&Y was forced into bankruptcy in 1992.

Reichmann’s timing may have been off, but proof that his instincts were correct actualized years later. The subway extension was completed in 2000 and Canary Wharf became so popular that several more buildings were later added around the 50-story centerpiece building known as One Canada Square; and, as Reichmann envisioned, London’s financial district eventually relocated.

As a result of the bankruptcy the Reichmann family lost most of its wealth. Reichmann was humble enough to recognize his over-confidence and went about rebuilding the family fortune. It was not long before the family’s new company – Olympia & York Properties Corporation – was valued in the multibillions, which included a large stake in Canary Wharf. Reichmann retired in 2005.

Paul Reichmann took huge risks in his professional life. He thrived on finding a way to succeed where others had failed, or were too timid to venture. As a result, he reaped enormous rewards and suffered great losses. When he was up, he sought to climb higher; when he was down, he got up and began again.

Samuel Friedmann, owner and president of Gevril Group, is the brother-in-law of the late David Reichmann, a nephew of Paul Reichmann.

“Paul Reichmann was an extraordinary man and an inspiration to me and many, many others. His foresight into how the world’s financial capitals would develop, both at home and abroad, was uncanny. He was generous and authentic, and we will not soon see his like again. He will be dearly missed.” – Samuel Friedmann

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

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