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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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