Industry News, January 2017

“Swiss Made” Requirement Changes for 2017

By Aaron Recksiek, CW21

In the United States, 2016 marked a big year for the transparency behind the origin of manufacture in the watch industry. The Federal Trade Commission (FTC) issued letters to many watch brands requiring changes to their hallmarks and marketing materials, some of them having used a version of “Made in the USA” for several years. This sparked some brands to respond by publicly releasing component origin information to satisfy the modern consumer’s demand for transparency. The “Made in the USA” or “American Made” designations remain among the strongest marks of origin in the world. The FTC states that “all or virtually all” of the product, regardless of the industry, be made in the United States to receive the designation. The line that defines “virtually all” is far from clear and is apparently something that is decided on a case-by-case basis. I have spoken with many representatives of US-based watch brands, and they feel like that puts the watch industry in this country at a tremendous disadvantage in comparison to the rest of the industry worldwide.
    swissshieldOn January 1, 2017, the Swiss watch industry will be required to take a step towards strengthening the “Swiss Made” label. The Swiss parliament passed new regulations in 2013 to change the general requirements of products receiving the designation from the current standard of 50% production in Switzerland to minimum requirements of 60% by value. The new requirements will also apply to the entire watch, whereas previously a watch with a mostly Swiss movement and case made in Asia could qualify as “Swiss Made,” if the cost of the movement outweighed the cost of the case components. The Swiss Federal Institute of Intellectual Property, the federal entity in charge of guarding the integrity of the “Swiss Made” label, will spearhead the effort to educate the brands and police the requirements. Of course, there are individual stipulations on products within each industry segment, and the specific changes to the “Swiss Made” watch designations were made with recommendations from the Federation of the Swiss Watch Industry FH.
    In addition to increasing the value of components produced within Switzerland and applying these requirements to the entire watch, the FH recommended tighter requirements not necessarily
associated with the production cost of components. The existing requirements state that the movement must be cased up, and the final inspection of the timepiece must take place in Switzerland. The new requirements add to the existing criteria, but include that all technical development of the watch and watch movement must be carried out in Switzerland. This is aimed squarely at the emerging smartwatch industry, where much of the technical development has taken place in Silicon Valley and other high-tech epicenters.
    Some of the ordinances are being rolled out progressively as to not disrupt too much or put undue financial pressure on some watch brands. For example, the case and certain case components can be excluded from the calculation of manufacturing costs until the end of 2018 if the components were already in stock in Switzerland at the time the new requirements come into effect on January 1, 2017.
    It is important to note that most of several hundred members of the watch federation support these new requirements, especially the most powerful member, The Swatch Group. Their hope is that this will lead to higher consumer confidence in Swiss products and thus strengthen the overall “Swiss Made” brand.

Sources
www.fhs.swiss
www.fhs.swiss/file/8/ordonnance_swiss_made_1971_En.pdf
www.ige.ch/en/indications-of-source/swissness/industry-ordinances/ordinance-on-the-use-of-swiss-for-watches.html

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Aaron Recksiek is an independent watchmaker in Salt Lake City, Utah. He is a graduate of the 2008 WOSTEP class at the Lititz Watch Technicum.

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