ébauches

HISTORY OF ETAWatch aficionados know ETA asSwitzerland’s most important manufacturerof mechanical and electronicwatch movements. A subsidiary ofSwitzerland’s giant Swatch Group, ETA producesmovements, movement blanks (widelyreferred to by their French name, ébauches,which are sold to outside assemblers), as wellas the group’s Swatch watches. Few people,however, know ETA’s turbulent history. Thecompany now known as ETA was born in thecrisis of the Great Depression, carved out of theEterna watch company to participate in a cartelof ébauches manufacturers known as EbauchesSA. ETA has survived, and to a great extentshaped, the often turbulent times that besetthe Swiss watch industry in the 20th century.The Ebauches/ETA story begins after WorldWar I, when, after years of profitable munitionsmanufacturing, Swiss watchmakers resumedmaking watch components. The suddensurge in ébauche production soon outpaceddemand. A regulating institution, SociétéSuisse des Fabriques d’Ebauches et deFinissages (Swiss Association of Ebauche Producersand Finishers), founded in 1917, coulddo little to prevent the descending spiral inprices and sales. By mid-1921, Swiss watch unemploymentfigures exceeded 30,000.The problem was that some 40 ébauchesmanufacturers were competing to win contractsfrom slightly more than 500 companiesthat assembled complete watches. With supplyoutstripping demand, surplus componentswere exported to foreign countries. That createdmore competition for Swiss watches onworld markets, and led to further job cutbacksin Switzerland. It was a vicious circle, in somecases aggravated by the banks in the Swisswatchmaking regions. Some bankers wereoverly generous in extending credit; by themid-1920s watch industry debts totaled approximately200 million Swiss francs.Watch and banking industry leaders realizedthat only a fundamental reorganizationcould put the watch industry back on its feet. Afirst step occurred in 1924 with the creation ofthe Fédération Horlogère Suisse (Swiss WatchFederation), or FH. The new association unitedabout 75 percent of Switzerland’s watch firmsAdolf Schild-Hugi founded the A. Schild SA (ASSA) ébauches manufacturing business in Grenchenin 1896. This brochure, printed around 1900, included photographs of the company’s building andits first watch movements.(both manufacturers and assemblers, knownas établisseurs).Another important step came on December27, 1926. On that day Switzerland’s threemovement-blank manufacturing giants —Schild SA (ASSA), Fabrique d’horlogerie deFontainemelon (FHF) and A. Michel SA (AM) —established a corporate trust known asÉbauches SA. Ébauches was the result of a remarkableinitiative by Cesar Schild. Schild wasthe director of the ébauche factory, ASSA,based in Grenchen, and grandson of UrsSchild, who had founded Eterna in Grenchenin 1831. ASSA had been the leading movement-blankmanufacturer in Grenchen sincearound 1905. ASSA employed more than 300people, its manufacturing facilities were highlymechanized, and it produced 5.8 million248 WatchTime December 2006

HISTORY OF ETAwould be possible for some (and, in the bestcase, all) other ébauche manufacturers tocome aboard under the same framework conditionsin the future.A position of strength: A. Schild SA (ASSA)movement blanks in 1926. ASSA managementcould have been content to continue withbusiness as usual. But not Cesar Schild. He understoodthe need for urgent action. He set outto create a cartel for ébauches producers thatwould stop the price slide that was killing theSwiss watch industry.Schild met with executives at FHF. A familybusiness since its founding in 1793, FHF hadbroken the one-million-unit barrier in 1913and had continued to increase production eversince, despite the fact that FHF’s production facilitiesneeded modernization. The two competitorslaid their cards on the table and openlyshared their sales figures and closely guardedbusiness secrets. Both companies were financiallyhealthy; neither was under any compulsionto merge with the other. From this positionof mutual strength, the two entered intonegotiations with the ailing A. Michel SA. Atthe time, AM was under the influence of alarge bank that was exerting strong pressureon it in an effort to recoup the capital that ithad invested in the firm.The ASSA-FHF-AM trio controlled about 80percent of Switzerland’s ébauche production.ASSA, however, was the most powerful. It wasworth twice as much as FHF and three times asmuch as AM. The founding fathers wanted tocreate a conglomerate that would control thespectrum of production and the prices that itsmember firms charged for their products. Aconventional merger into a unified businesswith hierarchical structures was out of thequestion; all three firms wanted to maintainthe existing structure of the companies out ofloyalty to their founders.They opted for an alternative solution: toestablish a corporate trust as a holding companyfor the three firms. The corporate trustwould own the shares of the three foundingcompanies, but would not interfere with eachcompany’s individual entrepreneurial freedomto act as its directors saw fit. The special situationof A. Michel SA and the generally difficultconditions on the watch market as a wholebrought additional banks into the game. Animpartial trustee company took care of all assetsbelonging to the three companies, includingreal estate, movables, machinery, tools, facilitiesand stock. In all of the negotiations, theinvolved parties took pains to ensure that itMerger ManiaÉbauches SA started operations on January 1,1927. It had at its disposal company capital valuedat 12 million Swiss francs, with a bank loanfor an equal amount. The group moved quicklyto agree on uniform pricing, eliminatingcompetition among its members, coordinatingthe purchase of materials, and unifying importantcomponents of watch movements so thatall components would be made according tothe same specifications. The three membercompanies agreed to refrain, for a period offive years, from manufacturing and/or tradingébauches in any form whatsoever, both domesticallyand internationally. The result wasan immediate 10 percent increase in the priceof ébauches.It then sought to further strengthen the cartelby integrating as many other ébauche manufacturersas possible and by absorbing theébauche departments of vertically integratedwatch companies. Nine independent factoriesjoined the cartel in 1927, giving Ébauches SAA. Michel SA’s 17-ligne hand-wound Caliber500 (1930s)250 WatchTime December 2006

HISTORY OF ETAcontrol of an impressive 90 percent of Switzerland’soverall production.The stock market crash of 1929 and the ensuingdepression battered Ébauches SA’s salesbut bolstered its ranks. Sales for 1930 fell 50percent compared to the previous year. However,30 additional ébauche manufacturersjoined the group early in 1931.The remaining 10 percent of Switzerland’sébauches were produced by independentwatch companies that, for individual reasonsof their own, were unwilling to join the cartel.One of these was Eterna, directed by TheodorSchild, a relative of ASSA’s Cesar Schild.Theodor Schild was reluctant to split his businessinto separate entities, one to manufactureébauches and one to manufacture watches.Ebauches SA offered renegades like TheodorSchild so-called “friendship contracts,” repletewith all sorts of limiting clauses and conditions,which gave the reluctant firms some forms ofcontrol. The move worked. In 1932, sevencompanies moved into the Ébauches fold, includingEterna. Schild finally agreed to splitEterna into two companies, which he and hisheir apparent, Dr. Rudolf Schild, continued tomanage. The watchmaking part of the businesswas called Eterna SA. The ébauches-manufacturingpart of the business, which becameThe FHF factory in the 1950sThe A. Michel factory in the 1950spart of Ébauches SA, was christened ETA SA,an abbreviation of Eterna.Ironically, Ebauches’s structure made it difficultto respond to the economic crisis. Forward-lookingentrepreneurial steps were urgentlyneeded to deal with the worsening businessclimate. However, such steps were nottaken because the principles of the holdingcompany accorded higher priority to the entrepreneurs’freedom.Instead, the cartel imposed protectionistmeasures “to ensure clear orderliness in theSwiss watch industry.” These steps led to thefounding, in 1931, of a financial and controllingagency known as ASUAG, the AllgemeineSchweizerische Uhrenindustrie AG (GeneralSwiss Watch Industry AG). ASUAG’s primaryguiding function was to create an overarching“super holding” conglomerate that includedthe manufacturers of regulating components(like balances, balance springs and escapements)along with the manufacturers of movementblanks. ASUAG was a joint response bythe Swiss watch industry and the Swiss governmentto the Depression. It was createdthrough an investment of 50 million Swissfrancs, a portion contributed by watch industryorganizations and the rest by a grant from theSwiss federal government.The Swiss government’s participation in theASUAG holding company altered the originalbalance of power within Ebauches SA. Managementregimes led by executives who wereresponsible to themselves and their shareholderswere replaced by new teams led by govern-FHF’s Caliber 60 was a shaped, 6 x 8-lignemovement with no small seconds.252 WatchTime December 2006

HISTORY OF ETASeventeenébauche manufacturerswereunited under theumbrella ofÉbauches SA inthe 1950s.254 WatchTime December 2006

HISTORY OF ETACesar Schild, the “father” of Ebauches SAAutomation and InnovationNevertheless, ETA and Eterna flourished underthe new structure. Under the aegis of RudolfSchild, as early as 1935, ETA and Eterna hadbegun to augment their traditional palette ofhand-wound movements by gradually developinga second mainstay: the self-windingmovement. Schild was well aware of the limitedlifespan of the various calibers with manuallywound mainsprings. He clearly envisioneda day in the not-too-distant future whensuch movements would appeal only topeople with a fondness for traditional craftsmanship.Beginning in 1943, the unequal siblingsEterna and ETA sought to safeguard their futureby establishing the watch industry’s firstteaching workshop. This institution bore fruitin 1948, because the ball-borne self-windingmovement (which had been developed by ETAand which was reserved exclusively for Eterna)required considerably more skill to manufactureand assemble.ETA’s Caliber 2428 (introduced in 1962)ticked at a pace of 21,600 vibrations per hour.The engineers expected this comparativelyspeedy balance to give a significantly more accuraterate to timepieces equipped with it. Forlarge-series production, further improvementsin watches’ rates could only be achieved bymaking balances with much faster frequencies.However, two obstacles stood in the way.First, increased frequency went hand-in-handwith increases in the amount of energy requiredto power the device. Second, increasesin rotational speed and centrifugal force led tosignificant lubrication problems.Despite these obstacles, in 1969 ETA’sbrand-new self-winding Calibers 2722 R and2724 R debuted: each contained a balancethat oscillated at a pace of 28,800 vibrationsper hour. The launch in 1971 of automaticmovements numerically designated 2806 and2826 brought balances that ticked at a pace of36,000 vibrations per hour, but these modelsultimately failed to win widespread popularity.While quartz oscillators were slowly butsurely conquering the terrain of timekeeping,the ébauche giant opted to phase out the36,000-vph models and focus instead on fastpacedmechanical movements with balancesthat oscillated at a frequency of 28,800 vph.This speed seemed to offer the ideal combinationof easier handling, high precision andcomparatively minor technical difficulties.More than seven million of these movementswere produced.That sounds like a large number, but it stillwasn’t comparable to the era’s unchallengedbestsellers, which oscillated at a pace of 21,600vph. Between 1971 and 1980, ETA sold morethan 7.5 million movements in the 7 3 /4-lignefamily of Caliber 2650. More than six millionunits of family 2750 (11 1 /2 lignes) were sold between1969 and 1982. And roughly 25 millionunits of movements in the 11 1 /2-ligne family2776 were sold between 1971 and 1982.Independent of the frequency of their balances,these and other self-winding calibersfrom the house of ETA formed the basis ofCalibers 2824 and 2892, which would findtheir way into the cases of numerousself-winding wristwatches. Each of them had256 WatchTime December 2006

Ébauches SA’s founding trio controlled about 80 percent of Switzerland’s ébauche production.All three firms maintained their existing structure rather than merging into a unified business.a ball-borne rotor and an optimal click-wheelreverser to polarize the rotor’s motions.In 1965, ETA invested heavily in automationwith the goal of increasing the efficiency ofproduction. The following year, the firm producedabout 4.2 million self-winding movements.ETA made about 18 million pieces inCaliber group 2750/2770 between 1969 and1976. An especially successful item in this serieswas a self-winding caliber for men’s watchesthat debuted in 1968 and included a rapidadjustmentoption to reset its date and weekdaydisplays. Felsa — the family-run,Grenchen-based ébauche manufacturer —was taken under the wing of ETA in 1969. Felsais remembered today as the source of the“Bidynator,” which was launched in 1942 andboasted the first bidirectionally winding rotorASUAG advertised a broad assortment of products in the 1980s, as seen in this ad excerpt.December 2006 WatchTime 257

HISTORY OF ETAThe so-called “Watch Statute” of 1934 suppressed healthycompetition, and remained in force until the early 1970s.mechanism for men’s wristwatches. At thesame time, ETA achieved another milestone,when it automated the process used to drive injeweled bearings.In 1971, after 39 years in the service of theébauche factory, Rudolf Schild (alias “Mr.ETA”) retired from the business. Since his firstday with the firm, Schild had held its tiller firmlyin hand and skillfully piloted the ship throughboth stormy and tranquil seas.One of his most trusted mates was a watchtechnician named Heinrich Stamm, who beganhis career in 1925 as a design engineer atA. Michel before joining ETA’s crew in 1939.Stamm served as ETA’s head design engineerfrom 1943 to 1969. His inventions of the ballbornerotor and extremely slim self-windingmovements significantly contributed to thestrong position that ETA enjoyed on the market.Another high point in Stamm’s life work isthe distinctive ETA toothing, which was introducedsimultaneously with the Eterna-Matic in1948. This special toothing was used in all ETAcalibers starting in 1951. According to HeinrichStamm, about 40 million watch movementshad been manufactured with this kind oftoothing by the end of 1967.Another CrisisSoon ETA became caught up in yet anotherSwiss watch industry crisis brought on by thearrival in 1970 of quartz watches. After WorldWar II, Switzerland enjoyed an unprecedentedwatch boom. But whenever success comes tooeasily, complacency sets in. Though the firstdark clouds of the looming quartz crisis gatheredin the Far Eastern skies in the early 1960s,the self-satisfied Swiss manufacturers didn’ttake notice. Those clouds eventually massedUnder one roof: the factory buildings of Eterna AG and ETA AG258 WatchTime December 2006

ETA proudly showed new machinery in the 1960s that enabled a single artisan to simultaneouslyperform several steps in the work process.into a gigantic storm which, exacerbated bythe shockwaves of the oil crisis of the 1970s,came crashing down upon the Swiss watchmakingbusiness. Extensive parts of the industrydied out because they had scarcely anythingof their own to offer that could keepabreast with the new trends. The traditional(and, for many years, quite profitable) focus onhand-wound and self-winding movementshad blinded the Swiss and lulled them intooverlooking the new technology. Thousands ofwatchmakers lost their jobs or switched to employmentin the micromechanical and microelectronicindustries. In towns that had oncethrived with watchmaking activity, streets werenow filled with vacant, unlit factories with dirtcoveredwindows.ETA felt the dire consequences of the ongoingprogress in quartz technology, further exacerbatedby a global recession, in 1976.Thanks to an intramural educational program,ETA’s workers and employees were speedily retrainedso that they could manufacture thepromising new quartz watches. That year ETAdebuted its first “Flatline,” a 3.6-mm-slimquartz caliber with a date display and a sweepseconds hand for men’s watches.On January 1, 1979, an event finally occurredwhich, considering the difficult marketsituation, should have taken place much earlier.A merger between ETA and ASSA createdthe ETA-AS ébauche manufacturer, which immediatelybegan a rigorous revision of itspalette of calibers. After 83 years, this mergerDecember 2006 WatchTime 259

HISTORY OF ETATicking at 21,600 vph:front and rear views ofCaliber 2428 (1962)Serially manufactured inthe 1960s: front and rearviews of Caliber 2752Further evolved:Caliber 2806Just 1.98 mm thick, includingthe case: the Delirium (withquartz Caliber 999401)One of the first “Flatline”quartz calibers:front and rear views ofCaliber 940111260 WatchTime December 2006

In 1982, the remaining Ébauches subsidiaries were fused to create one overall business calledETA SA — an appropriate name, considering that company’s history of achievement.finally united two former family businessesthat had been founded bybrothers and that had brought worldwiderenown to the city of Grenchen.A commentator in a regional newspapersummed up the situation: “A concentrationof forces will be advantageous,especially at the present time,when ETA has begun manufacturingquartz wristwatches.”The entity that emerged from themerger employed 2,200 people. Itsclients could continue to choose betweenproducts bearing either of thetwo brand names. A few months later,in time for the watch fair in Basel, ETAintroduced the Delirium –– at just 1.98millimeters tall, including its case, theworld’s slimmest quartz wristwatch,with an analog time display. One yearlater, ETA succeeded in further reducingthe overall height to less than onemillimeter –– still a world record forwatch thinness. To celebrate its 125thanniversary in 1981, ETA expanded itsquartz assortment to include two newlines of movements.In 1982, the global economic climateand severe financial difficulties atASUAG led to drastic cuts designed tocreate leaner operating structures. Theremaining Ébauches SA subsidiariesETA and FHF were fused with EEM (theelectronics division in Marin) to createone overall business. That this entitywas named “ETA” comes as no surprise,especially when one considersthe many decades of grand achievementsthat preceded this step. Itsheadquarters remained –– how couldit be otherwise? –– precisely where UrsSchild had laid the cornerstone 125years previously, thus earningGrenchen two enduring nicknames:Eterna City and ETA City. ■ASSA produced six million units of this caliber starting in 1935.December 2006 WatchTime 261