Editorial: A Level Playing Field, Swiss Made Vs. Made In The USA, And Thoughts On How Much It Really Matters

As we all probably have noticed by now, a recent FTC determination directed Detroit-based Shinola to change the language of some of its marketing materials, labeling, and product design to remove or alter those aspects of their work which might give the impression that their products were Made In The USA when they were not. A larger issue for watch enthusiasts, however, was raised as well: how does Made In The USA stack up against Swiss Made, and is the Made In The USA requirement unfairly restrictive – indeed, does it tend to stifle the nascent watchmaking industry in the United States?

According to the Federation of the Swiss Watch Industry FH, a watch is Swiss Made if it meets three criteria: a Swiss movement; final assembly and casing in Switzerland; and final inspection in Switzerland.  For a movement to be Swiss, it must be assembled in Switzerland, and 60% of its total value has to derive from parts made in Switzerland (exclusive of manufacturing costs).  As of January 1, 2017, a revision to "Swiss Made" goes into effect which stipulates that at least 60% of the total production cost of manufactured goods, including watches, must originate in Switzerland.  Tightening of "Swiss Made" regulations for watches to even more strict requirements has long been supported by the Federation but many manufacturers in lower price segments – where, typically, far more components are source from non-Swiss factories – have argued against it.  One of the most outspoken has been Ronnie Bernheim, co-owner of Mondaine, who has argued that "Swissness" should be "more a promise than a physical manifestation."  While this may sound like industry doublespeak, Bernheim's substantive point is that in forcing lower priced Swiss brands to adhere to stricter requirements, brands like Rolex (which already easily meets the criteria) benefit, at the cost of competitiveness for lower end brands.

In a 2011 interview with Bloomberg, Bernheim said, ""This law would be cutting the industry into two . . . the volume business will be killed, except for the big companies. Our foreign competitors are laughing."

"Swiss Made," the argument goes, is worth protecting, as Swiss origin is considered value added by consumers (and, as Reuters reported, the industry cites university studies showing that the label can "double the price of a luxury watch") .  Even in Switzerland, there are those who say the Swiss Made label has been so badly abused that it's meaningless to consumers.  A very vocal critic is Claudio D’Amore, founder of the Goldgena Project, which aims to make watches with total transparency about the origin of their components ("we'll reveal everything about prices and origin" their website promises) at a far lower price point for their quality than comparable "Swiss Made" watches; in an interview with Bloomberg this May, D'Amore characterized Swiss Made as "a joke."

By contrast, "Made in USA" which is administered by the Federal Trade Commission, is extremely restrictive, and much less complex than the "Swiss Made" label.  For a product to be Made in USA, "all or virtually all" of the product has to be made in the USA.  Furthermore, the FTC stipulates that you can't "imply" Made in USA status for a product either, which makes things even more difficult.  Watchmaking in Switzerland is an industry that relies extensively on a complicated supply chain, and historically, a watch made in Switzerland has relied on specialist suppliers for everything from balance springs to jewels to cases, dials, and bracelets.  The same is true for would-be "Made in USA" watchmakers, but with the much more restrictive definition, Made in USA looks almost unrealistically impossible to achieve, relative to "Swiss Made."

The problems this creates for would-be Made in USA watch manufacturers are considerable and leaves them badly disadvantaged with respect to their Swiss counterparts – at least when it comes to country of origin claims.  But the bigger question for American watch brands – which includes everything from small business like Lancaster, PA-based RGM, to behemoths like the Texas-based Fossil Group – is whether or not Made in USA is even worth pursuing.  In the US market it may well be, but globally, Made in USA would have to compete with Swiss Made, which is well established in the minds of consumers as value added when it comes to watches.  

The whole situation is inescapably reminiscent of "in-house" as a value add for consumers – Made in USA, certainly, is something to be proud of, if true, but in pursuing it, both consumers and manufacturers may be distracting themselves with something that provokes strong feelings, generates a great detail of debate – but which, at least taken in isolation, tells you very little about the actual quality of a watch.