TAG - Powered by Seiko

[FuzzyB]

I wandered over to the DWF since it is a slow day here, and there is a great thread about TAG now sourcing parts from Seiko. Link to Thread.

The Reuters article, reproduced below, can be found here.

Make sure to read through to the final lines.

Tag Heuer says Seiko parts won't harm "Swiss made"

*Tag Heuer to use Seiko parts as Swatch cuts deliveries

* Parliament votes to toughen "Swiss Made" rules

* Brands investing in production, workers

By Caroline Copley and Nathalie Olof-Ors

ZURICH, March 21 (Reuters) - Watchmaker Tag Heuer, squeezed by a cut in supplies from Swiss rival Swatch, said on Wednesday sourcing parts from Japanese peer Seiko will not tarnish its prized "Swiss made" tag.

The move by Swatch, for decades the main supplier to the Swiss industry, has sent watch companies scrambling to build in-house production or form alliances with alternative makers of movements, dials and cases.

Swatch has said repeatedly it wants to concentrate on its own brands and encourage rivals to build their own production capacity.

Tag Heuer, a unit of French luxury group LVMH said a deal it announced on Wednesday to use parts from Seiko Instruments Inc. would not hurt its "Swiss made" image as the company is a member of the Swiss Chronometry Society.

"We are the first company to announce in a transparent way that we are going to fit our movements with parts from Seiko, which are known as among the best," Ch ief Executive Jean-Christophe Babin told Reuters.

"The Swiss brand guarantees quality and reliability but not necessarily the fact that 100 percent of the components come from Switzerland," he said, adding no-one worries that Switzerland imports millions of cases and dials.

The Seiko components will be used in Tag Heuer's Calibre 1887 mechanical chronograph.

"This seems like a good thing. Given the need for an alternative supplier, of course competitors will highlight that Seiko is Japanese even if the parts and movements are made in Switzerland," Kepler analyst Jon Cox said.

But Cox said the reduction in supply would benefit Swatch's margin as it will be able to charge what it likes for its components, while rivals are forced to invest in production.

The Swiss parliament is currently debating whether to tighten rules on what constitutes a "Swiss made" product, in a bid to stop competitors knocking off poorer imitations which dent the country's reputation for quality.

BLESSING OR CURSE?

The Federation of the Swiss Watch Industry backs more stringent rules, saying they will help protect jobs.

But smaller manufacturers, most at threat from Swatch's cuts, argue this could be another nail in the coffin.

Many Swiss exporters hurt by the surge in the Swiss franc are moving production abroad. But the watch industry - Switzerland's third most important export sector - is tied to keeping production in the country.

The lower house of parliament last week proposed at least 60 percent of a watch's value should be produced in Switzerland, up from a current law that requires 50 percent of movements to be manufactured domestically. The motion must still be passed by the upper house.

Tag Heuer, which has forecast sales of 1 billion Swiss francs this year, is building a new production site to create an extra 100 jobs, while Swatch wants to create at least 500 jobs in Switzerland this year.

With unemployment around a low 3 percent, watch makers are turning to nimble-fingered hairdressers and manicurists as they look for staff.

[BrandonS]

Might make 'em better.

[FuzzyB]

The Seiko parts or assembly by nimble-fingered hairdressers?

So if the movements are Japanese and Switzerland imports millions of cases and dials, where does the Swiss component come in? I'd love to see them signing the hands "Swiss Made" instead of the dial since that seems to be the only part that might not be imported.

[BrandonS]

Funny thing is that this is the logical progression.
It has already been noted (at times ominously) that many, many Swiss "manufactures" have parts made overseas (read "China") and import them. So, why not have Seiko do them!?!

Seiko makes $40 watches, and $20,000 watches. They can match and surpass the required quality needs of TAG. It's all a matter of perception, methinks.

[kurt48]

Absolutely, and Switzerland is no longer what Switzerland was ......... The whole consumer product world profile has changed.

[FuzzyB]

Agreed. I'd love to see what would happen if Seiko would sell some of the Grand Seiko movements to other companies.

What I'd like to happen is the removal of "Swiss Made" from the dial, or at least an honest disclosure of the parts' sources if they insist on keeping that nomenclature. I really don't care where my watches are made, but it does irk me when a label is used in a misleading manner.

[TylerEOT]

...is making parts in Switzerland. They probably get special visa dispensation to even bring in their own watchmakers to do it.

[russell]

Ok, I will.

So, first and foremost, huge props to TAG for transparency. Every bad thing I've ever said about TAG I now, officially, regret and retract. This might be one of the ballsiest and most honest things I've seen happen in the watch industry, ever. Good for them. I am now saving to buy my first TAG.

Second, I can't wait for the bias and prejudice to ooze out, and it will, at least it always has in the past, when it comes comparisons about the innate superiority of European products compared to Asian ones.

Third, I very much other companies will follow TAG's lead (I know the vast majority will not) and disclose more about their supply chain. The informed buyer can always make a better decision than one how is guessing, which is what most of us have to do with just about everything in the watch world. "Made in Switzerland" is one of the biggest lies in consumer products.

Sparky wrote,
"It's all a matter of perception, methinks."
And as he frequently does, his the bullseye. In this business, perception is everything. So the most jealously guarded secrets are the ones that might even slightly tarnish that perception. Part of that is ubiquitous and reasonable, but it's gotten to the point where the buyers really know nothing about the product other than where the home office is. German mainspring, Asian case, Asian crystal, French hairspring...it's all in a "Swiss" watch (or a German watch or a...you get the idea). All we know is "Made in Switzerland". "It Takes A Year To Build A Rolex" Robots don't take a year to build a watch. CNC machines aren't cute elves in liederhosen. The watch industry has infantilized their buyers, filling their minds with bright fairy tales to the extent that we aren't even told the tiny, relatively harmless things about these products. And speaking of children's stories, there's one to cover the watch industry, it's Wonka's Chocolate Factory where everything is made in secret and any information that leaks out could potentially sink a centuries old (there's another common lie) brand name. I hope this is the first step in the right direction of disclosure for watch companies. A little reality wouldn't hurt and it would certainly benefit us, the customers, who deserve that knowledge.

(/soapbox)

[BrandonS]

"CNC machines aren't cute elves in liederhosen."... suddenly my world is unmade.

[kurt48]

And well said indeed !