BASEL: Mondaine, the maker of Official Swiss Railways watches, may have to shut a two-year-old factory because its timepieces are not Swiss enough.
The future of the Sfr10 million ($10.6 million) plant in Solothurn and its 110 workers would be jeopardised should larger rivals such as Swatch Group succeed in calls for fewer non-Swiss components to be allowed in Swiss-made timepieces, a co-owner of Mondaine, Ronnie Bernheim, said. Mondaine, which has been making watches modelled on the nation's railway-station clocks for 25 years, uses imported dials and cases.
''This law would be cutting the industry into two,'' Mr Bernheim said in Basel. ''The volume business will be killed, except for the big companies. Our foreign competitors are laughing.''
Watches were Switzerland's fastest-growing export last year. The industry has rebuilt itself since teetering on the brink of collapse in the 1970s. To keep its lead as other manufacturers shift to countries such as China in search of cheaper labour, the industry is trying to erect higher barriers to entry, which would make Swiss watches a scarcer luxury.
Since 1971, watchmakers have been allowed to use non-Swiss components for less than 50 per cent of the value of the watch's movement, or motor. The Federation of the Swiss Watch Industry, which includes Swatch Group and its competitor Cie Financiere Richemont, asked the government in 2007 to add higher requirements on the use of Swiss components in the value of the entire timepiece. The government proposed that for industrial products, 60 per cent should come from Switzerland. A final decision may be made next year, said Jean-Daniel Pasche, head of the federation.
Luxury watchmaking is one of the few manufacturing industries that has resisted a full shift of production to Asia. Still, the industry's growth has attracted non-Swiss companies. Tianjin Seagull Watch, a Chinese company, has begun producing complicated watch mechanisms such as tourbillons, which on a Swiss watch can command prices of $US50,000 ($47,400).