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Switzerland-Made Fossil Watches?

by Murat Balci on June 08, 2023

Fossil, a Hong Kong watch industry behemoth, is expanding its watch production in Switzerland.

Even the most knowledgeable watch collectors have never heard of a Swiss movement manufacturer. It’s in Manno, in the canton of Ticino, close to the Italian border and far from the Jura watchmaking sector. STP stands for Swiss Technology Production. It isn’t massive, but it isn’t insignificant: it will produce 100,000 autonomous movements this year. While most people are unaware of STP, they are well aware of its owner, the Fossil Group. Fossil, headquartered in Richardson, Texas, is the world’s fourth-largest watchmaker. (It was incorporated into the S& P 500 index two years ago.) Fossil had $2.2 billion in watch sales in 2012, the most recent year for which numbers are known, sold under 14 various brand names: the main Fossil brand, DKNY, Skagen, Michael Kors, Emporio Armani, and so on. (The brand also offers accessories; total sales for the Fossil Group in 2012 were $2.9 billion.)

Fossil was created in 1984, at the commencement of the fashion-watch boom, and has grown to its current formidable size largely on the strength of fashion watches built in southern China. Fossils is now advancing on a second front: Switzerland. STP, acquired in 2012, is the most recent step in the company’s attempt to expand its portfolio of Swiss-made products, which previously included just the Burberry and Zodiac brands. The Fossil Group currently has Swiss facilities for movement assembly, case-making, design, and prototyping. It also has a large structure in Basel, next to the Baselworld fairgrounds, that holds the headquarters for all of its European operations. Last year, the business introduced a Swiss-made collection under the Fossil name. It intends to expand the Swiss-made badge to other brands, including its new Tory Burch collection. Fossil struck a licensing arrangement with that brand early last year, and the watches are expected to be available by 2016.

 

Why would the king of Asian-made quartz fashion timepieces seek to manufacture watches in Switzerland?

The explanation is straightforward, according to Martin Frey, managing director of Fossil Group Europe. It’s Asia. “When you compare Fossil to other groups like the Swatch Group or Richemont, our proportion of the market in Asia is still quite modest.” Asia has a lot of potentials. We already have distribution.” Currently, the United States accounts for around half of the company’s sales, with Asia accounting for less than 20%. It’s no accident that Frey’s last work before joining Fossil in 2006 was with DKSH Ltd., a Zurich-based company that specializes in assisting brands in marketing their products in Asia. (It recently purchased a 20% stake in the luxury watch brand Bovet, which is also looking to expand its business there.) But Asians don’t buy Asian-made timepieces, at least not above a certain, rather low price range. At the mid-price level and above, they prefer Swiss-made and place greater value on that label than, for example, Americans. As a result, Fossil is concentrating its efforts in Switzerland.

The Swiss-made tale of the Fossil Group began in 2001. That same year, the business paid $4.3 million for the previously bankrupt Swiss brand Zodiac, widely known for its Sea Wolf dive watches. Fossil announced the acquisition as the first step toward creating a Swiss-made corporation. Fossil redesigned and upgraded the brand, which now features massive, highly masculine-looking quartz chronographs and automatic divers’ watches priced between $700 and $1,000. Almost simultaneously, Fossil paid $2.3 million for three Bienne-based subcontracting firms. Montres Antima constructed watches for its own Antima brand (now defunct) as well as for other brands; Meliga Habillement Horloger procured components; and Synergies Horlogères created and manufactured prototypes. All of these enterprises were grouped together under the Antima banner by Fossil.

In another arrangement that year, Fossil negotiated a license agreement with Burberry, the British apparel giant, and released Burberry timepieces as an all-Swiss-made brand in 2002. (with the exception of a handful of non-Swiss models now discontinued). Given the success of the Burberry brand in China (the Asia-Pacific area currently accounts for 39 percent of the Burberry Group’s revenue), Fossil regarded it as a locomotive that would allow the Fossil Group to expand rapidly in that market. (To read our article on the debut of Burberry watches, click here.) Within a few years, Burberry was selling between 400,000 and 450,000 watches per year, a rate that has remained consistent to this day.

Fast forward to 2012, when Fossil’s Swiss-made effort accelerated with the acquisition of a 51-percent stake in STP in April. A group of Lugano investors launched the firm in 2006. Prime Watch Holding Production was the company’s name at the time. One major reason Fossil desired it was the Swatch Group’s planned reductions in movement exports to third parties. “When it came to our Swiss-made approach,” Frey adds, “we realized that sooner or later you had to regulate the flow of movements.” We needed choices. We looked around the market to see what was available.” (STP was not only accessible but it was also offered for a song: $266,000.)

As for additional brands produced in Switzerland by the Fossil Group, or additional brands produced in Switzerland that are part of other Fossil Group brands, these are in the works, but for the time being, the company is remaining tight-lipped about what these additional brands will be.

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