SIC 3873

This segment covers establishments primarily engaged in manufacturing clocks, watches, watchcases, mechanisms for clockwork operated devices, and clock and watch parts. This industry includes establishments primarily engaged in assembling clocks and watches from purchased movements and cases. Establishments primarily engaged in manufacturing time clocks are classified in SIC 3579: Office Machines, Not Elsewhere Classified; those manufacturing glass crystals are classified in SIC 3231: Glass Products, Made of Purchased Glass; and those manufacturing plastic crystals are classified in SIC 3089: Plastics Products, Not Elsewhere Classified.

NAICS Code(s)

334518 (Watch, Clock, and Part Manufacturing)

Industry Snapshot

The watch and clock industry has always been small compared to other industries, and, since the late 1980s and early 1990s, the number of manufacturers has declined. This is due in large part to the movement, begun in the 1970s, of watch parts manufacture from the continental United States to offshore facilities. The popularity of quartz watches, which are produced primarily in mainland Asia as well as in Japan, have prompted the shift to offshore facilities.

The booming U.S. economy of the late 1990s helped push the value of industry shipments from $921 million in 1997 to $1.17 billion in 2000. The total number of employees rose from 6,333 to 7,343 over the time period.

Background and Development

Although the clock industry has existed in the United States since pre-Revolutionary days, it did not begin to flourish until the early 1800s when such companies as Ingraham Clock Co. and Chelsea Clock Co. were established. The first clocks manufactured for home use were pendulum clocks that, despite their excellent timekeeping, were rather cumbersome. Whether a huge mantle clock or a floor clock, the instrument had to be set perfectly plumb to keep time accurately. Such clocks were handmade, and their cost was prohibitive. A clock was considered an investment and bought with the understanding that it would be passed from generation to generation. With the advent of the Industrial Revolution, new technologies were developed, clocks became less cumbersome and expensive, and, subsequently, watch manufacturing began.

Prior to the 1920s, almost all watches were carried in the pocket or purse. Some women's watches were designed as pieces of jewelry in the form of brooches or integrated into necklaces. The first watches were analog—the time was displayed via hands pointing at markers or numerals. In addition, the watches were mechanical, powered by a coiled mainspring that required manual winding.

The industry grew as further technological advances were made. In the 1950s, the first battery powered watch was introduced, ushering in the electronic age in personal timekeepers. The spring mechanism was replaced by vibrating quartz crystals that contained a battery-powered silicon chip, and the use of integrated circuits led to the development of the digital watch.

The first digital watch, the Pulsar by Hamilton, was launched in the 1970s. Two types of digital watches were introduced—the Liquid Crystal Display (LCD), which required light to read the numerals and the Light Emitting Diode (LED), which required the wearer to push a button to light it and read the time. Neither gained true acceptance because the LCD was not practical at night, and the LED battery was short lived. The main reason digital watches did not become popular, however, was the reluctance of consumers to accept them. People felt more comfortable with a more traditional watch that gave a visual indication of the time remaining until a meeting or appointment, for example.

The digital clock fared much better than the digital watch. The clock companies solved the problems with LCD and LED displays by designing a digital clock run by an electronic chip that called for a light to plug directly into the line cord, stay lit, and give a constant display. The result is that approximately 40 percent of all bedside alarm clocks have digital readouts.

While the digital watch was not a success, the quartz watch was. During the 1980s, the production of the mechanical watch fell, and watches with quartz chip movements became popular. The vanguard of the industry was the analog quartz watch; more than half are sold in North America, western Europe, and Japan.

Although the components of the watches are mainly manufactured overseas, assembly takes place in plants in the United States. Although the number of people employed in the U.S. watch and clock industry has been steadily declining since 1970, wages have been growing. Production workers were earning $8.69 per hour in 1990, compared to figures from the previous year showing hourly wages at $8.06.

In 1991, according to the U.S. Department of Commerce, watchcases, watch straps, bands, bracelets, and movements were increasingly imported from Switzerland, Japan, Hong Kong, Thailand, and several other countries. Still, the trend in the industry was toward having both the manufacture of the parts and the assembly of the watches done overseas. Most of the major clock companies still produce their parts domestically.

The clock industry expected production to remain steady. Bedside alarm clocks, especially digital ones, continued to be strong-selling items, and sales of fine clocks were rising. One explanation for the increase was the growing consumer interest in home fashion and decorating. More and more clocks are being considered accessories for the home.

Watch companies registered impressive sales in 1994 and repeated their robust performance a year later. The biggest factor behind the surge in sales was the revival of interest in fashion watches. Another factor partly responsible was the strong marketing campaign for both the newer and the established brands. The moderately priced watches recorded the highest sales during this period.

Swatch USA launched a new line of metal watches in 1995, known as the Irony Line. The line, which was the company's first venture into traditional design, featured 12 new varieties with leather wristbands. In 1996 the major growth areas for clock manufacturers were consolidation and licensing.

In 1996, massive print and television advertising campaigns drove sales. Fashion trends, fostering growing interest in watches that complement clothing, also continued to boost watch sales. In 1996 there were about 88 U.S. companies operating in this industry.

Current Conditions

The biggest trends in watches in the late 1990s, according to a survey of jewelers conducted by Jewelers Circular Keystone magazine, were colored components (dials, straps, bezels, and gemstones), diamonds (even on moderately priced models), and unusual shapes (such as oval, rectangular, and tonneau). This survey also identified watches as items that enhanced the image and prestige of jewelers: 60 percent of the respondents believed that carrying watches attracted customers to their stores, and 40 percent believed that watches added prestige to their image. These respondents reported that watches accounted for 15 percent of their annual sales, and 77 percent of the respondents projected good-to-excellent watch sales for the coming year.

Industry shipments grew each year during the late 1990s, increasing from $921 million in 1997, to $1.02 billion in 1998, and to $1.16 billion in 1999. Shipments reached $1.17 billion in 2000. Industry players spent a total of $463 million on materials in 2000, compared to $380 million in 1997. Industry employment also increased throughout the late 1990s, rising from 6,333 workers in 1997 to 7,480 workers in 1999, before falling to 7,343 workers in 2000. Payroll costs in 2000 reached $218 million, compared to $178 million in 1997.

Industry Leaders

Timex Corp. of Middlebury, Connecticut was the industry leader, with estimated sales of $850 million for the fiscal year ending December 1997; the company employed about 7500 people. The Seiko Corporation of America of Mahwah, New Jersey, a subsidiary of the international industry leader Seiko Epson Corporation of Nagano, Japan, garnered estimated sales of $389 million for the fiscal year ending March 1998; they had 700 employees. Fossil Inc. of Richardson, Texas generated $305 million in sales for the fiscal year ending December 1998, with 828 employees.

The Movado Group Inc. of New Jersey ranked fourth, with 855 employees and $278 million in sales revenues for the fiscal year ending January 1998. Next came Intermatic Inc. of Spring Grove, Illinois, with $200 million in sales revenue behind the strength of 1,100 employees. SMH (US) Inc., a subsidiary of the Swiss company that makes Swatch watches, tied Intermatic with $200 million in sales for the fiscal year ending December 1997; they employed 400 people. Bulova Corp. of Woodside, New York employed 445 workers and generated $129 million in sales for the fiscal year ending December 1998. General Time Corp. of Norcross, Georgia acquired one of its main competitors, Spartacus Corp. of Stamford, Connecticut, in 1996.

This industry included not only watchmakers but also components makers. Time Delay, a company founded by the expert watch repairman Bob McQuirk in 1978, created a niche market as an accessories supplier by providing diamond bezels, dials, and bands for watches.

America and the World

In the 1980s, there was a profound change in the industry. The Swiss watch industry had hit hard times; production was down. A turnaround occurred in 1983, however, when Nicolas G. Hayek, chairman of SMH Group, introduced the Swatch watch. This inexpensive, trendy watch in a plastic case was a deviation from the traditional high-priced luxury watch usually associated with the Swiss industry. The Swatch was an immediate success and sparked a continuing interest in inexpensive fashion watches.

The analog quartz watch, once the industry weakling, had become its mainstay—more than 500 million were produced in 1992. Despite its impact, the Swatch did not reestablish Switzerland as the leading watch producer. For the past decade Japan has led the field in production with Hong Kong second, and Switzerland third. Figures from 1992 indicated Japan's production accounted for roughly 44 percent of total global output, Hong Kong was responsible for about 20 percent, and Switzerland contributed approximately 17 percent. U.S. production had little impact on total global figures.

The United States, the biggest single market for this industry, had a large trade deficit in watches; 1991 exports totaled $73.4 million compared to imports of $1.8 billion.

In the area of watch and clock parts, 1990 statistics showed imports of clock movements valued at $22.1 billion; watch movement imports totaled $13.2 billion; imports of watch straps, bands, and bracelets reached $43.2 billion; and $26.7 billion of watch cases were imported. Overall growth in the watch market has slowed from double-digit to single-digit figures. Nonetheless, production is expected to reach the one billion mark by the end of the 1990s, aided by such nations as China, India, and Thailand.

During the 1990s, the global watch industry began to assess its ecological impact, and in 1992 watchmakers pledged to support and aid environmental efforts. Among the steps taken were the development of watch batteries with life spans of 10 to 20 years and the use of recycled, biodegradable materials for packaging, catalogs, press material, and publications.

Sports sponsorship continued to boost watch sales worldwide. Watches have been linked to many high profile sports and sports stars. Citizen's sponsorship of the U.S. Open Tennis Tournaments, and Seiko's deal with figure skater Nancy Kerrigan were some of the more prominent efforts of watchmakers.

Luxury watches was another sector of this industry that was growing worldwide. The U.K. market for luxury watches alone was forecast to grow 22 percent between 1996 and 2000. The 1995 market for luxury watches in the United Kingdom was valued at 250 million.

One of the biggest problems for watch manufacturers in the mid-1990s was counterfeiters, who were becoming increasingly ambitious and producing high quality products. The 1995 sales of counterfeit watches accounted for about 10 percent of the value of world wristwatch trade. Ties, fragrances, and other consumer goods were also branded with names of prominent world watch manufacturers. The 1994 Uruguay Round Agreement confirmed the role of intellectual property rights to reduce counterfeiting.

Further Reading

Balfour, Michael. "Fakers' Time is Running Out." The Financial Times , 18 April 1996.

"Keeping watch on today's market." Jewelers Circular Keystone , vol. 169, no. 9, September 1998.

"Luxury Watches." Market Intelligence , July 1996, 1B.

"Sports Events Help Promote Watches." Jewelers Circular Keystone , Vol. 166, no. 1, January 1995, 183.

"Swatch's New Irony Aimed at Jewelers." Jewelers Circular Keystone , Vol. 166, no. 1, January 1995, 107.

Thompson, Michael. "Fashion and Marketing to Boost Watch Sales." Jewelers Circular Keystone , Vol. 166, no.1, January 1995, 90.

"Time On Your Side." Jewelers Circular Keystone , Vol. 167, no. 1 January 1996, 77.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from .

Werner, Holly M. "Keeping Clocks Ticking." HFN The Weekly Newspaper for the Home Furnishings Network , Vol. 71, no. 3, 20 January 1997, 38.

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