Including Black

Including Black

IN FEBRUARY 1994 JACQUES CHIRAC went to meet his old friend Nicolas Hayek in Geneva. The media clamour made it seem like he was running his campaign for the French presidency from the capital of the Swiss watch industry. It was a meeting between giants. Hayek, a Beirut­born Palestinian, is fond of saying he is 'better known than the Swiss president. He has reason to boast. Since he emigrated to Switzerland in 1955, his Swatch range had increased the country's share of the world watch market from 15 to 50 per cent. By the turn of the century Swatch was set to overtake Seiko to become the world leader. While the Swatch was going from success to success in the

1990s, the leading Japanese were losing sales, market share and profits. They blamed the recession and the overvalued yen for making them unprof­ itable.

SMH and Swatch Following the lead taken by Clive Sinclair's Black Watch, the Japanese had used electric movements and digital technology to dominate the industry. The mechanically based Swiss watch industry had been damaged badly by the technological change. The market was left split between the luxury

market, dominated by Swiss brands like Blancpain. Audemas Piguet and Rolex, and cheaper reliable products by the Japanese ­ Casio, Seiko, Pulsar

and others. Hayek's company, Ste Suisse Microelectronique et d'Horlogerie (SMII), rushed into the gap between them with the beautifully engineered, fashion­led Swatch range. The plastic­bodied, ever­changing range of watches with quartz movements combined Swiss reliability and quality with fun and economy.

In its short life Swatch had become a fashion­oriented youth product and a collectable cult object. Enthusiasts will pay SfrSOO for originals that cost Sfr50 in 1983 and only Sfr60 today. Some members of the 100,000­plus Swatch Club had paid over SfrlOO,000 for limited edition 'art' Swatches. In 1993, whenHarrods had 500 limited editions to sell, 'it stopped just short of

fisticuffs' as 1,500 buffs fought over them. The Swatchiuobile

in 1992 SMH's profit grew 64 per cent to Sfr413 million and was set to grow

23 per cent in 1993. But after years of steady growth its share price was levelling out. Swatch sales were saturating and Hayek had his eyes on the car market. He was being criticized for spending too much time working on his Swatchmobile and not enough on his core business.

His idea was to market a tiny car only 2.41 m long and 1.4 m wide ­ a Fiat 500 is 3.18 m by 1.32 m. Its lightweight plastic body was designed to carry

Cose 14: The Swatckmobile • 639

two people and their shopping through dense city traffic. It would be a super­environ men tally efficient car, with a fuel consumption rate half that of today's average family car. The performance would be equal to a basic Ford Escort, but it would have a range of 550 km on a tank of petrol. According to Hayek, to be successful on a global scale today, a wrist watch ­ and by exten­ sion, a microcar ­ 'must also be a provocation'. The Swatchmobilc will be 'an effort to change people's habits because it is only a two­seater'.

Although he was an engineer, he does not design Swatches; nor will

he design Swatchmobiles. lie saw marketing energy and style as his strength. Swatches were designed by an in­house team of Swiss engineers let! by Jacques Muller. He aimed to employ dozens of designers and artists as well as engineers to work on the Swatchmobile. 'Expect it to be offered in any colour ­ and any combination of colours ­ you want, including black,' says Hayek.

Please, Not Another European Car Maker Some saw Hayek's ideas as foolhardy. There was already overcapacity in the

world car market. The European industry was in deep recession and had high labour costs ­ Japan's were Sfr26 per hour compared with Germany's

Sfr40. In addition, further traffic growth was seen by some as an impossi­ bility on the world's overcrowded roads. Bankers and other potential

backers were openly critical of the venture. It was one step too far at the wrong time and in the wrong market.

SMH wanted a partner for its new venture. It partnered with Europe's market leader in small ears, Volkswagen, with die idea of making a SfrlO,00() Swatch­VW in China. Then, in 1993, VW pulled out. It was short of money and doubted the Swatchmobile's economic viability. It also questioned Hayek's philosophy for the microcar ­ like the successful Swatch watch, cheap cars can also become fashion items. It opted instead for the Gliico, a more conventional car than Hayek envisaged. It will also bring back the Beetle. In

1999 production of the 'back to the future' design based on VWs Concept 1 prototype will start in Mexico.

The meeting between Chirac and Hayek stimulated speculation about a French suitor for SMH. Was there the prospect of an exciting alliance combining French style. Swiss engineering excellence and Hayek's marketing hype? A deal with Matra­IIachette, Renault or Peugeot­Citroen, perhaps? Chirac left the meeting smiling but saying nothing. Hayek told reporters that the partner would certainly not be GM, but that they would

have to wait until the Geneva Motor Show to find out more.