Watches, Clocks, Clockwork Operated Devices, and Parts

Industry Snapshot

The U.S. watch and clock industry has always been small compared to other industries, and, since the late 1980s, the number of manufacturers has declined. This is due in large part to the movement since the 1970s of watch parts manufacturing 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, prompted the shift to offshore facilities.

Industry revenue was approximately $713 million in 2008, up from the previous year's total of $661 million as well as the $622 million generated in 2006, reversing the downward industry trend of a few years earlier. The value of industry shipments had risen from $921 million in 1997 to $1.17 billion in 2000, but then plummeted to $601 million in 2003.

Background and Development

Although the clock industry has existed in the United States since before the Revolutionary War, 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 accurate time. Such clocks were handmade, and their cost was prohibitive. A clock was considered an investment and was purchased 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 with the time displayed by the use of 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 introduced 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 were more comfortable with a 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. 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 was that approximately 40 percent of all bedside alarm clocks had 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 with more than half sold in North America, western Europe, and Japan.

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 were 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 established brands. 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, which was the company's first venture into traditional design. It 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. About 88 U.S. companies operated in this industry that year.

The biggest trends in watches in the late 1990s were colored components (dials, straps, bezels, and gemstones), diamonds (even on moderately-priced models), and unusual shapes (such as oval, rectangular, and tonneau). Jewelers carried watches to attract customers to the store, and watches accounted for 15 percent of annual retail jewelry sales, and 77 percent of the respondents projected good-to-excellent watch sales for the coming year.

After robust conditions during the 1990s, the industry slumped badly in the early 2000s before realizing modest growth in the mid-2000s. Industry shipments increased from $921 million in 1997 to $1.02 billion in 1998, and reached $1.17 billion in 2000. However, industry players spent $463 million on materials in 2000, compared to $380 million in 1997. Revenue plummeted in the early 2000s, dropping from $1.17 billion in 2000 to an abysmal $601 million in 2003.

Current Conditions

By 2004, the watch, clock, and part manufacturing industry was in recovery and held steady in the mid-$600 million range before increasing modestly in the late 2000s to an eight-year- high of $713 million in 2008. In 2007, the 121 establishments engaged in this industry employed 2,392 workers, about half of whom were considered production workers. The total workforce earned just under $102 million in pay, while production workers earned nearly $44 million.

Industry Leaders

Fossil Inc. of Richardson, Texas, designed and manufactures watches and jewelry, clothes and accessories. Watch brands included Fossil, Michele Watch, and Zodiac Watch. The company reported overall sales of nearly $1.58 billion in 2008. Founded in 1984 by brothers Tom and Kosta Kartsotis, Fossil quickly won attention with products evoking vintage Americana themes.

Longtime stalwart Timex Inc., founded in 1854, expanded its products from simple, low-cost watches to watches capable of paging or downloading computer data. Timex reported revenue of $100 million in 2006. Movado Group Inc. of Paramus, New Jersey, reported $461 million in sales for 2006.

Movado brands include Movado, Ebel, Concord, ESQ SWISS, Coach Watches, HUGO BOSS Watches, Juicy Couture Timepieces, Tommy Hilfiger Watches, and Lacoste Watches.