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Nick Hayek: The director of 'William Tell' tackles another Swiss icon - time

The world's coolest watches still come from Switzerland, and the industry No 1 is determined to stay put

Danny Fortson
Sunday 28 May 2006 00:00 BST

As a pitch man, Nick Hayek, the chief executive of Switzerland's Swatch Group, is first class. Once he gets talking about watches, it doesn't take long for the flair that is more often associated with his former profession to come bursting forth.

Before joining the company famous for its plastic, multicoloured watches, Hayek was a film director. He had a short film that made it to Cannes, directed commercials and made a couple of feature-length films, including Family Express with Peter Fonda, winner - no less - of best Swiss comedy at the Charlie Chaplin Comedy Film Festival. He counts Spike Lee and Pedro Almodovar as friends, and even had them design special edition watches for Swatch.

Films and wristwatches, he says, are very similar. Stay with him here. "I don't know of a better mass consumer product group than film. In film, first you need an idea, then you develop it, find financing, create a budget, assemble a team to produce it, make a good casting, then market it and distribute it in the right way," he explains. "With watches it is the same. You have to have new ideas, be creative, have an enthusiasm. When the engineers come to you with a new movement [the part that makes the watch tick] that needs nearly no oil, it's fabulous. You can appreciate the technical masterpiece."

Appreciate it he does: fresh from announcing that the Swatch-owned Omega will be the official timekeeper for the 2012 Olympics, Hayek, 52, is wearing a watch on either wrist, one of which is an unmissable electric orange hue.

Like seemingly every sector these days, the watch industry is changing due to the growing influence of China. The cheap labour and technical quality on offer have increased the pressure to move production there to reduce costs. And no group feels that more than Swatch, the world's largest watchmaker. The company's 158 factories churn out watches under 18 brands that stretch across the quality spectrum, from the mass produced, low-end Swatches to luxury Breguet timepieces.

But more than 90 per cent of its factories are not in the brave new, cheap world of the Far East. Instead, they are in the more pricey climes of Switzerland. So why not move production to China, where more watches could be made for less?

"Industries are making a big mistake by moving production to Asia," Hayek says. "To really do innovation, you have to keep production close, so you can talk about new designs. And the transportation cost [from China] is horrendous. Real entrepreneurs find new ways of producing things and marketing them."

Swatch enjoyed a strong period last year, increasing profits to Sfr621m (£272m), 21 per cent more than the previous year on sales of Sfr4.5bn. But some analysts have raised questions about how the company will maintain these growth levels.

Hayek doesn't seem particularly bothered by such worries, though, or by the proliferation of mobile phones and the threat that their built-in clocks pose. "You don't buy a watch to tell the time, you buy it because it looks nice. You buy it for beauty," says Hayek. "It's a personal item - you wear it on your skin and give it as a gift."

But then, this is not the first attack on Swiss dominance in watchmaking. In the early 1980s, Japan flooded the world with cheap Quartz watches, which run on mass-produced microchips. The Seikos and Casios hit the Swiss industry hard. It was around then, in 1983, that Hayek's father, also called Nick, formed the company that eventually became Swatch by merging SSIH, maker of Omega and Tissot, with Asaug, another long-established Swiss watchmaker.

In contrast to the square, monotone designs of most Quartz watches on the market at the time, the company came up with the funky, multicoloured Swatch. It was marketed as the "second, emotional watch". It first hit the market in 1983, and, like big shoulder pads and Rubik's cubes, became a fashion fad. Crucially, the company also engineered its products to have less than half the moving parts of normal Quartz watches. That kept manufacturing costs low, allowing the timepieces to be mass produced in Switzerland.

As the money rolled in, the company snapped up other brands before rebranding itself as Swatch in 1998.

For his part, Hayek joined in 1994, when he was asked to help with the marketing strategy. He began by directing commercials, and slowly got sucked in. "I was seduced, I must say, because working for a company like Swatch is cool," he says.

He became chief executive in 2003. "I never used my name; I never asked for special treatment because of my father," he insists. "The board did it without me knowing."

The question for Hayek - who commutes in a Mini to Swatch's head office in the Swiss town of Biel, and pilots his own helicopter to get away at the weekends - is where the company goes from here. Swatches don't have the cultural cachet they once did, and sales in some markets have plateaued. Hayek says that China, as a market rather than a production centre, represents a massive opportunity, though a new luxury tax threatens to undecut its plans there. The US, where Swatch's market share is about half the level it is in other countries, is also a high priority.

And Swatch has a wealth of technological know-how that it can leverage. It makes most of the parts for it own watches, such as the springs that weigh just one-seventh of a grain of rice or the 1,700 screws that it squeezes out of one ounce of gold. It also makes components for rivals and manufactures private label pieces for fashion houses. "We're a world leader in micromechanics," Hayek says. "We're not just a watch company."

That expertise has led Hayek to participate in projects far removed from the company's core business. Swatch is currently collaborating on the development of a solar-powered aeroplane, and was also involved in the early days with Mercedes Benz in the creation of the Smart Car. (According to Hayek, it dropped out of the project after Mercedes would not agree on the importance of the car using a hybrid engine.)

With a lot of free cash, Swatch could buy its way into new markets. "We have enough cash, and every month we get more," Hayek says. "Touch wood. Name me a company it's interesting to buy. What's missing in our portfolio is a jewellery brand. The rest I have. There are some other [watch brands] out there, big ones. But no one is selling, or the price is too high."

Before he starts naming names, he catches himself, checks one of his two watches (the orange one) and politely excuses himself. He's got work to do.


BORN 23 October 1954


Before joining Swatch, had stints as a marketing consultant and as producer of short firms. Set up the Sesame Films production company, based in Paris. Produced and directed two full-length feature films: The Land of William Tell (1985) and Family Express (1992).

1994: vice-president (marketing), Swatch

1998: president

2000: delegate of the board of directors

2003: chief executive

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