Société Suisse des Fabriques d'Ebauches et de Finissages

The Société Suisse des Fabriques d'Ebauches et de Finissages was an industry organization established in 1917 to bring order to the ever-expanding ebauche manufacturing business in Switzerland. Driven by advances in machine tools, dozens of small companies had risen to challenge the larger players in the watch movement business. Over-production after World War I meant punishing price reduction and threatened the entire watch industry. The goal of the Société was to control production and export.

The Société was unsuccessful and over-production lead to bankruptcy of factories and widespread unemployment. By 1921 over 30,000 watchmakers were unemployed even as more than 40 different companies produced ebauches for over 500 watchmakers in Switzerland. With the industry in debt by over 200 million francs, the banks began searching for a more effective solution.

The Fédération Horlogère Suisse (FH), created in 1924, was an industry association bringing together three quarters of Swiss watchmakers. The group decided and, to some extent, enforced production quotas. But the export of ebauches and components (chablonnage) remained an issue. Without controlling the production of watch movements the entire industry could be lost.

Thus, in 1926, the three largest producers of ebauches decided to come together to form a corporate trust to control production. The idea was spearheaded by Cesar Schild, director of the factory A. Schild in Grenchen which employed more than 300 people and produced over 5.8 million ebauches per year. He approached Paul Robert of FHF, the large and historic ebauche maker in Fontainemelon, and the pair then went to Adolf Michel of A. Michel in Grenchen. Together, the three factories produced 80% of all ebauches in Switzerland. But A. Schild was the largest and most valuable and the ailing Michel's firm was struggling.

Rather than simply purchase his competitors, Schild agreed to form a corporate trust along with bankers and outsiders. Indeed, the chairman was banker Léopold Dubois, Sydney de Coulon was selected as outside secretary (despite his ties to FHF), and the first and second vice presidents were national councilor and A. Michel chairman Hermann Obrecht and FHF chairman Paul Robert. A. Schild was well-represented on the board by boy Adolphe Schild and César Schild, and Robert Schild was selected as general manager, but A. Shild did not dominate Ebauches SA. And, at the assistance of Paul Robert, the headquarters was placed in neutral Neuchâtel rather than Grenchen or Fontainemelon.

The three companies quickly agreed on uniform prices for watch movements, eliminating competition at least for them. They also coordinated purchasing of materials and set about standardizing certain components. Finally they agreed on a five-year moratorium on all new sales of ebauches outside established customers. The cost of watch movements immediately jumped by 10%, but the cartel's actions did not yield lasting success. Indeed, competitors large and small increased production and sought to undermine the influencers of the three dominant firms.

Drawing on the lessons of the balance spring cartel FSR, the leaders of Ebauches SA moved quickly to bring more factories under their control. Nine more factories were brought under their control in 1927, giving the cartel control of 90% of the market, with more joining the following year. But there were a few major holdouts, including Eterna, Unitas, and many smaller factories. Eterna was particularly important, being the largest of the dissidents and run by Theodor Schild, cousin of César Schild. The cartel offered a "friendship contract" to the holdouts, attempting to control production without forcing them to join. But Eterna eventually relented and agreed to split their business, with watchmaking falling under Theodor and Rudolf Schild and the movement factory becoming ETA and joining Ebauches SA.

Still struggling to control the industry, Ebauches SA initiated the creation of a "super-holding" trust to incorporate makers of balance springs, main springs, balances, escapements, ebauches, and more. The Allgemeine Schweizerische Uhrenindustrie AG (ASUAG) was funded by 50 million francs from the Swiss government and altered the structure of the entire industry. Rather than being an effort of the industry and bankers, ASUAG was a quasi-governmental entity. It restricted trade among companies, punishing any who traded or exported without permission. It also stopped the opening of any new firms, forcing most of the remaining dissidents into line.

Production of lever escapement watches was restricted to Ebauches SA member factories, A. Michel, Aurore, Arogno, Derby, FHF, Peseux, FHF, Tavannes, and Unitas. Pin lever movements were produced by Ebauches Bettlach, while automatic movements were only to be produced by A. Schild, ETA, and Felsa. Chronograph production was handled by Landeron, Valjoux, and Venus. All other factories were closed or forced to produce only for in-house consumption.