The news from Le Locle hits with a cold, precise finality. Zenith, the 160-year-old Swiss watchmaker famous for the El Primero, is cutting its workforce in half. Up to 100 jobs at the manufacture are going now, with another 100 positions possibly eliminated later. This is not a minor adjustment. It is a fundamental retreat. The brand, owned by luxury giant LVMH, is abandoning the middle ground. It will stop making many of its core watches like the Chronomaster to become a high-horology, low-volume producer. The target for this painful transformation is 2029.
If you want to understand the pressure cracking the Swiss watch industry, look no further than this factory in the Neuchâtel mountains. The problems are not unique to Zenith. They are systemic. CEO Benoit De Clerck laid them out bluntly to employees this week. He cited the strong Swiss franc, which makes exports more expensive. He pointed to U.S. import tariffs. He noted the decline of key markets in the Middle East and Asia. “This is not a passing patch of turbulence,” he said, according to a transcript obtained by Swiss newspaper Le Temps. “The market has changed for the long term.”
The data backs his grim assessment. The entire Swiss watch sector is caught in a powerful vise. While export values remain near a record 25 billion Swiss francs annually, the actual number of watches shipped has nearly halved over the past decade, according to the Federation of the Swiss Watch Industry. The money is flowing to the very top. Brands like Audemars Piguet, Patek Philippe and Rolex command unprecedented demand and pricing power. Everyone else is fighting for scraps. For a mid-tier brand like Zenith, with watches priced between 7,000 and 12,000 Swiss francs, the squeeze has been fatal. Their significant production capacity in Le Locle is now underutilized. Losses have mounted.
Zenith’s history is a tale of near-death and resurrection. In the 1970s, its then-American owner ordered a halt to all mechanical movement production. An engineer named Charles Vermot secretly saved the El Primero tools and plans, hiding them in the factory attic. That act of defiance allowed Zenith to supply the legendary movement to other brands, including Rolex, in the 1980s. It saved the company. Today, it still supplies movements to sister LVMH brands like Tiffany and Hublot. But that business is not enough to sustain the whole operation.
Now, the rescue plan is a stark pivot upward. The brand will focus on haute horology pieces, akin to its award-winning GFJ models. It is a bet on exclusivity over volume. The strategy mirrors actions across LVMH’s watch division, which has seen executive shuffles at TAG Heuer and Hublot. The group is clearly rethinking its watch portfolio. For Zenith, this means ceasing production of entire mainstream lines. The company will maintain its vast after-sales service, which stocks over a million components to repair vintage watches. But its future as a manufacturer of accessible mechanical watches is over.
The human cost is severe. The consultation process with the Unia trade union is underway. These job cuts follow staff reductions at IWC, Montblanc and Breitling. The pain is spreading from brands to their suppliers. Major houses are now buying up component makers to keep them alive, a sign of deep distress in the industrial ecosystem. De Clerck told his team that no company can lose money indefinitely. He said Zenith is “choosing recovery.” For the workers in Le Locle, that choice feels like a severance package.
What you are witnessing is the great bifurcation of the watch market. The middle is collapsing. The strong franc and geopolitical tariffs act as accelerants. Brands must now command the heights of luxury or face a brutal contraction. Zenith, with its profound history and technical prowess, has chosen to climb. The path is steep, the baggage left behind is heavy. The El Primero caliber, once a beacon of high-frequency innovation for the everyman enthusiast, will now mostly tick inside watches few can ever own. The beat goes on, but the audience has changed.
- Strong Swiss franc
- U.S. import tariffs
- Decline of key markets
- Decreased watch shipments
- Mid-tier brands struggling
- Focus on haute horology
| Issue | Impact |
|---|---|
| Strong Swiss franc | Makes exports more expensive |
| U.S. import tariffs | Affects market competition |
| Decline of key markets | Reduces sales potential |
| Decreased watch shipments | Low production rates |
| Mid-tier brands struggling | Increased job cuts |
| Focus on haute horology | Shift in production strategy |
