FACTUAL DATA MISQUOTED AND DISTORTED BY THE WATCH IMPORTERS AND THE DEPARTMENT OF STATE Imports of Swiss watches are classed from 0 jewels to 21 jewels. They compete with 2 unrelated classes of watch production in the United States. The clock type of wrist watch, containing 0 to 7 jewels, 2,268,000 of which in 1946 were produced and sold in the United States. Swiss watches of the so-called bridge-construction type, and containing 7 jewels or less, directly compete with these clock-type watches. The imports of such Swiss watches in 1946 were 2,402,000. Thus the apparent domestic market of watches, 7 jewels and under, is approximately 50 percent Swiss and 50 percent American clock-type watches, and that import competition has come over a tariff which was substantially reduced by trade agreement. (NOTE. No watch containing 7 jewels or less is made by the American jeweledwatch manufacturers, although such a watch was made here in the early 1930's.) For example, in the year 1935 the American clock-type wrist watches formed 76 percent of the total American market for all watches seven jewels and under. It is significant that practically all of these 7 to 0 jeweled watches are imported already cased. This fact considerably minimizes the statement of the importers and the Department of State that American case manufacturers are so greatly benefited by the Swiss imports. The American "bridge type" jeweled watches are now made only in 15 jewels and upward, and with from 2 to 6 adjustments. (The Swiss watches are adjusted in the Swiss factories but are marked "unadjusted" to evade the payment of the legal duty for adjustments running from $1 to $3 per watch.) In 1946, 7,280,000 Swiss watches over 7 jewels were imported, constituting 87 percent of the American market for this class of watches. That same year the 3 American manufacturers made and marketed 1,124,000 watches (after having been entirely out of the American market for substantially 4 years). As shown by appendix A attached hereto, for example, in 1935, the apparent American market for watches having more than 7 jewels was 1,350,000, of which the Swiss had 22 percent, or 300,000 watches. SHIFT IN COMPETITIVE IMPACT A study of appendix A will disclose that in 1935, the year before the negotiation of the Swiss trade agreement, 2,926,000 nonjeweled watches were produced in the United States, and 902,000 7-jewel and under were imported, making an apparent domestic market of 3,828,000, of which approximately 76 percent was held by the American clock-type-watch manufacturers. This ratio steadily declined, until in 1946 the American manufacturers of clock watches had only 50 percent of this domestic market. (It should be remembered that the clock-type watch is strictly an American conception, and the market is one which these manufacturers themselves had created in former years and to which they returned in 1946 after 3 years of 100-percent war activity.) It is significant that the American clock-type-watch market in 1946 is not substantially more than it was in 1935; but the Swiss have 50 percent of it now instead of 24 percent, and two of the American manufacturers of these watches suffered a substantial loss in 1946. Not content with flooding the American market with 7 to 0 jeweled movements and invading that portion heretofore held by the American clock-watch manufacturers, the Swiss, after 1935, also directed their competitive efforts against the American jeweled-watch manufacturers in the highest jeweled-watch categories and increased their shipments to the United States of that class from 25 percent of their total shipments in 1935 to 75 percent in 1946. That competitive impact deprived the American jeweled-watch industry of its opportunity to grow in accordance with the population and economy of the United States, as it had a right to expect, and left the domestic jeweled-watch industry in 1916 with a total production of 1,125,000, against 1,050,000 which they had in 1935. It is significant to note that no venture capital has been attracted to this industry. Mr. Clayton, speaking for the Department of State says: "We are all of us more than a little proud of the fact that outside of Switzerland the American jeweled-watch industry is the only one of any importance in the world." This sentiment is difficult to reconcile with the experience of the American watch manufacturing industry in attempting relief through the trade agreement administration during the past 3 years. JUN 8-1949 One would think that the term "selfish" might well be applied to this ruthless Swiss competition which deprived the American manufacturers of their entire market while they were engaged in the war. But, not so! The Department of State now says it is the American watch industry which is "selfish" and should not have any tariff protection whatever because (out of the dire necessities of the distributors in this country for branded American-made watches required by people who were real Americans and preferred American-made goods) a profit had been made by two of these companies in 1946, although a loss of nearly a million and a half dollars was at the same time suffered by the third company. It is true that wages and costs have risen in Switzerland. But they have increased even more in this country. In 1939 the Swiss watch industry sold to the world watch movements and parts to the total of 166,610,000 Swiss francs (about $42,000,000). In 1946 their "take" was 605,000,000 Swiss francs (about $151,000,000). For even a gradual restoration of this American industry's rightful place in the American market, an increase of 50 percent in the existing trade agreement rates is required. Respectfully submitted. ELGIN NATIONAL WATCH Co., WALTHAM WATCH CO., GENERAL TIME INSTRUMENTS CORP., THE E. INGRAHAM CO., UNITED STATES TIME CORP., American Watch Manufacturing Industry. APPENDIX A Analysis of competitive impact of Swiss watches upon domestic production and its relation to a decline in tariff duty protection Domestic jeweled watch sales statistics include figures from Elgin, Hamilton (and Illinois), and Waltham only. 29 months, from Jan. 1 to Sept. 30, 1942, inclusive. (Three quarters of the import figure was used to make up a 9 months' total of apparent consumption.) 39 months. 4 Production of domestic manufacturers during these years was solely for Army-Navy use. There were no watches produced for the civilian market. The CHAIRMAN. If there are no further witnesses, the meeting will stand adjourned. (Whereupon, at 9.45 p. m., the committee adjourned.) X 99616-47-pt. 2- -92 |