BIENNE, Switzerland -- The two largest watch companies in Switzerland today announced a merger plan to stem financial losses and to remain competitive on the world market.
The Swiss General Watch Company, known by the acronym ASUAG, and Swiss Watchmaking Company, or SSIH, said full details of their projected merger would be announced May 26.
ASUAG produces Longines watches. SSIH manufactures Omega and Tissot watches as well as lesser-known models.
The merger plan was drawn up by a crisis committee including ASUAG and the owner of the Ebauches components company, ASUAG said.
The merging companies said final approval of the planned merger must still come from their boards of directors and from the group of Swiss banks which hold controlling interests in both businesses.
A brief statement issued by ASUAG said that under the merger, existing models of watches would continue to be manufactured. The joint company will be called Swiss Watch Industry Ltd.
Both ASUAG and SSIH, as well as smaller Swiss watchmakers, have steadily lost money and world market positions over the past 10 years in the face of Asian cheap-labor competition.
Switzerland's share of non-communist markets for complete watches, as distinct from watches and parts together, fell from 30 percent in the early 1970s to an estimated 9 percent in 1982.
Hong Kong now produces about 50 percent and Japan manufactures some 30 percent of at least 300 million watches made yearly by non-communist nations.
Swiss manufacturers still make profits and enjoy a lion's share of world markets for expensive watches costing $400 and up but have taken a beating in the medium- and lower-priced timepieces.
Industry experts have long conceded that apart from higher labor costs in Switzerland, Swiss manufacturers were too slow in moving into electronic watches.
ASUAG, whose sales in 1982 were down by 19 percent to $500 million, is the world's second-biggest watchmaker after Hattori-Seiko of Japan, which has annual sales of more than $3.5 billion.
The Swiss company lost $22 million in 1981 and a similar or even larger loss for 1982 is expected when figures are released.
ASUAG has had to steadily cut jobs and currently employs 11,500 people against 20,000 in 1974.
SSIH managed to increase sales last year by 5 percent to the equivalent of $300 million. It lost $41 million in 1981 and cut 837 jobs in 1982 to a current total of 3,500.
Industry officials said the banks which control both companies will probably have to put in about $500 million as part of the planned merger with several top executives likely to lose their positions, especially in ASUAG.
