“It’s Complicated”: The American Watch Industry, Federal Trade Commission, and Claiming “Made in America”

Made in America claims in the watch industry have been elusive. Claiming anything is made in America is very difficult and costly in today’s global economy. The US has an “all or virtually” all parts made in the US requirement. Recently, many American watch companies have been rebuffed by the Federal Trade Commission for misleading claims. Watch companies claim the FTC guidelines are vague and put American companies at a disadvantage. To get to the bottom of it, I interviewed the FTC’s lead attorney for enforcement as well as two of the only American watch companies currently making Made in America claims. 

made in america

Made in America

There was a popular YouTube video a few years ago called What Does the Fox Say? One of the reasons it was so popular is that no one really knows what foxes sound like. After speaking to many American watch company entrepreneurs, it made me realize that what makes a watch qualify for the Made in America label is the same kind of mystery as “what does the fox say?” — there are many readings and interpretations of the FTC guidance by entrepreneurs, but no one concrete or common understanding of what it really means. I sought to find the answer to this question of “what does it take to be called Made in America,” which has been the Achilles heel of American watch manufacturers and to date, puts them at a disadvantage over their Swiss counterparts. Hodinkee even wrote an article called “Smoke and Mirrors”. I wanted to get to the bottom of it so I interviewed an attorney at the Federal Trade Commission as well as American watch companies to figure out why this has been so difficult. What I learned is there is so much more to the story and its more complicated than it seems.

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The Made in America label has proved to be an elusive label for watch companies in America. Manufacturers have struggled to meet the stringent requirements of the label, while also struggling to fully grasp what is allowed and what isn’t? “Swiss Made” isn’t exactly what it sounds like either. Many consumers assume Swiss made means a watch was 100% made in Switzerland. But Swiss laws only guarantee that 60% of a watch was made in Switzerland (it used to be 50% and only changed to 60% in 2017). In the past few years, at least 3 American companies have been rebuffed by the FTC for making Made in America insinuations and advertising claims that left consumers with potentially misleading impressions about whether their product was actually made in America. Generally speaking, U.S. law requires that a product be made “all or virtually all” in America before a company can label it Made in America. Today in America, only a few companies claim that their watches are Made in America. However, contrary to common belief, there is no board or commission that says “yes, this product qualifies.” A company must read the FTC’s guidance and decide if its products qualify. Yet for a mechanical watch, which can have over 300 parts, making this decision can be difficult, and the specific requirements of the FTC can weave a more complex narrative.

Weiss Watch Company is one of the only watch companies making Made in America claims

Weiss Watch Company is one of the only watch companies making Made in America claims

I wanted to learn about this topic for another article I am writing on watchmaking in America but decided this topic alone deserved it’s own “day in court”. I interviewed Julia Ensor, a staff attorney within the FTC’s Bureau of Consumer Protection, Division of Enforcement. Her name is found at the bottom of many of the enforcement letters delivered to American watch companies. The FTC’s mission is “the promotion of consumer protection and the elimination and prevention of anticompetitive business practices.” I spoke to Ms. Ensor more broadly about Made in America claims, but I want to be clear that we did not speak about or mention any specific companies in our correspondence. I also interviewed RT Custer of the Vortic Watch Company out of Colorado makes and sells a watch 100% made in the USA that uses vintage pocket watch movements. Finally, I interviewed the only American watch company founder and CEO currently making Made in America claims for fully modern-production watches, Cameron Weiss of the Weiss Watch Company.

What Do You Think Made In America Means?

RT Custer (right) with his co-founder Tyler

RT Custer (right) with his co-founder Tyler and the Vortic sign above saying “Made in the USA”

Watch Ponder: What do you think Made in America means?

RT Custer: Our [Vortic Watch Co’s] definition of Made in America is very literal. We stand behind our tagline: “America wasn’t Assembled. It was Built.” To us, this means that assembling a product in America is NOT making that product in America. To be made in America, the product, and ALL of its crucial components, must be BUILT here.

Watch Ponder: Why aren’t all of your watches Made in America?

RT Custer: Version 1 of the American Artisan Series is completely, and I mean 100%, made in the USA. Version 2 is almost completely American made. We are struggling to find a supplier that is willing to make the plastic components in America for a reliable price (o-rings and gaskets). Everything else is made here. The barriers aren’t technical, they are financial. A gasket made in USA is 5X the price of one made in Switzerland, and 10X made in China. However, they’re all the same part and there’s no benefit to paying more money for a part made in the U.S. PLUS, most of what’s “Made in Switzerland” is actually made in China and distributed through Switzerland.

Waltham Watch Co movement made in 1903

Watch Ponder: Only your vintage-movement watches are actually Made in America. Some critics don’t think that counts. When will you produce a modern watch in America?

RT Custer: Within the next 5 years the American Artisan Series will earn the right to be 100% American made. We simply need a plastics supplier willing to manufacture in low quantities. We think we can accomplish this in the next 12 months. For our first modern watch, The Journeyman Series, we will source a movement that is as much made in America as possible. Currently, the winner in that battle is Cameron Weiss and his Caliber 1003, but who knows what other movement companies might come about in the next 5 years.

Vortic Watch Co crown

 

How to Look at the Issue From the Outside Looking In

Excerpt of an FTC Letter sent to a company, signed by Ms. Ensor

Excerpt of an FTC Letter sent to a company, signed by Ms. Ensor

Julia Ensor: By way of background, the FTC enforces Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce.  The FTC’s Enforcement Policy Statement on U.S.-Origin Claims provides guidance to marketers on how to avoid deceptive “Made in USA” claims that may violate Section 5.  We analyze claims in context from the perspective of a reasonable consumer.  Our analysis is driven by consumer understanding and interpretation of marketer claims.

When it comes to U.S.-origin claims, the Enforcement Policy Statement provides that consumers are likely to understand an unqualified U.S. origin claim to mean that the advertised product is “all or virtually all” made in the United States.  Therefore, when a marketer makes an unqualified claim that a product is “Made in USA” it should, at the time the representation is made, possess and rely upon a reasonable basis that the product is in fact all or virtually all made in the United States.

When a product is not all or virtually all made in the United States, any claim of U.S. origin should be adequately qualified to avoid consumer deception about the presence or amount of foreign content, and marketers should possess and rely upon a reasonable basis substantiating the qualified claim.Ms. Ensor speaking on enforcement of claims in general

The FTC analyzes claims on a case-by-case basis, from the perspective of a reasonable consumer.  Although we do not pre-approve claims, in some instances we can provide informal staff counseling and feedback to marketers based on their specific circumstances.  If your readers have questions or need help, they can email us at musa@ftc.gov.

Does Weiss Watch Company Meet the FTC Requirements?

 

weiss watch co logo

Watch Ponder: What parts for your Caliber 1003 are NOT made in the US? Why don’t you manufacture these in the US?

Cameron Weiss: We do not manufacture the hairspring or jewels in the USA.  We choose not to make these materials in the USA at this time because the cost of production would substantially increase the cost of the finished timepiece without adding any real value for the end consumer.  Our goal is to make an attainable timepiece with as much American content as we can.

Watch Ponder: Obviously, you are manufacturing movements in the U.S. with the exception of the jewels and hairspring noted previously. What is your interpretation of the FTC’s guidance that has given you confidence to use the Made in America label?

Cameron Weiss: I look to this guidance and example from the FTC website:

“What factors does the Commission consider to determine whether a product is “all or virtually all” made in the U.S.? The product’s final assembly or processing must take place in the U.S. The Commission then considers other factors, including how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product. In some instances, only a small portion of the total manufacturing costs are attributable to foreign processing, but that processing represents a significant amount of the product’s overall processing. The same could be true for some foreign parts. In these cases, the foreign content (processing or parts) is more than negligible, and, as a result, unqualified claims are inappropriate.

Example: A company produces propane barbecue grills at a plant in Nevada. The product’s major components include the gas valve, burner and aluminum housing, each of which is made in the U.S. The grill’s knobs and tubing are imported from Mexico. An unqualified Made in USA claim is not likely to be deceptive because the knobs and tubing make up a negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product.

 

Cameron Weiss assembling a mechanical movement

Cameron Weiss inspecting part of a mechanical movement

Watch Ponder: A previous article by Gear Patrol suggested your movements are just copies of an ETA 6497. Is this true?

Cameron Weiss: We manufacture a movement that bears resemblance to the ETA 6497. [Watch Ponder Note: the ETA 6497 is a popular watch movement manufactured by Swiss company ETA]. We designed it in a way that any manufacturer can use their dial, hands, case, and crown that was made for the ETA 6497 with our new Caliber 1003 instead (this does not mean that the movement is the same, just that the dial foot locations and overall thickness and diameter are the same).  This allows us to sell our movement kits to Swiss manufacturers that were dependent on ETA for 6497 movements without any additional engineering or design issues.  

We make components for the ETA 6497 in our studio that can be used in servicing existing ETA 6497 movements, but the parts that we make to go into the Caliber 1003 are not compatible with an ETA 6497.  The Caliber 1003 was designed from the ground up, with certain elements of the ETA 6497 in mind.

Watch Ponder: Do you consider the movements “in-house”?

Cameron Weiss: I don’t typically like to use the phrase in-house because it means different things to different people.  We make the majority of the pieces that go into the Caliber 1003 in our own studio in Los Angeles.

Weiss Watch Co engineer setting up production in their US-based factory

Weiss Watch Co engineer setting up production in their US-based factory

Watch Ponder: Using the label “American Made” is a bold move. How can other manufacturers learn more about making watches in America or buy movements from you?

Cameron Weiss: Anyone interested in more information about purchasing watch parts or movements can get in touch with Pinion Precision Technology.  I am the co-founder there and we currently share our manufacturing space with Weiss Watch Company.  Pinion Precision Technology is able to manufacture components or finished products for the watch, jewelry, medical, and aerospace industry. For anyone serious about manufacturing their products in the USA I would highly recommend that they contact us and schedule a visit to the facility to discuss their project. info@pinionprecisiontechnology.com

 

So What Actually Qualifies? It’s Complicated

While Cameron Weiss is taking steps no one else is taking, there are many detractors who feel that 100% = 100% and nothing less. Therefore, they feel that the fact that Weiss uses Swiss-made jewels and hairspring, disqualified his watches from being “Made in America.” But when you read the FTC guidance, this might be “splitting hairs”. Ms. Ensor of the FTC cannot address specific companies and her following comments do not relate to Weiss (nor did I ask her specifically about Weiss), but provide relevant guidance for all companies.

Julia Ensor: In order for a product to be considered “all or virtually all” made in the United States, the final assembly or processing of the product must take place in the United States.  Beyond this minimum threshold, the Commission will consider other factors, including, but not limited to:

  • The portion of the product’s total manufacturing costs that are attributable to U.S. parts and processing
  • How far removed from the finished product any foreign content is
  • And the importance of the foreign content or processing to the overall function of the product.

Substantiating that a product underwent final assembly or processing in the United States is only the first step toward making an unqualified “American Made” claim.  Because consumers likely understand “American Made” claims to mean that products are “all or virtually all” made in the United States, a manufacturer should possess and rely upon a reasonable basis that its product is “all or virtually all” made in the United States at the time the manufacturer makes the unqualified claim.

Weiss’s optical inspection station in their California-based factory

So You’re Saying There’s a Chance…

There is a catch in all of this. Ms. Ensor says “how far removed from the finished product” is the foreign content? And how important is the foreign content to the product? Arguably, using jewels and hairsprings are pretty far from the final product considering on their own they are worthless. A foreign-made mechanical watch movement can tick without its watch case, so it is a final product in its own form. But jewels and hairsprings? They can’t do anything on their own and are definitely not a final product. In fact, the FTC publication defines it as “‘All or virtually all’ means that all significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no — or negligible — foreign content.” To many, the jewels and hairspring would qualify as negligible.

(Used under Creative Commons)

There is no doubt that Weiss is taking steps that go a whole lot further than almost any other watchmaker in America to mass produce movements. But is it far enough? The purist opponents of Weiss’s interpretation say no. In their view, “all or virtually all” = 100%. After all, just about every component of a mechanical watch is essential, especially the jewels and the hairspring which are like the bearings and cylinders of an engine. But it doesn’t really matter what other watch manufacturers think, it matters what the consumer thinks and interprets.

Weiss Watch Co Cal 1003

The red jewels are the tiny pieces at the heart of the debate

Overall, which side is right, Weiss or its purist opponents? Based on my reading of the statements from the FTC, they both are. Weiss has a reasonable argument for labeling his movements Made in America. Because there is no board or commission that signs off on these claims, he is free to exercise his own judgement as to whether his product meets the FTC’s published guidance, as long as he’s willing to stand behind this decision if challenged.  It is likely that how the FTC interprets and applies these factors will remain fluid as it makes decisions in specific cases. Having spoken to many American watch entrepreneurs, many do not understand the nuances of the FTC’s guidance nearly as well as Weiss (receiving a complaint letter from the FTC in 2014 will cause a person to learn very quickly). The question remains though — is he right?

Many entrepreneurs simply see “all or virtually all” as equaling 100% made in the USA. However, peel back the onion — consider the complexity of defining the origin of a part in our global economy.

Where was the ore mined?

Where was the foundry?

Where was it cut?

Where was it molded?

Where was it assembled?

Where do you draw the line and say “from this point forward, it must have occurred in America” to call it Made in America? Usually, manufacturers like to draw that line at whatever point puts them at the biggest advantage. However, the FTC says a minimum line is drawn with assembly, but beyond that, you have to consider the additional factors.

Vortic The Boston with Certificate

This Vortic Watch certificate clearly labels “Country of Manufacture: USA”

The FTC’s published guidance states “in some circumstances, there may be inputs one or two steps back in the manufacturing process that are foreign and there may be other foreign inputs that are much further back in the manufacturing process. Those foreign inputs far removed from the finished product, if not significant, are unlikely to be as important to consumers and change the nature of what otherwise would be considered a domestic product.” Opponents of Weiss think the jewels and hairsprings are significant enough. The question is — from the perspective of a consumer, do they care about the majority and major components of the movement and the watch, or every single part? So far, Weiss seems to be operating in the clear.

 

In Conclusion

Why is making a watch movement so difficult to do in America to an 100% standard? It’s a very complex process and costs millions of dollars to get established. It is amazing in itself that Weiss has even made the investment. The reason why jewels and hairsprings are even an issue is because they are some of the most difficult parts to manufacture despite their very small nature. Because movement manufacturing is so expensive, this is why many Swiss companies do the majority of parts manufacturing in Asia and assemble the movement in Switzerland. Why should US manufacturers be put at a disadvantage when they can make a movement in the US with minimal foreign content? Should “all or virtually all” actually be 100% as some purists suggest? Right now, Weiss seems to be meeting the standard by many accounts. So what’s the final answer as to whether a watch manufacturer can claim the elusive label Made in America? Like many things in life — it’s complicated.

Vortic Watch Co wrist shot

 

Read other articles related to this issue:

Made in USA claims: Three cheers for the said right and true

FTC tells Shinola: Stop saying ‘Where American is made’

Watch Your Words

FTC Letter to Bedrock Manufacturing Company

‘Made in the USA’? Maybe Not, According to the FTC

FTC Signals More Rigorous Enforcement on “Made in USA” Labelling

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I have a passion for watches and am a collector of luxury watches. I write opinion-based articles that try to bring the business lens to my writing to provide readers with a view of the business, marketing, and strategies of the watch industry companies I look into. In addition to Watch Ponder, I do speaking, freelance writing, and publish in other watch blogs and magazines. I do this as a hobby and because of my passion for watches. I am also a member of the National Association of Watch and Clock Collectors.

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