One of Lebanon’s most successful sons, Nicolas Hayek, has died aged 82. Here’s how he became one of the world’s richest men, and saved the entire Swiss watch industry into the bargain.
June 29, 2010 3:21 by Katherine Azmeh
The Harvard Business Review called him that “rare phenomenon in Europe — a genuine business celebrity,” credited with the all-out rescue of the Swiss watch making industry from the brink of extinction. A self-made success by the 1970s, Beirut-born, French-educated Nicolas Hayek wielded a unique brand of business brilliance that saw the Swiss watch making retreat from the precipice. Poised for a spectacular descent into bankruptcy in the 1980s, Swiss watchmakers faced unrelenting and unlikely competition from the inexpensive and mass-produced digital offerings of Japanese companies like Seiko, Casio, and Citizen.
Hired by Swiss banks to consult on the liquidation of the distressed industry, Hayek recommended instead a merger of the country’s two titan manufacturers, both effectively insolvent at the time. The corporate merger of the industry’s two major players, Asuag and SSIH, set the stage for the industry’s competitive comeback in an entirely new corporate reality.
The original marketing consultant for the product, Franz Sprecher, said Swatch “proved that the Swiss could beat the Japanese at the low end of the market and it made the watch into a fashion accessory. Hayek had the nose of a truffle dog when it came to finding what would work with consumers.”
Hayek bought a majority stake in the merger, renaming it SMH. In its first year, the new company generated revenues of over $1 billion, posting a net loss of $124 million. Ten years later revenues had doubled and SMH was nearly $300 million in the black. Within four years of its debut, the Swatch (a contraction of “Swiss” and “watch”) had sold 12 million units.
Hayek’s business epiphany led to the brilliant revival of the entire industry, a cornerstone of the Swiss economy – all on the back of the $30 plastic watch. Today, the iconic Swatch watch is synonymous with Swiss design that is fun, functional, durable, and cheap. With half the movements of the high-end watches of the day, the translucent, brightly colored Swatches revolutionized the industry, and revived high-end Swiss watch making in the process.
Long before saving his country’s watch industry, Hayek had established a successful engineering consultancy. Born in Lebanon, he had moved to Switzerland as a young man, and later studied mathematics, physics and chemistry at the University of Lyon in France.
His other achievements include being a leading light in the development of a small, urban vehicle, dubbed the “Swatchmobile” (a project that would later become the now famous Smart car). In fact, he was reportedly working on a venture for a small electric car at the time of his death.
Alongside his stellar business success – Hayek was a Forbes ranked billionaire, worth an estimated $3.9 billion – he is also known for his “roguish sense of humor” and “ebullient personality.” The Financial Times said of Hayek, “he combined a Swiss work ethic with a Levantine flair for marketing. He always wore at least two watches on each wrist.”