Swarovski International Holding AG

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Swarovski International Holding AG

General Wille Strasse 88
CH-8706 Feldmeilen
Telephone: ( + 41) 1 925 71 11
Fax: (+ 41)1925 73 12
Web site: http://www.swarovski.com

Private Company
Incorporated: 1895 as Daniel Swarovski & Co.
Employees: 12,600
Sales: SFr 1.99 billion (2000)
NAIC: 339911 Jewelry (Except Costume) Manufacturing; 333314 Optical Instrument and Lens Manufacturing; 333515 Cutting Tool and Machine Tool Accessory Manufacturing

Switzerland-based Swarovski International Holding AG is parent to the Swarovski group of companies based in and around Watten, in the Tyrol region of Austria. Founded in 1895, the Swarovski name has become nearly synonymous with crystal production. The company manufactures crystal jewelry stones, crystal gifts and objectsincluding its famed collection of miniature animalsand accessories, as well as crystal-based materials for the fashion industry, and components for crystal chandeliers. Swarovski is also well-known for its Swarovski Optik subsidiarys line of high-performance telescopes, gun-sites, and binoculars for hunting and birdwatching enthusiasts. Another company subsidiary, Swareflex, manufactures roadside reflectors and related highway safety products. The companys Tyrolit subsidiary produces a catalog of over 70,000 bonded, grinding, cutting, sawing, and drilling tools and systems. Lastly, the company is part of the Signity joint venture with Swiss gemstone seller Golay Buchel & Cie., created in 1999 to produce genuine and manmade gemstones, cubit zirconia, and similar products. With worldwide operations including factories in the United States, Mexico, Italy, Brazil, Argentina, and elsewhere, Swarovski employs more than 12,000 people. Swarovski remains wholly owned and led by the founding Swarovski family.

Late 19th-century Crystal

Daniel Swarovski, originally from the Bohemia region of the former Austro-Hungarian empire, came to Wattens, in the Tyrol region of Austria, with a new invention. Originally trained to cut crystal by hand, Swarovski had invented and patented an automatic grinding machine to industrialize the process, and the Tyrolean mountain rivers provided a cheap source of energy to run the machine. Swarovskis inventionand a process that remained a jealously guarded family secretwas to revolutionize the crystal industry and provide the basis for the family companys long-lasting success. Swarovski set up his firm, Daniel Swarovski & Co., in 1895.

Swarovskis invention produced crystal gemstones of outstanding qualityand the patented process enabled the company to become the worlds leading producer of crystal gemstones. The companys earliest products were especially valued by the jewelry and fashion industries. By the end of World War I, the company began to target the industrial community as well. In 1917, Swarovski began developing grinding and polishing equipment for its own production uses. By 1919, however, the company saw the opportunity to market these tools as a new product line. In that year, Swarovski launched its first subsidiary and brand name, Tyrolit. Originally designed for cutting and polishing crystal gemstones, the Tyrolit line of products later expanded to include a wide variety of applications.

The 1930s saw several significant developments in Swarovskis history. The first of these was a line of crystaltrimmings, which debuted in 1931. The Swarovski trimmings featured the companys crystal gemstones prepared in a variety of ready-to-use formats for edging, hems, and borders. Also known as rhinestones, Swarovskis gemstones were of such high quality that they were often mistaken for real diamonds.

In the 1930s, also, Wilhelm Swarovski, the son of Daniel Swarovski, began work on a prototype for a pair of field binoculars. The younger Swarovski, who had inherited his fathers inventiveness, had joined the family company at the age of 17, and had long been conducting experiments in glass smelting techniques. Wilhelm Swarovski finished his prototype field glasses in 1935, developing new grinding techniques for the field glasses hand-ground and polished optical components. The company began production of optical lenses in 1939, on the eve of World War II. The companys field glasses were to remain in the prototype stage, however, until after the war ended.

Swarovski moved into a third area of operations toward the end of the decade when it launched a line of reflective glass that quickly found a number of applications, such as road and rail reflectors, reflector strips for guardrails, and other safety uses. Launched in 1937, these products resulted in the creation of the Swareflex brand in 1950.

Expanding Products in the 1950s

Emerging from World War II, the company built on Wilhelm Swarovskis optical experiments to begin the production of eyeglass lenses in 1945. This was to become an important part of the companys operations and remained a key component of its catalog until the early 1980s. Swarovski not only ground lenses, it also launched an initiative to train opticians for the Austrian market, founding the Industrial and Vocational School for Optics, Glass, Iron, and Metal, which later became the Trade School for Opticians, producing a large share of the countrys opticians.

The companys optical glass activities grew quickly. By 1948, production of optical glass had outgrown the companys Wattens glass-cutting headquarters. The company opened a new facility in nearby Absam, forming the operation as the subsidiary Swarovski Optik KG in 1949. While eyeglass lenses represented the largest share of the new subsidiarys productionup to 300,000 lenses ground per monthSwarovski Optik launched production of its first pair of binoculars, the 7 x 24, which was quickly acclaimed by Europes hunting enthusiasts.

In the 1950s, Swarovskis reflective glass operations had also begun to growthe postwar European economic boom and the rapidly growing numbers of automobiles on the continents highways helped to stimulate demand for the Swareflex range. Meanwhile, Swarovskis Tyrolit operations were also outpacing its Wattens production capacity, and those operations were moved to a new production plant, in Schwaz, Austria, in 1950.

A new generation of Swarovskis had taken a place at the companys leadership, as Daniel Swarovskis grandson Manfred took over the family companys direction in the 1950s. Manfred Swarovski brought the company into a new direction and new acclaim, when, working with designer Christian Dior, the company created its famed multicolored Aurora Borealis crystal stones. The collaboration with Dior marked the beginning of a new era of close cooperation between the crystal company and the worlds fashion industry.

The companys other divisions were also producing their share of technical innovations in the 1950s. Through the decade, Swarovski Optik rolled out a number of binocular designs, including the wide-angle Habicht binoculars. The company also began developing a new range of opera glasses, which debuted in 1957. Two years later, Swarovski Optik debuted its first rifle scope, a line that was to become one of its most important. Meanwhile, Tyrolit was enjoying increasing international success, leading the subsidiary to open its first foreign sales office, in Milan, Italy, in 1953. The companys international reputation was equally helped by the launch of a new range of fiberglass-reinforced grinding wheels, launched in 1952.

Light Bulb Moment in the 1970s

Tyrolit was also leading Swarovskis international development. In 1960, the company opened its first manufacturing plant outside of Austria, founding the grinding tool production facility Abrasivos Austromex in Mexico City, Mexico. The company opened a new foreign plant in Buenos Aires, Argentina, in 1968. This expansion coincided with the launch of a new line of resinoid bonded diamond grinding tools the year earlier.

Swarovskis crystal operations were also growing. In 1965, the company began producing crystal chandelier components dressing up such famed chandeliers as those in the Metropolitan Opera House in New York City and Frances Palace of Versailles. Two years later, Swarovski began producing a new range of natural and artificial gemstones, including cubit zirco-nia. The company developed the first mechanical process for cutting cubit zirconia by the end of the decade.

Company Perspectives:

SWAROVSKIs corporate culture: Daniel Swarovski, technical genius, humanitarian, and founder of the company, had a crystal-clear vision that went far beyond financial or corporate ambitions. One of his primary concerns was to build a democratic company that could offer employees, co-workers and directors a life of dignity and self-respect, of social harmony and cultural experiences. His attitude was shaped by his own early experiences:

Our fellow workers are our fellow humans. We need to value each individual as a human being, and help him or her to lead a fulfilled life in honour and dignity.

Daniel Swarovskis philosophy was far ahead of its time. At a time when both the termcorporate culture and acting to implement it were largely unknown, SWAROVSKI already realized the importance of it and valued it as a program for their employees that would provide them with a harmonious social environment. The first step towards his vision, taken as early as 1907, was a housing development scheme, followed by the introduction of sporting activities and cultural events, along with a profit-linked bonus scheme and other fringe benefits. This progressive attitude which continues today at the heart of the company is the key to SWAROVSKIs loyal and fast growing workforce of some 12,600 employees around the world.

The 1970s marked the beginning of a new era for Swarovski. Until then, the company had never ventured into the consumer retail market. The worldwide recession of the decade, the result of the Arab Oil Embargo of 1973, had caused a dramatic drop in demand for the companys crystal gemstones. Manfred Swarovski was searching for a way to prop up the companys sales. As granddaughter, and future company Vice-President Nadja Swarovski told the Financial Times: My grandfather was fiddling around in his office with a few little crystals when it occurred to him that the pieces, arranged in a certain fashion, resembled a tiny mouse. That was his light bulb moment.

That moment led the company to launch the first of what was to become one of the worlds most sought-after collectors series, a tiny crystal mouse, in 1976. The mouse and the many other animals in the series, the production of which was placed under a new Tabletop Division, brought the Swarovski name into the consumer world for the first time. The companys consumer products, which at first represented a means to guarantee cash flow during industry down-cycles, nonetheless quickly became an integral part of the companys operations. In 1977 Swarovski followed up the worldwide success of its crystal animals by launching its own line of jewelry. This move led to the creation of a new subsidiary and brand, the Daniel Swarovski line of jewelry and accessories in 1989. By then, the growing international demand for the companys crystal animals also led the company to establish the Swarovski Collectors Societywhich quickly boasted a membership of more than 300,000. The company also changed its logo, formerly featuring the Tyrolean edelweiss, to a more elegant swan symbol.

Market Leaders for the New Century

Swarovski continued to build its several businesses through the 1990s. Tyrolit, which had continued to roll out new products, such as laser-welded diamond tools targeted to the stone industry launched in 1984, also continued its international development. After launching a new production plant in San Luis, Argentina, the company moved into North America, buying a share of Diamond Products, in the United States. In 1997, Tyrolit cemented its North American position with the acquisition of Bay State/Sterling Company, based in Massachusetts, then the number two leading manufacturer of bonded grinding tools in the U.S. market. Tyrolit also built up its European position through the decade, opening a new Stans, Austria plant for high-precision grinding tools in 1992, acquiring the Italian diamond tools producer Vincent in 1993, and capping the decade with the acquisition of US Veglio S.p.A, a metal bonded diamond tools manufacturer based in Italy.

Swarovski Optik meanwhile had continued to build an international reputation for its high-quality binoculars, telescopes, and gun sites. After discontinuing production of eyeglass lenses in 1983, the company began expanding its range, adding hand-held night-vision binoculars and pocket binoculars during the decade. In 1991, the subsidiary moved into the U.S. market, founding Swarovski Optik North America. Swarovski continued to roll out new products, such as laser range finders, leading to the companys patented LRS product and a rifle scope with integrated range finder, a market first. In the mid-1990s, the company was encouraged to begin designing binoculars for a new marketthat of bird-watching enthusiasts. The company rolled out its own line of bird-watching binoculars in 1999.

By then, Swarovski itself was enjoying renewed enthusiasm from the fashion industry. Helping to inspire this trendwhich saw Swarovskis crystals glitter from creation of the worlds top fashion designerswas Nadja Swarovski, who joined the companys New York branch in 1995. The new generation of Swarovski actively sought partnerships with and sponsorships of such noted designers as Anand Jon, Alexander McQueen, Philip Treacy, and othershelping to raise Swarovskis name from thekitsch of its crystal animals to the ranks of global haute couture. At the turn of the century, the company also prepared to expand its direction with the formation of a joint-venture with Geneva, Switzerland-based Golay Buchel, to produce precision-cut genuine gemstones and synthetic and imitation stones.

As Swarovski closed out the century, it had built an enviable position as a world leader in nearly all of its product categories. With a new generation of the Swarovski family in position to take over the companys lead, the Swarovski name was poised to provide glitter for a new century.

Principal Subsidiaries

Daniel Swarovski Corporation AG; Daniel Swarovski Paris; Swarovski Selectrion; Swarovski Silver Crystal; Swarovski SCS; Swarovski Crystal Memories; Swarovski Kristallwelten; Swarovski Components (Austria); Signity (50%); SwaroLite; Swareflex; Swarovski Optik AG; Swarovski Optik North America; Tyrolit Schleifmittelwerke Swarovski KG (Austria).

Key Dates:

Daniel Swarovski establishes crystal cutting company.
Company begins development of cutting and grinding tools.
Company launches Tyrolit tool subsidiary.
First binocular prototype is produced.
Daniel Swarovski & Co. begins production of optical lenses.
Company launches its eyeglass lenses line.
Company begins marketing binoculars.
Swarovski Optik is formed.
Company creates Aurora Borealis crystal in collaboration with Christian Dior.
Company opens production facility Abrasivos Austromex in Mexico City.
Swarovski & Co. launches line of crystal animals.
Company launches Swarovski jewelry line.
Tyrolit opens new Stans, Austria plant.
Tyrolit acquires Bay State/Sterling Company (U.S.A.).
Company forms Signity joint venture.

Principal Competitors

Avimo Group Limited; Konica Corporation; Leica Camera AG; Nikon Corporation; Société du Louvre; Tiffany & Co.; Carl-Zeiss-Stiftung.

Further Reading

Adams, Susan, Hawk Eyes, Forbes, November 13, 2000, p. 402.

Becker, Vivienne, The Magic of Crystal, New York: Harry N. Abrams, Inc., 1995.

Carpenter, Lea, A Many Spangled Thing, Financial Times, February 10, 2001.

Pongvutitham, Achara, Crystal Producer Seeks to Relocate to Thailand, Nation (Thailand), August 6, 1997.

Rickey, Melanie, The Glitter Band, Independent, December 19, 1998, p. 27.

M. L. Cohen