THE DEMISE OF THE HAMILTON WATCH COMPANY IN LANCASTER, PA AND THE RISE OF THE SWISS OWNED HAMILTON WATCH COMPANY

                                                                                                   A QUICK HISTORY ABOUT THE HAMILTON WATCH COMPANY
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The Hamilton Watch Company (HWC) was founded on November 11, 1892, and incorporated on December 14, 1892. The company came into existence because of another reorganization by merging Keystone Standard Watch Co with Aurora Watch Company out of Aurora, Illinois. All the Aurora machinery was moved to Lancaster in the summer of 1892.  The name Hamilton was selected to honor Andrew Hamilton, the original owner of the site in Lancaster, PA.  Andrew Hamilton was granted the land by William Penn’s heirs and is credited with founding the city of Lancaster with his son James. All the watches were sold under the subsidiary name of Hamilton Corp.

The Hamilton 18 size, grade 936, 17 Jewel open face watch movements were the first movements made. Serial number 15 was the first completed movement on January 31, 1893, and a handful of others in November and December of 1893.  Serial #1 was completed April 21, 1896. Serial #1 & Serial #2 are on display in Columbia, PA and you can read about them in my article archive if you have not already read it. The company was founded and set out to serve the railroad market by demanding precise timepieces. By the turn of the century, the company came to be known as The Railroad Timekeeper of America.

Prior to 1909 Hamilton only sold uncased pocket watch movements exclusively and were placed in cases made by other casemakers. Soon after this they started selling a cased line of railroad pocket watches in solid gold and gold fill. In the first fifteen years, the HWC, it only sold two sizes of movements, the 18-size and the smaller 16-size pocket watch movements. In 1912 Hamilton started advertising in magazines as the public thought the HWC only made railroad grade watches and the HWC realized their audience was broader than they thought. The HWC throughout its history had a great advertising department and ran wonderful ads particularly around the holidays and graduation. The women’s line of wrist watches was released in 1908 before the men’s lines were introduced in 1919.

After World War I, men’s watches became popular in the United States starting with the 0 size watches (Grade 981) for men in 1919, and the Cushion was announced on November 11, 1922. The HWC started a line of men’s wrist watches including the Square and Cushion with a 6/0 size movement, grade 986 & 986A, then using the 987-17 jewel movement and the high grade 19 jewel 979 in their solid gold men’s wrist watches. From that time on, the HWC produced a great line of pocket and wrist watches. In 1930 the HWC started a radio advertising campaign to reach out to potential men or women customers across the USA and in the mid 1930’s and wholesale distributors were each given a defined territory which Hamilton designated as a "zone" to reach more customers in specific areas of the USA.
 
 From the start, the HWC was a successful company and in 1929 posted a net profit of $1.8 million off $7.6M in sales. When the great depression hit, HWC experienced a couple of bad years (as did the nation) but soon recovered and was profitable again. According to Annual reports I have from 1926 through 1974, Hamilton only had four losing years: 1932   (-$987,000)  and 1933   (-$148,000)  after the great depression and then in 1970   (-$23,651,000)    and 1971    (-$2,414,000).

The HWC was the premier watch company in the world, better than their Swiss rivals and by far had the best quality in the United States. As stated in the 1929 Annual Report “Production figures are gratifying because the Company has consistently and persistently refused to sacrifice workmanship and quality to quantity.” Here is an excerpt from Watch Word in 1929, titled “Would you believe: That a 6/0 Size 987 (wrist watch) contains a total of 149 parts, including the case, and 139 without the case. That a 16 Size 992 (Railroad Watch) movement contains 183 parts, with case thrown in, and 173 without. That the number of operations it takes to make a 12 Size, 23 Jewel 922 movement totals 1649? That it would take about 3 years for one such movement to go through all the operations in consecutive order? That it really takes from nine months to a year for such a movement to go through the Hamilton factory, since some operations are done at the same time.  Well, Milt Manby and his staff of technicians say so, and believe it or not, we agree with them. They also go on to say that a 992 movement goes through the following departments, taking the route, and approximately the time in each department, given here; (1) Plate Room, 3 months; (2) Jeweling Room, 3 months; (3) Damaskeening Department, 1 month; (4) Gilding Department, 1 month; (5) Finishing Department, 3 months.”
 
Swiss imports were always a concern, and in the 1945 Annual report the HWC points out that from 1938 through 1945 there were 50 importers (2,379,000 imported watches) and post WWII in 1945 there were 500 importers (9,398,716 imported watches). Hamilton used the best materials to make their watches: sterling silver dials, solid 18K numerals, and finished movements with demaskeening patterns even though no one would even see the movements. They finished them with high quality polished parts and early on they were all constructed with gold chaton jeweled settings, until the 987-F came along.  This practice stopped in the late 1940’s when the size 8/0 grade 747 was designed and manufactured. The watch cases prior to 1940 were made of platinum, solid gold, sterling silver or gold fill. No wristwatches were made of stainless or nickel until WWII.  Hamilton had the best quality of watches from the start through the end of the 1950’s. 

Interchangeability was one of Hamilton’s strong suits which began in 1931. The ability to take one part from one movement and place it in another was a huge step forward for Hamilton and made the assembly and finishing of a movement much quicker, saving hundreds of man hours to finish a watch, and of course to the bottom line.  Their tolerance was so precise that this is what enabled them to take on this enormous task of interchangeability between parts.  The machinery that was utilized by the HWC to create Hamilton watches was developed by Hamilton in the Hamilton factory itself.  Even the instruments used in regulating the movements, scales for weighing parts, vibration machines, and the micrometers used for measuring miniature parts were made in the factory.  Hamilton insisted on manufacturing with their own machinery which was vital to watch performance, and they did not trust outsiders making their parts, again quality vs. quantity.  They made their own hairsprings, and in an interview through the nawcc, an ex-employee said George Daniels, the great watch maker purchased Hamilton Elinvar hairsprings directly from Hamilton for his watches.
In 1957, Hamilton introduced the world’s first electric watch with a battery cell.  The watch was extremely popular with the consumers and a huge success and seller.  The Hamilton size 5/0 500 grade watch movement had some issues with carbon build up with the contact points and were corrected, and the new 505 grade movement resolved the issues.  Many people think the electric watch was the demise of Hamilton, but Hamilton had  25M in sales in 1957 with net profits of 1.5M and in 1966 sales of 44M and net profits of 2M. The electric watches were still being made during this time frame and last appeared in the 1968 catalog.  Watches accounted for 56% of total revenue in 1965, military products were 17%, the balance was from Wallace Silversmiths, Industrial Products and Precision Metals.
 
                                                                                                                                                                 THE TARIFF YEARS
 
In the November 1956 issue of Timely Topics, Art Sinkler explains the decision to import watch movements vs make them in Lancaster. He states “for the past 10 years, Hamilton has been faced with one principal problem. However complex the details of that problem might be, it can be stated quite simply; the Swiss can make watch-movements for less money than similar movements can be made in the United States.” He was working to have tariffs raised on imported watches, while also looking to make new products in the Lancaster factory.  Richard J. Blakinger (Sec and Gen Counsel) said “between 1951 and 1954 production of watch movements in the United States went down from three million per year to one million seven hundred thousand.”
The Swiss copied the American way of manufacturing, copying the way the American’s did it. They set up separate facilities to make the parts, then supplied them to them to be assembled by individual craftsman vs the assembly line in the United States. 80% of the cost of a watch movement was labor, the Swiss paying around 70 cents per hour while the American’s were paying around $2.00 an hour. Corporate tax rates in the US were 56% while the Swiss Corporations were only paying 25%.  Tariffs were needed to equalize this issue. In 1936 half the American Watch market was supplied America made movements and the other half imports. In 1936 Tariffs were cut drastically, naturally imports rose.  In 1947 an agreement was reached with the Swiss to voluntary limit imports for one year, the agreement was never really enforced, the Swiss still were free to have unrestricted imports during these times. C.M Kendig the CEO of Hamilton in went to Washington before the ways and means committee to fight in unrestricted imports and stating “the American Industry was assured that the reciprocal trade agreements program would not be administered to its detriment, and that should there be any harmful effects to the American industry, means of obtaining relief therefrom would be available. The statement is difficult to believe in the light of the experience of this industry, past and present. No do we agree that is nothing more you can do.”
 
The HWC was forced to make a lower quality line of watches as they could not compete with the lower prices of the Swiss movements as they could not pay the higher wage scale. The HWC tried to sell their imported watches under a different name and this failed. In 1956, Hamilton had 269 models in the Hamilton line, 20% were imports.
To stay active, Sinkler wrote they need to expand get into other industries, here is a list of products considered: Diamond laps, butane cigarette lighters, ear microphones, jewelers and auto clocks, aerial navigation devices, mechanical counters, timers, parking meters, gages, electric razors, transistors, thermistors, transducers, replays, time computers, servo and gear heads and national standard miniature screws. Gages and auto clocks were picked from this list. A warning was issued that stated while watches are our specialty, industrial products will be a whole new learning curve. It was also mentioned that acquisitions will be in play in the future. It was written by Sinkler, “When a company is facing the problem of operating within an industry that is declining, it cannot wait until the last minute to take corrective action.” The HWC was feeling the effects of the Swiss and go out of their comfort zone and started expanding into other business.  Sinkler was dead set on expanding and he did.  Sinkler was unsuccessful in getting higher Tariffs and Hamilton was feeling the effects of a battle they tried to win, but for some reason the US Government would not help the watch industry out.

                                                                                                                                                                           THE DEMISE

Basically until 1951 the HWC made only watches or watch related items and had no other source of revenues.  The HWC made watches, chronometers, electrical clocks and timing watches until they purchased the Biggs Watch Case Co, a watch case manufacturer in Stamford, Connecticut.  On March 16, 1950, the HWC put into progress Project 5223 an “automatic wrist wind watch design” having direct drive and sweep second hand, a wind indicator, a second’s setting device (hack setting), a dust proof crown (Rolex type), and a shock proof balance assembly (Van Haaften patent). This project was terminated on November 18, 1951.  On November 19, 1951, the HWC made plans to make an “automatic wind wrist watch” of approximately 8/0 size, called Project 5285 and was terminated on March 16, 1953. At this same time, the Swiss were superior in the making of movements, making automatic and calendar movements, something the HWC attempted to make but gave up on.  Hamilton took pride in always making their movements but started importing automatic and calendar movements from Switzerland.  

The HWC’s first use of Swiss automatic watches was in the 1953 catalog, not in Hamilton watches, but rather three Illinois models, the Signamatic (Eta-1256, the automatic Models A & B (Eterna-Matic 1248) under then President George Luckey. Under the leadership of Art Sinkler (President 1954-1967) in 1954, the company started importing automatic Swiss movements for Hamilton Watches and the HWC offered twelve automatic watches with Swiss imported automatic movements-marked Hamilton on the rotors: the Automatic K-200, K-201,K-300,K-301,K-350,K-400,K-401,K-450,K-501,K-502,K-550 and the K-575. This had to be a sad and horrifying defeat in the eyes of the engineers, design staff, upper management and the board. Shortly after this, almost all the Hamiltons were being made with Swiss movements. The 1964 annual report states “domestically produced Hamilton watches accounted for less than 30% of our total sales revenues.” Key word here is domestic, I would assume the balance were from abroad. At the end the HWC here in America, the HWC was only making the 945, 950B and 992B pocket watch movements, the 770 wrist watch movement, the ladies sized 758,761 and 780 movements in Lancaster, PA.  
 
In 1961, the HWC bought Standard Time Corporation, A Virgin Islands wholly owned subsidiary company. This division was making the Vantage products at a greatly reduced price and quality for the HWC’s lower end products. The obvious ploy was to compete with the Swiss as they had lower labor costs, and it was hard for the HWC to compete. The HWC grew into a large conglomerate; it was more than just a watch company. The HWC became involved in Wallace Silversmiths, Puritan Fireplace Furnishings, Industrial products, elapsed time indicators, gauges, battery operated timing devices, photo etched products in electrical components for computers and aerospace. The military products Division grew out of WWII making electrical timing mechanisms, fuzes, timing release mechanisms and safety arming devices for the Vietnam war. Hamilton also turned-out rocket fuel alloys, special metals for the Apollo program, missile timers and safety and arming devices for military applications.  They were all over the place and they were not focused on what they did best, watches.  In the 1964 Annual Report it states, “In May the Canadian plastics business was sold and a contract for the sale of the Puritan Fireplace Furnishings division was executed in January 1965, neither of these businesses was compatible with our other operations nor did they promised sufficient profit in the foreseeable future to warrant continuing our investment in them.” The key words here, “not compatible with our other operations.”

The demise could either be attributed to Art Sinkler and his expansions outside of the watch making arena, the Swiss competition or probably was more likely due to a fellow named Jacob Hain, through his Penn Square Mutual Fund (Bush Terminal out of Reading, PA), who bought a large chunk of the HWC. His company owned 30% of the stock in 1961 which they started buying two years prior, and by December 1963, his company owned nearly 54% of the common stock.  Hain obtained a board seat in 1961, and his brother Edward held one in 1963. By 1964 they had 6 board members on a 15-member board. Why the board allowed him to do this, nobody knows.  Maybe some promises between upper management or just pure stupidity, it’s only anyone’s guess. Hain had full control of the CEO, Art Sinkler and the board.  A handful of conservative Lancaster business leaders left the board, Charles Watt being the first in 1962 after a 42-year term.  Another, William Shand, left in 1964 left after having served a 44-year term, the longest standing Hamilton board member. According to an old HWC employee, these board members left after Hain’s involvement as they did not approve of Hain’s borrowing money to pay dividends.  

When the HWC acquired Standard Time in 1961 for its inexpensive Vantage line of watches. This was contrary to the HWC longstanding practice of elevating quality over quantity. Through Sinkler’s leadership, the quality of Hamilton watches in the early 60’s took a steep dive:  dials were now for the most part embossed and made of brass, not of sterling with solid gold numerals; most of the cases were made in stainless steel and rolled gold plate, micro plated, not gold filled; and most the movements were imported from Switzerland and marked “Hamilton.” You can’t blame Sinkler for staying around, he was well paid and could not fight the board as he knew he would most likely get terminated, so you can only guess he stayed as a local big shot, for the money or maybe he thought he could convince them to stop? In a 1965 Bush Terminal filing it states Art Sinkler’s aggregate remuneration was $78,100.  That’s a whole hell of a lot of money in 1965 - about $780,000 in today’s dollars.

An ex-employee told me in the end, the HWC was cobbling together watches with the wrong dials, hands and bands just to get stuff off the line and out to be sold.  I am sure if you are a collector, you will see this in some of your watches that are new old stock, and you can’t figure out how those hands or dial got there, now you know. Anytime a business stops doing what it does best, it means the end is near.  Other companies tried to take over or buy the HWC and in 1952 Benrus bought 11% of the stock of the HWC.  Through extensive litigation, Hamilton was able to stop Benrus from meddling in its business and in the 1954, the HWC was able to buy back the Benrus-owned 92,200 shares, (approximately 25% of the common shares). General Time in 1964 tried to buy the Bush Terminal shares of Hamilton for $15M.  The proposed transaction was called off just before signing the deal in October of 1964. In 1969 Sunbeam tried to buy the HWC for $26M, and one article stated six other companies were interested in buying the HWC as well in 1969.
 
                                                                                                                                          LET’S MOVE TO SWITZERLAND

In the 1969 Annual Report, it states “a year ago, we indicated that we were planning a program to transfer watch movement manufacturing from Lancaster to Switzerland.” They actually did move, and most the employees left behind were moved over to the military production division. They also dissolved the division of Standard Time and integrated it with their watch business. Wallace Silversmiths was feeling the effects of a bad economy and was dragging down the numbers for the company.  Hamilton got out of its core watch business and got into case making, fireplaces, silverware, metals, military and industrial products.  While this is not a bad thing, there are several large companies today that can multi task and be profitable, but I personally think the person running the show, Art Sinkler who joined Hamilton as a low-level employee in 1936 (1936-Jobbing in T&C, 1938-Technical Testing, 1939-Inspections, 1942- Assembly, 1946-Foreman Assembly research, 1950-Manager of Defense contracts & director of quality, 1951-Director of research,1952-VP Manufacturing, 1954-president & Chairman of the board, 1971-Terminated) was a watchmaker at heart, a tooling and manufacturing genius.  Art was a well-loved boss by many employees, a worker’s boss as he came up through the ranks. In my opinion he was not really a CEO or business person.  

When Sinkler took over, Hamilton had basically two divisions, the watch division and the Biggs Watch Case Co in Connecticut which they had just purchased. The HWC had $3.9M in debt and, when he left as president and became Chairman of the Board, the company had $6.5M in debt (1966) and $17M the following year (1967), with 6 divisions and 11 subsidiaries.  Eventually things got out of control under Sinkler’s leadership and things took a steep decline. By 1967, Richard Blakinger was the President, Sinkler was Chairman of the Board, but both were not able to control Hain, as his Bush Terminal still owned over 51% of the HWC, controlled the board and Blakinger/Sinkler could not stop the senseless borrowing to pay dividends and the enormous debt increase.  Hain finally met his demise and was barred entirely from the securities business by the SEC in 1968, ending his control and manipulation in Hamilton. The SEC forced Hain to sell all his holdings in the HWC. I am sure Blakinger and Sinkler were thrilled about this, but it may have been too late to save the company in my opinion.  If you look at when Sinkler took over and to the end, the company grew to more than just a watch company.  Sometimes expansion is not your friend, and in this case it was true.

From an article in Lancaster New Era in 1990, James Guerin, a former Hamilton Employee who left the company in 1971 said “Hamilton was respected worldwide as a superior watch company, for it to stop manufacturing watches was as if General Motors stopped making cars.” Hamilton bid low on a large military contract to make portable backpack radios for the government. They bid low and felt they could make it up on other military contracts. This was a total disaster, prompting the loss of $150 to $250 per radio. Under its contract, HWC was to make 16,000 radios.  In the end, the company only completed 500 and Hamilton bailed on the contract.  The contract was transferred to an Indiana firm and Hamilton closed the Military Electronics division taking a loss of $6.7M, the watches and clock division took at $12.2M loss and the Fuze business lost $4.7M. To stop the bleeding, Sinkler approached the Pentagon and tried renegotiating the deal and was rebuffed according to Guerin. Guerin even tried to buy this division when he left the company in 1971. As the company faced bankruptcy, top management was replaced, some 1,350 employees were laid off when the workers took a voluntarily 10% pay cut, they had $41M in liabilities and lost $23.6M in 1970. As an aside, the watch division was responsible for 50% of the losses in 1970.

                                                                                                                                      THE SWISS TAKE OVER FROM HERE

In November 1971 Hamilton formed a new subsidiary, partly owned by Aetos Watch, SA a wholly owned subsidiary of S.S.I.H.  Aetos owned 17% of the stock of The Hamilton Watch Company, paying $920,000 in three installments, while Hamilton owned the remaining 83% of the subsidiary. An inventory note for $12.6 was created with no interest between the HWC and the HWM for bookkeeping purposes.  Hamilton had changed its name from The Hamilton Watch Company to HMW, the stock trading symbol on the New York Stock Exchange and the Hamilton Watch Company became a subsidiary of it. In 1974 S.S.I.H bought the remaining 83% for $2.3M in the form of a non-interest-bearing note with the first payment being due January 31, 1977 (four years later), with equal quarterly installments thereafter for three years. The last watch was assembled in Lancaster, PA was in 1992.

Today, the Hamilton Watch Company is a thriving watch company, owned by the Swatch Group of Switzerland making great entry level watches. They are excellent at marketing and using their products in movies such as Men in Black, Dune (Part II), Indiana Jones-Dial of Destiny, Interstellar, Pearl Harbor and of course Oppenheimer.  They host the Behind the Camera Awards in Hollywood honoring those behind the camera, screen writers, prop masters, set directors, editors and so on. Today they manufacture and sell retro looking watches (Ventura, Khaki military, Boulton, and in the past Spur, Piping Rock and many others), an elegant line of men’s and ladies’ watches, the field Khaki leading the way with the Jazzmaster right behind them and a whole host of other beautiful watches. I wish I could tell you how many they produce a year, but the figures for yearly sales are private, closely held and not made public. 

I have met and spent time with two of Hamilton’s CEO’s, Sylvain Dolla who is now CEO at Tissot and the current CEO, Vivian Stauffer along with Sebastian Kearle, the customer service manager. I have to say, they are as passionate about the brand as I am.  We spent several hours combing through old memorabilia, photographs, research information, prototypes and of course watches from the past, ideas and the watch markets in general. They both know the watch business, the products and both are truly amazing, kind and considerate people.  This is why they are so successful at what they do. I also met and spent time with Murielle Raveloson, the brand president of Hamilton US.  She is so knowledgeable about the brand and its history, and her passion for watches and this brand is without question, top of the line.  When the Swiss took it over in 1974, they were just a watch company and even to this day, the Swatch Group is all about watches and movements (ETA). Today the Swatch group employs 33,500 people in over 50 countries, has 16 brands of watch and jewelry brands (Winston Jewelers), 2 retail brands, 30 production companies, 150+ production plants in Switzerland, 30+ counties with a Swatch Group organization, $7.8B in sales and a net profit of $890M.

In closing, the demise was either through the expansions of Art Sinkler (20% of the blame in my opinion) or Jacob Hain’s Penn Square-Bush Terminal (80% of the blame in my opinion).  This is 100% my opinion from the materials I have read.  I also feel that if Hamilton just made watches of high quality, they could have survived as just a watch company as many of the other major American watch brands were out of business.  Look at Patek Phillipe today, Thierry Stern the CEO of Patek said in an interview in Forbes magazine, they make 62,000 a year for worldwide consumption.  The HWC in the 1949 made 658,587 watches and in 1950 made 559,875 watches. That’s a lot of watches and a large labor force to fulfill those orders, but when things turn, it’s hard to go backwards and lay off staff, go back to a lower output and go back to quality vs quantity. It’s all hindsight, but the annual reports and the numbers speak for themselves.

I hope you enjoyed the article and thanks for reading. 
 
*All my data was obtained from Rene Rondeau, Timely Topics, Watch Words, Swatch Group, HWC Annual reports, NAWCC employee interviews, Lancaster New Era, Intelligencer Journal, Sunday News  
Revised 10/22/24.