Seiko aims to be a leading company in the global watch industry as one of the world’s few “manufactures d’horlogerie” that produces all key components in-house, right down to the steel in the mainsprings, the chips in the Spring Drive and quartz movements, and the satellite receivers and antennas in the Astron.
Not only do they create all these things, they want us to know they are progressive, and touching our hearts.
PuristS, even Seiko-loving PuristS, might not appreciate the full reach of Seiko's business ambitions. To expand our understanding, I have compiled some information about its corporate structure and financials. I used to get paid to filter through annual reports, and I find Seiko one of the most complex entities I've dealt with. So, bearing in mind I might not have every answer, let's proceed.
BASIC STRUCTURE
"Seiko" consists of three groups of companies, related but not identical in ownership or management. Unlike most watch companies, Seiko is involved in lots of other activities. Some are synergistic and add to the value of its watches; others can seem to be a diversion. The company defines its main business areas in this way (unfortunately these do not align with the three corporate structures):
Here's how management defines this year's corporate mission:
"The Watches Business has achieved steady growth as the Group’s core business. Going forward, Seiko aims to further expand profitability and invest for growth, further raising brand value by opening its own boutiques across the world and by promoting a shift toward the mid- to high-end price range centered on mechanical watches."
Astron - Prospex - Presage - Premiere - Grand Seiko
Good news for us, as watch lovers, right? We can hope so. But we know this move to own-boutiques also limits us in some ways. Leaving that debate behind us, and with those four areas in mind (watches, electronics, systems, clocks & retail), let's look at the corporate structures:
SEIKO HOLDINGS | |
Global HQ: Tokyo Employees: 13,000 employees Sales: $2.3 billion dollars (2016) Operating Income: 2.9% or $66 million | |
Watches: $1.2 billion Electronic devices: $750 million Systems Solutions: $180 million Other: $240 million | |
Seiko Watch Corporation | Watch planning, design & sales |
Seiko Instruments Inc. | Subsidiary (see next table) |
Seiko Sports Life Company, Ltd. | Golf clubs, stopwatches, sporting equipment |
Seiko Service Center Company, Ltd. | Servicing & repair of Seiko products, including watches, shavers & LCD televisions in Japan, plus technical training for retailers and sale of parts, batteries & repair tools in Japan. |
Seiko Clock Inc. | Planning, design, manufacturing, sales & service of desk, wall, alarm & radio-wave clocks |
Seiko Time Systems Inc. | Development, marketing & service for system clocks used in schools & hospitals; marionette clocks; master clocks for broadcasting stations; sports timing devices, competition timing computer systems, & large display screens for sports events |
Seiko Precision, Inc. | Camera shutters & auto-focus mechanisms, system clocks, printers, mechatronics equipment, imaging devices, semiconductors, sensors, electroluminescent displays & open network systems |
Seiko Optical Products Company, Inc. | Eyeglass lenses, frames & related optical products |
Ohara, Inc. | Optical glass (partial ownership) |
Seiko NPC Corporation | Development, Mfr & Mktng of Semiconductors & ICs |
Seiko Solutions, Inc. | Development, manufacture, sale, maintenance, service, & consulting plus hardware and software for information systems & network services. |
Wako Company, Limited | High class retailer of watches, jewelry, accessories, etc. |
Chronos, Inc. | High class retailer |
Seiko Business Services, Inc. | Human resources |
SEIKO INSTRUMENTS
SEIKO INSTRUMENTS Inc. (SII) | |
Headquarters: Chiba Employees: 8,000 Sales: | |
World’s leading wristwatch movement manufacturer. Watches: Mechanical, Quartz and Digital watch movements and finished watches (Grand Seiko) Automotive components: integrated circuits, ABS parts, batteries and capacitors Info & Comm Technology: Mobile phones, routers, network switches, ICs, batteries Consumer Products: Musical instrument accessories (metronomes, tuners), dictionaries Distribution & Retail: Credit card terminals, restaurant ordering, inventory terminals, thermal printers Industrial Equipment: radiation detection and measurement systems, robots, CAE, CAD, and CAM systems, printheads, etc. | |
Division | Product Lines |
SII Semiconductor Corporation | Semiconductor chips, timers, amplifiers, EEProms, etc. |
SII Nanotechnology, Inc. | Watch planning, design & sales |
Morioka Seiko Instruments, Inc. | Development, manufacturing & sales of watches, tools, printers & measuring |
SII Network Systems, Inc. | Manufacturing camera shutters & related items |
SII Mobile Communications, Inc. |
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SII Printek, Inc. |
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SII Microtechno, Inc. |
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SII Micro Parts Ltd. |
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SII Micro Precision, Inc. |
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Epolead Services, Inc. |
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Seiko I Infotech, Inc. |
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Seiko I Techno Research Company, Ltd. |
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Seiko EG&G Company, Ltd. |
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City Service Company, Ltd. |
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HOW IS THE WATCH BUSINESS DOING?
2016 Fiscal Year: Sales of watches declined by 34%
Watches (Japan)
Sales fell due to factors including a decline in consumption by foreign tourists and sluggish sales of high-end products due to stagnant personal consumption. Ladies’ models in the Grand Seiko mainstay product line saw strong performance, while sales of the men’s models were down year on year. Sales of the Astron and Prospex struggled, falling from the previous fiscal year, while sales of the Presage and Alba fared well, remaining mostly at the same level as the previous fiscal year.
Net sales under the Wako Business fell due to a decline in consumption by foreign tourists, while the Clock Business performed strongly due to an increase in net sales in Japan.
Watches (overseas)
Sales shrank due to factors including the impact of yen appreciation, as well as a falling off in department store distribution channels in the U.S.. On a local currency basis, performance was strong and sales grew in markets in many countries and regions, including Germany and the Netherlands and Thailand. Seiko Boutiques were opened in Miami in the U.S. and Beijing and Guangzhou in China.
Movements
Earnings of watch movements worsened due to the impact of a change in distribution of products, as well as the slump in the watch markets of the United States and China
Outlook for 2017
Amidst a volatile business environment, the Company will continue striving to increase the Seiko brand value while working to grow profits in the Watches Business in all markets throughout the world, particularly for high-priced products, by:
Watch Business
Establishing new brand strategies for the Grand Seiko and expanding sales in Japan and overseas
Promoting efforts aimed at revitalization in the U.S.
Improving profitability through cost review in the watch movement sales business
We now come to Seiko Epson. Epson printers, projectors, etc PLUS some watch business. Is this the tail that wags the dog? Look at the total revenue figures - just shy of $10 billion USD. This is NOT part of Seiko Holdings, but is its own group with 90! related companies. Their focus is on combining efficiency, precision, and compactness. Epson creates wristwatches sold under the Seiko brand, including Spring Drive, GPS Solar and solar wave watches, mechanical wristwatches sold under the Orient brand, and the Smart Canvas watches that display the time on an electronic paper display. Epson also manufactures and sells wristwatch movements to other companies. The company produces wearable sensors/fitness monitors, golf swing analysers, and so forth, along with the sensors, accelerometers, chips, etc. although I think the batteries that power them come from Seiko Holdings.
SEIKO EPSON
SEIKO EPSON (EPSON) | |
Headquarters: Suwa, Nagano Employees: 70,000 employees Subsidiary companies: 90 Sales: ~$9.2 billion | |
Printing Solutions: $6.5 billion from pocket printers to commercial digital presses Visual Communications: $1.4 billion from liquid-crystal displays and projectors Wearable Products: $1.4 billion from watches and sensors for sports and personal healthcare Robotic Solutions: product assembly and chip handling (such as the Astron watch assembly line) Other: Crystals, Semiconductors, Powdered metals and composites, surface processing, plating, etc. | |
Sponsorships: Manchester United, Mercedes AMG Petronas | |
Epson Sales Japan Corp. | Sales and marketing of imaging products in Japan |
Epson Direct Corp. | Planning, development, manufacture and direct sales of PCs and peripherals |
Epson Service Corp. | Service and repair of printers, PCs, and peripherals; development and sales of new services |
Epson Atmix Corp. |
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Epson Software Development Lab, Inc. |
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Yasu Semiconductor Corp. |
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Seiko Epson Contact Lens Corp. |
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Seiko Lens Service Center Corp. |
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Epson Imaging Devices Corp. |
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Orient Watch Company, Ltd. |
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