Victorinox AG
Address:
Schmiedgasse 57
CH-6438
Ibach
Switzerland
Telephone: (0) 41 81 81 211
Fax: (0) 41 81 81 511
http://www.victorinox.ch http://www.swissarmy.com
Statistics:
Private Company
Incorporated: 1891 as Swiss Cutlery Guild
Employees: 970
Sales: $165.12 million
SICs: 3421 Cutlery; 3423 Hand & Edge Tools, Not Elsewhere Classified; 5072 Hardware
Company History:
Victorinox AG has spent the 20th century perfecting and popularizing a cultural icon: the Swiss Army knife. A synonym for utility, the multifunction gadgets have won an enduring place in the heart of self-sufficient hikers, tinkerers, and yes, soldiers, of all kinds. Among pocket knives, the Swiss Army brand is probably the most widely recognized in the world. As Europe's largest knife manufacturer, Victorinox also produces a line of popular chefs' knives.
Nineteenth-Century Alpine Origins
Carl Elsener was born in 1860 to Balthasar Elsener-Ott, one of a long line of haberdashers in Zug, Switzerland. Instead of taking up hats, Elsener learned the craft of knife-making and apprenticed in Paris and Tuttlingen, Germany, where he specialized in surgical quality instruments and razors. Elsener began making knives for himself on January 1, 1884, in Ibach, south of Geneva in the pastoral canton of Schwyz, the birthplace of the Swiss Confederation. A former mill on the Tobelach River (Tobel Stream) housed Elsener's first workshop. The first Swiss Army knives were reproductions of pocket knives mass-produced in Soligen, Germany. A blade, punch, can opener, and screwdriver folded into the knife's handle. Elsener began making them for the Swiss Army in 1891, after organizing the Swiss Cutlery Guild of 37 craftsmen in order to ease the district's severe employment deficit, which was forcing its agricultural labor base to seek greener pastures in foreign lands.
Elsener was not the only knife maker granted a contract. While the Fabrique nationale d'armes in Bern had turned down the chance to supply pocket knives for the army, the Forges de Vallorbe was another early supplier. Around the turn of the century, Paul Boechat & Cie (based in the Francophone Jura canton), later to become Wenger S.A., also became a supplier, giving rise to decades of apparently contradictory claims of authenticity from the rival manufacturers. The Swiss government would continue to maintain the right of both of these two companies to manufacture official Swiss Army knives.
Many variations of the original Soldier's Knife ensued: farmers, students, and cadets alike could have their own namesake folding assortment of tools. Elsener's stroke of genius came when he whittled down the original knife's clunky design, adding two new features for the benefit of officers, who unlike enlistees typically had to buy their own knives. A small, sharp "erasing" blade was useful for scraping off mistakes in paperwork handwritten by pen. A corkscrew helped enhance the officers' dining and socializing. The six blades required only two springs. The "Offiziersmesser," the official knife of the Swiss Army, was registered for trademark protection on June 12, 1897. When later offered for sale to civilians, the knives sported bright red handles to aid their visibility in snow. The original Army models were housed simply in a metal case.
The company's tinkering did not end with the Officer's Knife. Its success spawned knives with various additional appendages, including a saw, scissors, tweezers, and magnifying glass. The Swiss Champ performed 30 different functions. The 24-tool "Champion" has been displayed in New York's Museum of Modern Art and the Staatliches Museum für angewandte Kunst in Munich as a pinnacle of product design. In the 1990s, it retailed for about $90; the six-blade Classic sold for $18.
The company began using a Swiss White Cross to identify its wares in 1909. Elsener dubbed the line with the trademark "Victoria" in honor of his mother, who died the same year. The -inox suffix was attached in 1921, a designation for the stainless steel newly introduced into the knives' production. In the 1920s, the field of craftsmen supplying pocket knives to the Swiss Army was thinned to only Victorinox and Wenger.
Post-World War II, Swiss Army Knives Conquer the U.S., Then the World
In 1937, the Forschner Butcher Scale Company of New Britain, Connecticut, began importing Victorinox butcher knives. However, American buyers were not introduced to Swiss Army Knives en masse until they were sold at overseas army bases after World War II. Forschner was also a venerable family-owned business, founded in 1855. Swiss Army knives replaced butcher scales in its product lineup after it was sold in 1957.
So compact were the knives that appendages often served more than one function. For example, in 1951 Victorinox received a patent for its new can opener, which was said to work easily and not leave ragged edges. The end of the can opener had been fashioned into a small screwdriver blade. (One unstated function that had always been included with screwdriver blades was that they spared the knife blades from being ruined in prying open containers or twisting screws loose.) Victorinox also made the knife lighter by using aluminum alloy rather than nickel and silver in the separators.
In 1960, the KGB and Soviet press mulled over a Swiss Army knife, among the ingenious Western spy equipment found on Francis Gary Powers when his U2 was downed over Russia. Victorinox maintained an enduring relationship with pilots, who had a natural affinity for compact, lightweight devices. One aviator even reported using his Swiss Army knife to free himself from burning wreckage. The knives would later be carried aboard the space shuttle.
Forschner became the exclusive Victorinox distributor for the United States in 1972. This was documented formally in 1983. Forschner was sold again in 1974, to investor Louis Marx, Jr., who sold the knives through mass market retailers instead of just outdoor supply stores. The company went public in 1981; one significant investor was Charles Elsener, president of Victorinox.
In 1976, Victorinox began supplying the Germany army with pocket knives--sporting a German eagle rather than the Swiss cross. After the United States, Germany was the firm's biggest market.
Spinning Off New Products into the 1980s and 1990s
Some earlier brand extensions were the survival kits Victorinox had assembled as a natural complement to its pocketknives. A broader diversification began in earnest after Forschner registered the Swiss Army name as a trademark in the 1980s, clearing the way for product spin-offs such as sunglasses and wristwatches. The watches, which retailed between $75 and $500, performed beyond expectations. The granting of the trademark provoked some public questioning since the Swiss Military Department did not require royalty payments in return. However, it did stipulate that such products be made in Switzerland and be of "exceptional quality." In 1996, Forschner, then known as Swiss Army Brands, did agree to pay royalties, however.
The deal prompted a lawsuit from Precise Imports Corp., U.S. and Canadian importer of Wenger knives, which was settled in 1992. Forschner retained the rights to use the Swiss Army trademark on its compasses, timepieces, and sunglasses, while Precise could use it in marketing other non-knife items. Watches under the Wenger brand did appear in stores opposite Victorinox brand watches (made by a separate Swiss supplier). In 1992 and 1993, Canada and the Caribbean were added to Forschner's exclusive sales territory.
The connotation of quality possessed by Swiss Army knives helped U.S. distributor Forschner build a considerable business selling the knives as promotional items imprinted with sponsor's logos. Lyndon Johnson reportedly gave away 4,000 of the knives embossed with his signature, starting an enduring White House tradition. Approximately a hundred companies bundled Swiss Army knives with their wares in order to entice consumers in the 1990s. Massachusetts-based Cyrk, Inc. specialized in this type of marketing.
Pharmaceutical companies such as Eli Lilly bought hundreds of thousands of the knives to promote new drugs. In 1989, Forschner sold nearly $10 million worth of them this way. The knives made medical news more than once, being used by doctors in emergency in-flight tracheotomy operations to save choking airline passengers. Not surprisingly, a special blade was eventually created for this purpose, as well as a tool for pulling cotton out of medicine bottles.
The renewed vigor of Victorinox in the 1980s and 1990s inevitably began to arouse competitors. Schrade Cutlery introduced a German version of the knife. Wenger made an agreement with Buck in 1991 to market knives under the well-known American brand name.
In 1992, Forschner sued to prevent the Arrow Trading Co. from importing Chinese clones displaying a white cross and shield and the words "Swiss Army." Victorinox introduced the genuine article to the Chinese market in 1993, when worldwide sales totaled $148 million (only $83,000 of this garnered in China).
Various refinements helped broaden the knife's appeal. Victorinox attempted to make the knives more attractive to female buyers by offering them in various colors. The Executive model, a small knife featuring tools such as a nail file and orange peeler, sought to cut out a place for Swiss Army knives in the business world. The SwissCard embodied the concept in the form of a "credit card" a fraction of an inch thick, which sported a toothpick, tweezers, letter opener, pen, and scissors.
In the mid-1990s, Victorinox had an 80 percent market share for Swiss Army knives outside Switzerland. Sales to the Swiss Army itself had dwindled to less than 1 percent of the company's output. Victorinox also made kitchen knives carrying the Forschner brand name, as well as daggers and kitchen knives for the Swiss Army. Victorinox made 400 different chefs' knives as well as at least as many variations on the Swiss Army knife. However, only a fraction of these models (40) were marketed in the United States.
Forschner changed its name to Swiss Army Brands, Inc. in the middle of the decade to reflect the company's principal focus. Its sales were $130.01 million in 1996. Swiss Army brand extensions earned nearly half of this; the knives themselves earned just over a third.
Cutting into New Turf and a New Century
As it approached the new millennium, Victorinox exported 90 percent of its production. As Carl Elsener reported, "We receive many letters from abroad which make us proud of our product, but also of Switzerland. To be able to advertise Switzerland and Swiss quality is a great honour for Victorinox."
Elsener summarily dismissed the concept of moving pocket knife production overseas in order to slash labor costs and customs duties. He cited the company's stated mission of providing employment in its rural environment (headquartered in a town with a population of 3,500) as well as the selling power of Swiss craftsmanship. The plant manufactured 34,000 pocketknives per day.
Victorinox boasted of its new factory's efforts to minimize ecological impact. The plant was heated primarily through energy recovered from its own manufacturing operations. In addition, a hundred adjacent apartments also shared this heat source. Other environmental conservation measures included recycling industrial waste.
Victorinox AG celebrated the 100th anniversary of its "Offiziersmesser" in 1997. Although the Swiss Army knife had remained a bestseller throughout the century, the firm continued to refine its mainstay as well as develop new products. The calls of new markets, such as Latin America, could be heard echoing through the Alps, and the village's workshops hummed with activity in response.
Further Reading:
Andreae, Christopher, "Definitely Officer Material," The Christian Science Monitor, June 25, 1997.
Bourjaily, Philip, "The Swiss Army Knife," Sports Afield, July 1, 1994.
Bucher, Delf, "Pfiffige Werkzeugkästen für sämtliche Hosentaschen," Tages-Anzeiger, February 2, 1997.
"But Will They Open Cans?," Time, September 10, 1990, p. 63.
Meeks, Fleming, "Blade Runner," Forbes, October 15, 1990.
Merki, Kurt-Emil, "Nicht jedermann hat's im Sack," Tages-Anzeiger, February 2, 1997.
Norman, Geoffrey, "Making the Blade," Forbes, November 25, 1991.
Pullin, Richard, "Swiss Army Alleges Trademark Infringement," Reuters Business Report, December 18, 1996.
Ratcliffe, Alice, "Never a Dull Moment As Swiss Army Knife Turns 100," Reuters, June 12, 1997.
Rychetnik, Joseph, "A Perplexity of Pocket Tools," Knives '96, Northbrook, Illinois: DBI Books, 1995, pp. 21--29.
Sains, Ariane, "Swiss Army Swells Ranks," Adweek's Marketing Week, June 4, 1990, p. 24.
"Swiss Army Knife Cuts Wide Swath: Profits Rise as It Carves Bigger Niche," Charlotte Observer, September 6, 1992, p. 7B.
Tagliabue, John, "Red-Hot Battle Over Red-Handled Knives: Distributor of Famous Swiss Army Gadget Sues to Stop Sales of Chinese Knockoffs," Charlotte Observer, September 11, 1994.
Weiser, Benjamin, "It Slices, It Dices, It Outrages the Swiss: A Ruling Favoring Chinese Imitations Cuts Army Knife's Original Makers to the Bone," The Washington Post, July 30, 1994.
Source: International Directory of Company Histories, Vol. 21. St. James Press, 1998.
