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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 pocket-knives 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, 100 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.

The company was well positioned to handle the challenges it faced in the new millennium. The terrorist attacks in 2001, which led to strict travel restrictions and a slowdown in consumer spending, cut into company sales of Swiss Army knives. In fact, sales of Victorinox's knives reportedly fell by as much as 50 percent when the knives were no longer allowed on planes. The opening of a new SABI store in New York's SoHo district was also set back by more than a month as a result of the attacks. The company experienced another blow in 2003 when Switzerland decided to cut its military forces by one half.

Despite facing uncertain times, Victorinox forged ahead. It teamed up with SABI in 2001 to create Victorinox Swiss Army Watch AG, an international watch company. It purchased the remaining shares of SABI the following year, taking the U.S.-based company private. Sue Rechner, SABI's new president, commented on the deal in an October 2002 National Jeweler article. "Now that we don't have to worry about shareholders," she claimed, "we will be far more flexible and agile. The purchase by Victorinox allows us to be more competitive, because we can redeploy resources at the drop of a hat. We can concentrate on our core business, instead of worrying about how to make money in the short-term."

Victorinox's next big move came in 2005 when it added competitor Wenger S.A. to its arsenal. Both companies maintained their individual identities and expected the union to be beneficial on several levels. For Wenger, it provided much needed financial relief and would allow production to continue. The merger also kept the manufacture of genuine Swiss Army knives in Switzerland and put both companies on solid footing to compete with cheap imitations that were surfacing abroad, especially in China. Together, Victorinox and Wenger produced more than 25.7 million knives each year.

Victorinox's strategy during this time period included the introduction of unique and inventive products while continuing the longstanding tradition of providing top quality knives, pocket tools, and watches. Many new versions of the Swiss Army knife were being launched in order to combat weak sales. New knives that had flash memory sticks, glow-in-the-dark handles, and other digital features were hitting store shelves. Wenger introduced Evolution, a new line of ergonomic knives, to the American market in 2005. Although Victorinox had battled unprecedented challenges over the past several years, it stood in an enviable position as the sole manufacturer of the genuine Swiss Army knife. Carl Elsener and his management team were confident the company was prepared to overcome any future challenges that may come its way.

1. Introduction
2. 19th-Century Alpine Origins
3. Mid 20th-Century Rise to Prominence
4. Spinning Off New Products into the 1980s and 1990s
5. Cutting into New Turf and a New Century
6. Principal Competitors
7. Further Reading
8. Copyright Page
9. About Page