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How The Swiss Army Knife Survived 9/11

It can get you out of a jam and open wine, but the iconic multi-use companion narrowly escaped collapse after the War on Terror made it suddenly hard to carry everywhere.

26 million Victorix pocket knives are sold every year
26 million Victorix pocket knives are sold every year
Wolfgang Koydl

IBACH - The corkscrew on the legendary Swiss Army Knife is regarded as one of the most essential parts of the product. But it was also the one that gave its makers the most headaches in the beginning.

Because unlike blades, scissors, can-openers or magnifying glasses, its rounded spirals didn’t fit neatly into the construction. Beyond that, the metal had to be forged — a process that, suitably enough, was done in France, home of great wines in traditional corked bottles.

All of this makes the corkscrew the only exotic aspect of an otherwise entirely Swiss product, which has a brand recognition value around the world comparable to industry icons such as Coca-Cola, Nike or Apple.

Bright red with a luminous white cross, the jackknife with the innumerable functions embodies the values of the Swiss Confederation.

"The pocket knife is a symbol of Swiss quality and dependability," says Carl Elsener Jr., fourth-generation CEO of the family-run company Victorinox that makes the knives.

Every day, the company located in the small town of Ibach in central Switzerland ships some 120,000 of its knives. That's 26 million a year, and not only are they found on every continent in the world, but they have also traveled to outer space. Swiss pocket knives were among the basic tools accompanying every space shuttle mission.

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Comes in all shapes and sizes - Photo: Jim Pennucci

And yet the market is by no means saturated. There are, after all, 350 different models from which to choose, ranging from the no-frills standard knife to the Swisschamp with 33 functions, including linesman’s pliers and a chisel. As it is for other companies, China is a huge growth market for Victorinox. "Imagine if we could sell a knife to every single Chinese!" Elsener says with a dreamy smile. "And then of course there are all the knives that people lose and that have to be replaced."

Elsener’s great-grandfather Karl started out in Ibach as a self-employed cutler 129 years ago. Seven years later, in 1891, he landed a major contract with the Swiss army to deliver a soldier’s knife he had developed. It went on to become the world-famous Swiss Army Knife, and it overshadowed the market for the many household and professional knifes that Victorinox produced.

The post 9/11 business plummet

But the success story escaped an abrupt and catastrophic end by just a hair. "Our company has never been as hard-hit as it was by the Sept. 11, 2001, terror attacks in New York and Washington," the 55-year-old Elsener says. Almost overnight, after sharp objects were prohibited on airplanes, sales of the fireman-red knives — which had been a duty-free staple in airport stores and on flights — collapsed.

"We lost over 40% of our business,", Elsener recalls. "Airports sent vast quantities of the knife back to us." He is proud to this day that the company was able to absorb the losses without firing a single employee. "Jobs have always been a main focus for us," he says. "We really do see ourselves as a big family, in good times and bad."

One of the creative ways the company saved jobs was to "loan" Victorinox workers to other businesses in the area. At the same time, Victorinox strengthened the focus on its other products — traditional household knives along with the Swiss Army watches and luggage that Victorinox started producing in 1989 and 1999, respectively.

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Photo: Thinh H

"By its very definition, you don’t see a pocket knife — it’s in your pocket," Elsener says wryly. Shortly before 9/11, Victorinox had launched a line of leisure wear, and after the 2005 take-over of its competitor Wenger, which also makes Swiss knives, Victorinox introduced a fragrance line too.

Victorinox also overcame that turbulent period by having embraced virtues over the years that may sound old-fashioned today — "saving for a rainy day," for example. "We always had reserves," Elsener says. The company is now on a path of what he characterizes as "organic" growth. "We don’t want to soar up like a rocket because what goes up fast comes down fast," the CEO says. The current economic crisis has brought the company’s workers and management together.

But perhaps the greatest reason for Victorinox’s success is its unique structure. The Elsener family has long since given up all ownership. Ninety percent of the shares are in a company foundation with the remaining 10% of the capital invested in a charity foundation. Profits down to the last cent are reinvested in the company.

Given those circumstances, it’s no surprise that Elsener offers an sympathetic smile at talk of all the radical attempts to keep executive remuneration in the United States and Europe in check. He is paid only about six times the salary of the lowest-wage worker in the company.

"This isn’t some kind of adaptation to current trends. It was always like that here," he says. "Company management shouldn’t be so self-important." And they should also never be without their "faithful companion" — even if it is only to open a bottle of wine, should the occasion arise.

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