We discuseed this before:

http://forums.equipped.org/ubbthreads.php?ubb=showflat&Number=193006#Post193006

There is an excellent post by blast explaining what can degrade the compass needle/magnet

Thanks, some of the old stuff has a lot of charm. This particular one is from the late '40s and made of bakelite, aluminum, and glass. The older ones have a twisted bar needle with a tiny copper coil on one end. The later versions have a blued flat steel needle. The glass can be pried up, and the needle removed. By stroking the needle with one pole of a strong magnet from end to end for a minute or so, you can strengthen the field or change the polarity. Should last a long time, but if not, the procedure can be repeated.