EU Takes Close Look At Watchmaking

I have written several blogs this summer about Swatch Group and CEO Nicolas Hayek’s intentions to slow down the supply of movement parts to independent brands and watchmakers.  Hayek believes that watchmaking is being somewhat taken for granted and wants to make sure the art is never underappreciated.

The European Union antitrust regulators are now investigating whether their refusal to supply watchmakers with parts is a breach of EU competition rules.  Swatch Group has what some consider a monopoly on movement components and their refusal to sell them to other manufacturers could put a lot of companies out of business.  There are no alternatives for most brands, as developing movements entirely in-house requires an insane amount of time and money.  It should be interesting to see how the investigation unfolds.

On a completely different note, Tag Heuer has official ended ties with Tiger Woods after sponsoring the professional golfer for a full decade.  Audemars Piguet certainly has no intentions of leaving the golf scene, however, as it seems every stud golfer is rocking an AP patch on his sleeve while competing.  I am sure you will see what I am talking about if you catch any of the PGA Championship this weekend.

Linking back to my blog post from earlier this week on tech watches, there are some awesome golf watches out there.  For instance, the Garmin Approach S1 golf watch uses GPS technology and a large database of over 17,000 courses in the US and Canada to help provide distances to the front, back and middle of the greens for golf addicts.  I recently saw one in action, and it was incredibly accurate.  Pretty awesome if you ask me!

The Art Of The Movement

I read an incredibly interesting article in the NY Times this week on the Swatch Group. The watch manufacturing company is unable to meet the current demand for its products. To combat that problem, Swatch is looking to add 2,000 employees and expand their factories.

The statistics mentioned in the article are astounding. Exports of mechanical timepieces increased 32 percent in terms of units from 2009 to 2010. Meanwhile, Swatch group’s net profit in 2010 was a record 1.08 billion Swiss Francs.

The most interesting part of the article for me was reading how Nick Hayek, the Swatch Group CEO, wants to change what it means for a watch to be “made in Switzerland.” Swatch has supplied the base movements for watches manufactured by brands outside of their group for years and controls 70 to 80 percent of the industry’s current overall watch movement production.

As Hayek says, “We are in a ridiculous situation that would be like having BMW supply all the engines for Audi and Mercedes. In no other industry do you have one company supply all the critical parts to the people who then compete directly with it.”

Patek Philippe, Rolex, Zenith, Girard-Perregaux, Jaeger-LeCoultre and Glashutte are all true manufacturers that make all of their watch movements in house. While numerous other brands produce some of the movements for their watches entirely in house, most of them outsource movement parts from Swatch and other manufacturers.

The threat of Swatch no longer supplying movements to various watch brands is what has led brands like Breitling into investing millions upon millions of dollars towards producing in-house movements. If Swatch decides to completely stop supplying other manufacturers with movements, it would certainly stir things up in the watch industry. Each brand would have a much stronger individual identity.

Some watch collectors and enthusiasts are very particular about the movements used in their watches. Others care more about aesthetics and case materials. What matters the most? I think the answer varies depending on whom you talk to. We all have our different values. Regardless, I think it is crazy to undervalue the art of watch movement production. Nick Hayek clearly agrees.

New York Times Article

The Independents

Breitling has been a solid independent watch company since 1884.  Many high-end watch brands today are part of a larger group of companies.  For instance, IWC is part of the Richemont group, a Swiss luxury goods company founded in 1988, and Blancpain is part of the Swatch Group, a Swiss conglomerate that is now the biggest watch manufacturer in the world.

While Breitling is one of the independent watch companies that is still going strong and extremely popular, several other independent watch brands were unfortunately not able to survive the worst part of the recent recession.  One of those particular brands was a company called Wyler Geneve.

Wyler timepieces are extremely cool; they have a unique shape and lie incredibly well on the wrist.  The cases are flawlessly attached to the straps, and many of the watches have exhibition casebacks.  I really like some of them and just recently found myself wondering why the company did not make it.

Wyler Geneve

I decided to research some of the old Wyler retail prices and saw that their stainless steel chronograph on a rubber strap retailed for $10,800.  Doesn’t that seem a little high?  The watches do have an incaflex dial that makes them able to withstand a great deal of pressure, but it is not like they house a unique in-house movement or anything; Wyler Geneve watches use ETA base movements just like approximately 75% of the automatic Swiss watches on the market today.

I think the price point was the main reason for the company’s downfall. You are able to get a Breitling stainless steel automatic chronograph for under 5k!  That is less than half of what you would have had to pay for a Wyler stainless steel chrono…  Let’s be real; at the end of the day, price definitely matters.  There are a lot of awesome watches out there, and in order for a company’s line of watches to sell well, they must be priced appropriately and competitively.

Do you agree with where I am coming from?  Do you think Wyler Geneve watches would have sold better had they not had such a high price tag?