Tuesday, August 21, 2007

New manufactures: is verticalization on a roll?

Between 2008 and 2010, ETA will officially begin its progressive diminution of supplies of ébauches or movement blanks to companies outside of the Swatch Group. Having had a few years to prepare for this cataclysmic event, Swiss watch companies are seeking alternatives – the most logical of which is verticalization.

Numerous watch companies in Switzerland and elsewhere purchase movement blanks (a mechanical watch movement without the regulating organs - dial, hands, the balance and the balance spring), add a module of their own creation and/or decorate the movement, assemble the watch with the addition of the regulating organs purchased elsewhere, and voilà, a new watch is ready to be sold under the brand name X.

The balance spring conundrum
There are also a handful of watch companies that are referred to as ‘manufactures’, meaning they don’t purchase parts from specialist suppliers for their watches. Perhaps it would make some sense to clearly define the term ‘manufacture’: in the strictest terms of the definition, a ‘manufacture’ is a watch company that has the capacity to manufacture each and every component used in the production of a mechanical wristwatch – i.e. the case, dial, hands and movement, which includes its most essential and complex element, the heart if you like … the balance spring.
Obviously, a mechanical watch won’t work without a balance spring and, in Switzerland there is only one major supplier. The balance spring is made from a metal alloy Elinvar (elasticité invariable - elastically invariable) that resists magnetic fields and doesn’t react to variations in temperature and there is only one foundry that produces Elinvar and that’s in Germany. The foundry’s production schedule of Elinvar is a major mystery to outsiders because not only is the alloy very rarely manu-factured, but it appears to be totally impromptu, as if every decade or three someone suddenly remembers to make some. When it is made, however, very little is produced because just 3 grams of Elinvar makes 1,000 balance springs … therefore 1 million balance springs requires a mere 3 kilos of this very special alloy.
For many years now, Nivarox-Far, a company within the Swatch Group, has enjoyed a near monopoly on the production of balance springs since it manages to obtain most of the Elinvar available. Which means that even if a watch manufacturer makes their own movement, they are dependent on Nivarox to supply the balance spring. Consequently, when Nicolas G. Hayek decided in 2002 that he was going to give priority of supplies of movements and movement blanks to his own watch companies, non-Swatch Group companies were obliged to put on their thinking hats to find a solution to their supply problem.
Through force of circumstance, for those with sufficient financial clout, becoming a ‘manufacture’ seemed the logical move - albeit it an extremely expensive and demanding one. For those companies without the financial resources to follow the verticalization path, they will remain dependent on whatever supplies they can lay their hands on in the forthcoming years.

Given the extensive costs of machines and the specialized technology and know-how in the production of balance springs, it is also generally accepted that those brands who purchase their balance springs from a specialist producer can still be considered a ‘Manufacture’ if all the other components are produced in-house.
The watch companies of the ‘old school’ referred to as a ‘manufacture’ are Audemars Piguet, Girard-Perregaux, IWC, Jaeger-LeCoultre, A. Lange & Söhne, Patek Philippe, Piaget, Rolex, Vacheron Constantin and Zenith. However, of these only Jaeger-LeCoultre, Rolex, A. Lange & Söhne and Ulysses Nardin are believed to have the capability of producing their own balance springs, although one must doubt whether Rolex can produce sufficient for the 800,000 or so timepieces they manufacture a year.
Of the ‘new boys on the block’ that can be considered a manufacture it is generally accepted that Chopard, Franck Muller, Frédérique Constant, Maurice Lacroix, Parmigiani-Vaucher, Roger Dubuis and François-Paul Journe, who is currently seriously investing in the necessary machinery, and most recently Bovet, can produce at least some, if not all, of their own balance springs and movements.
Much has been written in Europa Star about Chopard, Journe, Franck Muller, Parmigiani-Vaucher and Roger Dubuis and there’s more in this issue from the pen of Pierre Maillard. Consequently, let’s take a look at Bovet, Frédérique Constant and Maurice Lacroix the latest brands to move into the ‘manufacture’ category.

With the acquisition of the Château de Môtiers in the Val-de-Travers, Bovet, under the leadership of Pascal Raffy, has moved back to its roots and with the purchase in August of this year of three manufacturing structures, Bovet’s move to becoming a ‘manufacture’ is now no longer a dream.
By acquiring STT Complications SA (ex-Progress Watch, production and development of tourbillons), STT Mechanical Movements SA (calibres), STT SPIR-IT (balance springs) STT Watch U Licence (brevets) as well as Aigat (stamping) and placing them under a single roof in Tramelan under the name Dimier 1738, a name belonging to the Bovet patrimony, Raffy has ensured that his company can now become totally self-sufficient and is, by definition, a ‘manufacture’. Additionally, Bovet is a partner of Aubert Complications based in Le Lieu (VD).
Bovet now has, via the 60 highly skilled employees and the 2000 m2 workshops in Tramelan, the essential know-how of quality workmanship in the manufacturing of haute horlogerie movements at its fingertips. Few watch companies have achieved their objectives in such a short period of time, but given the opportunity for the acquisitions and enough finance for the purchase … miracles can be achieved.
“As a client of these companies since 2004,” Pascal Raffy explains, “I knew the quality of their products and it was a unique opportunity to enter the very close circle of genuine manufactures of Swiss Haute Horlogerie. It was also a way to guarantee our total autonomy in terms of supply of manufactured movements, answering not only the highest criteria, but also guaranteeing a vertical growth of our production, indispensable for an ambitious and prestigious watch company. I will assume the development of manufacturing, focussing on the highest quality of products, but in keeping a limited production in terms of volume. Excellence, exclusivity and respect of delivery terms are for me essential preoccupations.” With Dimier 1738, Bovet is opting for verticalization of its production and has become an instant ‘manufacture’ with the aim of creating an exclusive Bovet movement, a top-of-the-range calibre that will be presented in 2008.

Frédérique Constant
Founded in 1988, Frédérique Constant is another independent watch company that has enjoyed a remarkable growth of between 25-30% annually. With a recent annual production of more than 45,000 watches a year and increasing orders, during the summer the company moved to new premises in Plan-les-Ouates on the outskirts of Geneva. Measuring 3,200 square metres and divided over four floors, the specially designed and constructed building is home to around 70 employees in the sectors of movement component production, calibre assembly, watch assembly, and extensive quality control. Numerically-controlled machines of the latest generation are located in a large atelier in the basement, where all component manufacturing is concentrated. Calibre and watch assembly, as well as state-of-the-art quality control is primarily organized on the first floor. The building is also the brand's international headquarters.
With its slogan ‘Live your passion’, Frédérique Constant will continue with the passionate development and production of exciting new collections and aims to produce and sell over 55,000 pieces this year. Current plans, including the recent acquisition of the Alpina watch brand, seems to have ensured that the company can confidently manage growth now and in the future.
To commemorate the official inauguration of the new Frédérique Constant building, a new limited edition of its classic Heart Beat Manufacture wristwatch, with the brand’s own manufacture movement, has been developed. The Heart Beat Manufacture ‘Plan-les-Ouates’ is in 18 carat white gold and is equipped with the original FC-910 Frédérique Constant manufacture Calibre first unveiled in 2004. The dial of the watch, with classic Roman numerals, is of the same anthracite colour as the new building. The Heart Beat Manufacture ‘Plan-les-Ouates’ is a Limited Edition of just 188 pieces.
“From the start of the company, Frédérique Constant’s mission has been to manufacture classical Swiss watches at sensible prices,” explain Aletta and Peter Stas, COO & CEO of Frédérique Constant. “We position ourselves with a Swiss quality product in the mid-price segment. As a young company, our overheads are considerably lower than most of the competition and the resulting lower costs are passed on to consumers. The new manufacture in Plan-les-Ouates has been developed for maximum efficiency and we expect that the new work-environment will continue to enhance our competitive position.
“In addition to its watches in the middle-price range, Frédérique Constant offers some timepieces in the Haute de Gamme segment. In 1999, we introduced our Highlife Tourbillon in 18 carat gold at 48,000 Swiss francs. While this model was created as a ‘talking piece’, over 100 of them have now been sold. We had a similar experience with the Heart Beat Perpetual, also a timepiece at a substantially higher price than most of the Frédérique Constant collection. Lastly, the Heart Beat Manufacture, the watch that is equipped with our own movement has a retail price ranging from 5,000 to 15,000 depending on the model and is now selling 1,200 pieces a year.
“With new investments in CNC and milling machines, we are increasing our capacity to manufacture small series of rare timepieces. It is important to note that these new high-end timepieces are entirely developed and produced in-house. These timepieces are produced in addition to the regular Frédérique Constant collection in the mid-priced segment, which remains our main focus.”

Maurice Lacroix
Founded in 1975, Maurice Lacroix is one of a small number of genuinely independent Swiss watch manufacturers. Since its beginnings, watches have been produced in its state-of-the-art workshops in Saignelégier, and as the company has developed both nationally and internationally (Maurice Lacroix watches are available in some 3,700 retailers in more than 60 countries), so the workshops have expanded to add to the production capacity.
Although there have been changes within the industry and therefore within the company over the last 30 years, watchmaking tradition, skilled craftsmanship and passion, as well as a devotion to design and perfection have remained at the heart of what has become a highly creative watch company and today, Maurice Lacroix produces more than 150,000 watches a year.
At Baselworld this year, Philippe C. Merk, Maurice Lacroix’ CEO, presented the brand’s first ‘own Manufacture’ Calibre ML 106 hand-winding chronograph movement along with the ‘Masterpiece Le Chronographe’ that houses it. As Merk stated, “This heralds the start of a new, promising era for the brand.” The ML 106 Calibre Chronograph movement is the first one completely designed and developed in-house, which means, using the earlier definition, Maurice Lacroix has joined the ranks of the exclusive club of Swiss ‘manufactures’.
Since the beginning of October, workshops for the manufacture of highly complex watch movement components have been set up under the name La Manufacture des Franches-Montagnes SA in Montfaucon, very close to the Maurice Lacroix watch atelier at Saignelégier in the Swiss Jura Mountains. The production based on the latest CNC technology is primarily intended to encompass low-volume individual parts, thus giving the brand’s timepieces their own unique and detailed styling.
Understandably, Maurice Lacroix will continue to work with external suppliers, but the in-house manufacture makes it possible for the brand to act independently in times of greater demand and to better control its production of complex mechanical watches.
With the establishment of the Manufacture des Franches-Montagnes SA, Maurice Lacroix completes the last logical step in its manufacturing verticalization and as a ‘manufacture’ ensures the development of innovative addit-ional functions and complicated mechanical movements in its Masterpiece Collection.
Verticalization or die? You pays your money and make … your own watch?

By D. Malcolm Lakin
Source: Europa Star December-January 2007 Magazine Issue

1 comment:

Ted Cossins said...

A most thought-provoking article! I have vague memories from my RAF days of an alloy called "Invar" so maybe there is a alternate either forgotten or not yet re-discovered. And what happened to all the research into alternate materials such as ceramic or silicon, I wonder? I hate monopolies, and may decide to sell anything that has Swatch bits in it (just kidding, too many military watches with 2801-2's in them).