Singapore Tatler Jewels & Time - - Contents -

Is there ca­chet in mar­ket­ing in­house move­ments, and do they trans­late to dol­lar sales?

High-end me­chan­i­cal time­pieces are of­ten

ac­com­pa­nied by a tech­ni­cal spec­i­fi­ca­tion sheet that would not look out of place with an ex­otic sports car. There is one term though that has been the sub­ject of much dis­cus­sion over re­cent years: in-house, or man­u­fac­ture, re­lat­ing to the ori­gin of the watch’s me­chan­i­cal heart, the move­ment it­self. You have un­doubt­edly seen it, whether or not you’re in­clined to pore over such tech­ni­cal terms, for the brands that pro­duce their own move­ments are very proud of that ca­pa­bil­ity. Long-time watch col­lec­tors will nod know­ingly when pre­sented with such time­pieces, which have tra­di­tion­ally car­ried an ex­tra ca­chet rel­a­tive to those watches with, for lack of a bet­ter phrase, a more generic prove­nance.

How­ever, that was not al­ways the case, as it wasn’t all that long ago that the watch in­dus­try gen­er­ally re­lied on a hand­ful of move­ment pro­duc­ers, and were only too happy to use them to power even the high-end, ex­clu­sive watches. Let’s ex­am­ine why “in-house” has be­come such a fo­cus, and whether it gen­uinely trans­lates into a strong sales ar­gu­ment.


In or­der to do that, I have to rewind the clock a bit, and ex­plain how we’ve got­ten to to­day’s fo­cus on the me­chan­i­cal blood­stock, if you will. Some 15 years ago, fol­low­ing its re­birth af­ter the on­slaught of quartz watches, the me­chan­i­cal horo­log­i­cal in­dus­try had achieved a sig­nif­i­cant foot­ing, but on a dif­fer­ent play­ing field. In spite of their chrono­met­ric per­for­mance, which sim­ply can­not ri­val that of a quartz move­ment, me­chan­i­cal watches were el­e­vated into an art form, one to be priced at a pre­mium. Rather than present the vari­ance of the watch as a few sec­onds a month, the watch in­dus­try switched to sec­onds per day, which makes it sound so much bet­ter, doesn’t it? It’s not what re­ally counted though, for these me­chan­i­cal watches were for those who didn’t need to worry about ul­ti­mate pre­ci­sion; these were watches that vaunted man­ual crafts­man­ship, ex­quis­ite fin­ish­ing, and, ul­ti­mately, the very his­tory that would be con­tained in these mag­nif­i­cent minia­ture me­chan­i­cal art pieces that hap­pen to be worn on the wrist.

De­sign­ing and build­ing a move­ment from scratch is eas­ier said than done, even to­day, with the help of com­put­ers in the de­sign and pro­to­typ­ing phases. If en­tirely done by hand, which is pos­si­ble, it’s a long and ar­du­ous process. There are still el­e­ments of watch­mak­ing that can­not be done by ma­chine any­way, par­tic­u­larly when it comes to the fin­ish­ing of a move­ment—all those an­gles you see when you ex­am­ine a me­chan­i­cal move­ment and the pol­ish­ing ap­plied to it are meant to show off the fact that a hu­man touch was re­quired to ac­com­plish it. So watch­mak­ers gen­er­ally turned to a com­mon source to get the move­ments in kit form, called “ébauche”, which they could then adapt to their own spec­i­fi­ca­tions, ei­ther in the hand fin­ish­ing alone, or by the swap­ping of some key el­e­ments or the in­clu­sion of func­tional mod­ules to bring dif­fer­ent com­pli­ca­tions into the watch.

One of the largest sup­pli­ers of move­ments is ETA SA, which dates back to 1793. They would hap­pily al­low you to buy ébauches that would end up be­ing cus­tomised. Thus, they formed a com­mon base for a very large part, if not the ma­jor­ity of the watch­mak­ing in­dus­try, quartz and me­chan­i­cal. How­ever, ETA is owned by the Swatch Group, one of the ma­jor watch­mak­ing con­glom­er­ates, which has quite a num­ber of brands within its port­fo­lio, such as Breguet, Blanc­pain, Omega, Longines, to name but a few. The group wanted to en­sure that its own brands would have ac­cess to suf­fi­cient com­po­nents for their pro­duc­tion, and an­nounced in 2002 that it would grad­u­ally re­duce the sup­ply of ébauches to ex­ter­nal com­pa­nies, phas­ing out the pro­duc­tion by 2020. As you can imag­ine, this caused a gen­eral up­roar—no one at the time was re­motely pre­pared to build their own move­ments, and other sup­pli­ers were not

De­sign­ing a MOVE­MENT from scratch is EAS­IER SAID than done, EVEN WITH to­day's com­put­ers

avail­able to cater to the grow­ing de­mand. This strate­gic move by the Swatch Group ended up be­ing tied up in leg­is­la­tion for years, but fast for­ward to to­day, the fact is that ETA sim­ply can­not sup­ply, will­ingly or not, the sheer num­ber of move­ments that the en­tire in­dus­try re­quires.

That doesn’t mean that the pro­duc­tion of ébauches, at ETA and else­where, has dried up com­pletely; it’s sim­ply that it no longer forms the ma­jor­ity, par­tic­u­larly at the very high­end, of the me­chan­i­cal watch in­dus­try. Brands with suf­fi­cient re­sources have man­aged to build in-house move­ment pro­duc­tion ca­pa­bil­ity, which is now cre­at­ing an in­ter­est­ing co­nun­drum: given that in-house is the norm, does it war­rant the ca­chet that it once car­ried, and is it truly an added value sales ar­gu­ment?


It’s per­fectly un­der­stand­able that watch afi­ciona­dos, let alone col­lec­tors, would want their pre­cious time­pieces to be as ex­clu­sive as pos­si­ble, and part of that priv­i­lege is know­ing that this ex­tends to the very heart of the watch. The prob­lem has been though that this man­u­fac­tur­ing ca­pa­bil­ity came with a sig­nif­i­cant added cost; the brands were re­quired to make very high in­vest­ments in ma­chin­ery and man­power in or­der to adapt, and this cost was di­rectly passed on, of­ten at a pre­mium, to the end clients. The higher prices were ac­cepted for a time, es­pe­cially as the Greater China cus­tomers seem­ingly bought watches left, right and cen­tre. The prices con­tin­ued to rise, far out­pac­ing in­fla­tion in de­vel­oped coun­tries, but as long as the de­mand was there, the brands were more than happy to go with the flow.

How­ever, the past two years have painted a very dif­fer­ent pic­ture. This in­sa­tiable de­mand has sud­denly seemed to dwin­dle to a mild crav­ing rather than a rush to the buf­fet ta­ble. Watch sales have been fall­ing for months, with Asia hit par­tic­u­larly hard, and there doesn’t seem to be a light at the end of the tun­nel yet. What does this mean for all this in-house man­u­fac­tur­ing ca­pa­bil­ity that is avail­able?

There has cer­tainly been a move­ment (par­don the pun) to­wards show­ing that in-house doesn’t have to be di­rectly cor­re­lated with high prices. Brands that started in­vest­ing a long time ago are reach­ing a level of ma­tu­rity that en­ables them to pro­duce in suf­fi­cient quan­ti­ties while man­ag­ing costs, lead­ing to more ac­ces­si­ble watches while still equip­ping them with in­house move­ments. Some of these move­ments are be­ing shared with other brands as well, whether they are in the same group or are sim­ply closely re­lated brands.

It seems that the fo­cus on in-house as a pre­mium sell­ing point is no longer ap­pli­ca­ble, given that it’s less ex­clu­sive, and that the mar­ket con­di­tions are in­di­cat­ing that fewer clients are will­ing to pay a pre­mium, and would rather have well-made, de­pend­able move­ments, but at more ac­ces­si­ble price-points. It must be said though that while the prices are still very high com­pared to just a decade ago, this in­vest­ment has led to a sig­nif­i­cant amount of in­no­va­tion in the watch in­dus­try, with new move­ments and ma­te­ri­als be­ing de­vel­oped on a con­tin­u­ous ba­sis. Per­haps it’s time for the in­dus­try to turn this arms race around, and find new ways of col­lab­o­rat­ing and shar­ing this knowl­edge and pro­duc­tion ca­pa­bil­ity, which will be ben­e­fi­cial for the in­dus­try as a whole, and ul­ti­mately for its po­ten­tial clients.

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