HEART OF THE MATTER
IN-HOUSE MOVEMENTS HAVE OFTEN BEEN ESPOUSED AS SIGNIFICANT SELLING POINTS FOR MECHANICAL WATCHES, BUT AS THEY BECOME MORE COMMON WITHIN WATCHMAKING LINE-UPS, AND WITH A MARKET THAT IS CHALLENGING AT BEST, PERHAPS IT’S TIME FOR BRANDS TO FOCUS THEIR ATTENT
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.
ALL ABOUT THE BASE
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?
FOR BETTER OR WORSE
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.