Wel­come to Glashütte, the eastern Ger­man vil­lage over­run with world-class watch­mak­ers

Glashütte’s watch­mak­ers pros­per as Switzer­land re­trenches “We’re a very well-kept se­cret, al­most like stealth wealth”

Bloomberg Businessweek (Asia) - - CONTENTS - Corinne Gretler

The eastern Ger­man vil­lage of Glashütte doesn’t look like much: just a hand­ful of streets stretch­ing up and down a nar­row val­ley from a bare sta­tion plat­form, where trains de­part once an hour for the 45-minute trip to Dres­den. Look more closely, though, and you’ll find

that the town of 7,000 is home to the great­est con­cen­tra­tion of world-class watch­mak­ers out­side Switzer­land—with a busi­ness that’s grow­ing even as Swiss pro­duc­ers re­trench. The town pro­duced more than 32,000 watches last year, with a to­tal re­tail value of at least €500 mil­lion ($565 mil­lion), ac­cord­ing to an­a­lyst es­ti­mates.

Th­ese aren’t Timexes. Glashütte’s 10 watch­mak­ers tend to­ward the high end, and the prici­est lo­cal pro­ducer, A. Lange & Söhne,

has built a rep­u­ta­tion that com­pares fa­vor­ably with those of

gi­ants Patek Philippe and Aude­mars Piguet. Some of its watches top €1.9 mil­lion, and the brand carries an av­er­age price of roughly €50,000. “Our cus­tomers like that not ev­ery­one knows what they have around their wrist,” says Wil­helm Sch­mid, chief ex­ec­u­tive of­fi­cer of Lange, whose prod­ucts have been spot­ted on the arms of Brad Pitt and Clint East­wood. “We’re a very well-kept se­cret, al­most like stealth wealth.”

The Ger­man in­dus­try, though far smaller than Switzer­land’s, is less de­pen­dent on sales to China, where the watch busi­ness has been ham­mered by an an­ti­cor­rup­tion ef­fort that has re­duced gift-giv­ing. And with most ex­penses in eu­ros, pro­duc­ers have been able to keep costs in check, un­like Swiss ri­vals that have to deal with the ris­ing franc. Switzer­land’s Richemont said in Fe­bru­ary it may cut as many as 350 jobs in the coun­try, but the two main brands in Glashütte say they’re hir­ing. Ger­man watch ex­ports last year jumped 14 per­cent as Switzer­land’s fell 3.3 per­cent, gov­ern­ment data show.

Still, the Ger­mans may soon face the prob­lems that have hit the Swiss, cau­tions René We­ber, an an­a­lyst at Bank Von­to­bel in Zurich. Europe’s A. Lange & Söhne Zeitwerk Minute Re­peater, $498,000 It can strike dif­fer­ent tones hourly and at 10and 1-minute in­ter­vals.

ter­ror­ism-sparked tourism slump will likely eat into sales, We­ber says, and “the lux­ury watch­mak­ers in Glashütte will also feel the down­turn in Asia.”

De­spite the dif­fer­ing for­tunes, Glashütte owes much of its pros­per­ity to the Swiss. In 2000, Richemont bought Lange, and Swatch Group ac­quired Glashütte Orig­i­nal and Union Glashütte. Lange has sent em­ploy­ees to the Swiss town of Schaffhaus­en, home to sis­ter brand IWC, for train­ing. And some Glashütte pro­duc­ers im­port hands and di­als from Swiss sup­pli­ers.

Lange was the town’s first watch­maker, founded in 1845 by Fer­di­nand Adolf Lange, a Dres­den na­tive who stud­ied the trade in Switzer­land and Paris. By the turn of the 20th cen­tury, Glashütte counted as many as 20 com­pa­nies that man­u­fac­tured watches, marine chronome­ters, and grand­fa­ther clocks. Af­ter World War II the town’s half-dozen re­main­ing watch com­pa­nies were ex­pro­pri­ated by East Ger­many’s com­mu­nist gov­ern­ment and merged into a state-owned kom­bi­nat, which con­tin­ued to man­u­fac­ture me­chan­i­cal watches and chronome­ters.

To avoid be­ing sent by the Soviet oc­cu­piers to work in a ura­nium mine, Lange’s great-grand­son Wal­ter fled Glashütte for the West in 1948, and the fam­ily’s brand was moth­balled for four decades. In 1990, Wal­ter re­turned to his an­ces­tral home with Gün­ter Blüm­lein, chair­man of IWC and Swiss watch­maker Jaeger-LeCoul­tre, and to­gether they re­vived the Lange & Söhne name. The lo­cal in­dus­try to­day em­ploys al­most 2,000 peo­ple.

“Un­like Switzer­land, which has been al­lowed to work in peace, we’ve had wars, eco­nomic crises, bank­rupt­cies,” says Yann Ga­mard, pres­i­dent of Glashütte Orig­i­nal. “Ev­ery­thing was taken away from us by the Sovi­ets af­ter World War II. But the peo­ple re­mained, and so did their know-how.”

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