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”

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.”