Demand soars for Swiss expertise
After exporting 25.9 million pieces last year, watchmakers cannot keep up with growing order books as buyers seek fine craftsmanship
Hublot, the Swiss watchmaker renowned for innovation in technology and concept, has a backlog of 60,000 watches. It's worth about 500 million Swiss francs (HK$3.3 billion). Even at maximum production capacity, it would only be able to meet half of that by the end of this year.
'The average waiting time for customers is about six months,' said Miwa Sakai, area manager for Geneva. 'The demand has just been much higher than we expected.'
Across most of Switzerland, fine watchmakers are all struggling to meet soaring demand despite their best efforts to increase production in response to the increasingly robust market.
Last year, Switzerland exported 25.9 million timepieces, one million more than in 2006, according to the latest figures from the Federation of the Swiss Watch Industry FH. The export volume of mechanical watches showed above-average growth, up 12 per cent.
'The luxury watch market is developing very fast, with customers expecting the constant revision of new products and the launch of new ones,' said Wolfgang Sickenberg, CEO at Audemars Piguet in Hong Kong. 'Keeping development in tandem with the demand in growth is proving to be most challenging as a watch movement alone can take two to three years to develop.'
Watchmakers have pulled out all the stops to ease the demand-supply gap, with most brands turning to factory consolidations and the streamlining of watchmaking production in a bid to heighten self-sufficiency and efficiency.
The Hermes Group, which first began its watch business in the 1920s with the production of leather straps for timepieces, is a case in point.
In 2006, the company partnered Vaucher Manufacture Fleurier, a Swiss family-owned enterprise that develops, produces and assembles haute horlogerie mechanical watch movements, so that exclusive movements could be developed for Hermes watches.
'This joint venture lowers our dependency on the market and secures the supply of watch movements from one exclusive partner, allowing us greater flexibility to launch our own designs and mechanisms that stand out in the market,' said Eric Grellety Bosviel, managing director of La Montre Hermes, Asia-Pacific.
Hermes has also relocated part of its watch-strap production capability from Paris to Bienne, Switzerland, home of its watchmaking workshop, in an effort to enhance its overall operations.
'This allows our leather-strap production unit to work more closely with our watchmaking workshop so that they can better co-operate to meet customers' demands,' Mr Bosviel said.
Hermes produces a wide range of leather straps including ostrich, buffalo, lizard, alligator, crocodile and goat. About 60 per cent of the brand's watch straps are leather, with the remainder metal.
At Hublot, which launched its own movement three years ago, plans are under way to consolidate its operational facilities all under one roof by June next year.
'Given the industry's tight labour situation, watch brands will increasingly have to develop more of their own in-house expertise and depend less on outsourcing,' Ms Sakai said.
Watch brands have benefited from the emergence of advanced technologies such as robots, computers and hi-tech coatings. This has in turn made the use of new raw materials, such as carbon, titanium and ceramics, in watch designs possible, creating some of the most dynamic haute horlogerie ever seen.
Audemars Piguet, for example, launched the world's first carbon fibre-cased watch, while Hublot has fused unusual materials, including gold, ceramic rose gold, tantalum and rubber, into one product line.
The broader challenge, however, lies in whether watchmakers can balance the best elements of modernity with the traditional techniques of watchmaking, still a major part of Swiss methods.
'Technology may simplify the production of certain mechanisms but much of the watch is still handmade in the traditional way,' Mr Sickenberg said.
'For Audemars Piguet, we have achieved a good balance of modernity and tradition in being able to combine new technology while keeping hold of traditional craftsmanship at the same time. That is the challenge both watchmakers and brands face today.'
Brands, such as Hublot, have drawn watchmakers out of retirement and placed them alongside the new generation of watchmakers in a bid to develop innovative timepieces that reflect the brand's ethos of converging two centuries of watchmaking with modern technology.
The modern watchmaker is open-minded, well travelled and creative, with an ear to the ground when it comes to understanding the preferences of customers.
'No longer are watchmakers just crafting timepieces in isolation in the factory's workshop, but they are often found interacting with visitors, travelling overseas to understand trends and becoming more in tune with the mindset of customers,' Mr Sickenberg said.
Despite the resurgence of the watchmaking industry, following a downturn in the 1970s and early 1980s, today's watchmakers still have some way to go before they master the old techniques.
The quartz movement, driven mostly by Asia 30 years ago, brought the Swiss watchmaking industry to its knees, shifting sizeable chunks of the market away from Switzerland as buyers gravitated to the cheaper alternative.
Many Swiss watchmakers were forced to shut down and watchmakers were laid off, leaving a generational knowledge gap.
'In the past 20 years, we have seen a great deal of talent turning to the watchmaking industry but, with the rapid market growth, there is still a shortage of skilled watchmakers,' Mr Sickenberg said, pointing out that 90 per cent of Switzerland's watchmaking schools were operating at full capacity.
That is part of the reason why watchmakers have stepped in to heighten the availability of training, setting up in-house schools in ever-growing numbers. Audemars Piguet's own watch school takes individuals with a mechanical background and offers a training programme spanning 18 months.
These efforts have yielded some dividends, but though the gap is closing it is not narrowing fast enough. Until it does, customers and retailers will have little option but to join the long waiting list.