Watchmakers are gaining prestige and creative freedom by developing more in-house movements

Watch brands are increasingly moving production in-house as supplies of ETA movements drop following Swiss competition watchdog decision in 2013.

PUBLISHED : Monday, 14 December, 2015, 11:33am
UPDATED : Wednesday, 16 December, 2015, 10:39am

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As the end of the year draws near, watch brands are beginning to feel the heat of the Swiss Competition Commission’s decision in 2013 to allow Swatch Group to restrict the supply of third-party parts and movements to non-Swatch brands.

Starting next year, supplies of ETA watch movements and parts will be 65 per cent of the average 2009-11 levels, dropping further to 55 per cent from 2018.

The Swiss watch industry is increasingly concerned that insufficient supplies of third-party parts and movements could bring higher prices and pose a significant risk to their business.

This could explain the rise of in-house manufacturing at several brands this year. Tudor announced its first in-house movement in a new watch, the North Flag, to great fanfare. Cartier also introduced the Cle de Cartier, which houses the new 1847 MC, with MC standing for Manufacture Cartier and 1847 being the year the maison was established.

“It’s a two-sided strategy,” says Carson Chan, a watch expert and head of the Greater China Mission of the Fondation de la Haute Horlogerie. “First you build the prestige of the brand and, second, you don’t want to be controlled by an outside company in terms of the volume and complication of the watches you are going to manufacture. So having the in-house movement gives a brand the independence and flexibility of developing what they want to develop.”

Brands that can  develop  movements in-house have always held a certain allure and customers are willing to pay a premium for what they can offer, according to Jeslie Ko,  business development director of Bonhams Asia’s watch department.

To build up this level of prestige takes time. Panerai, perhaps better known for its history as a supplier of instruments to the Italian navy and its status as a cult brand, has spent more than a decade refining its in-house movements. Other brands have taken to acquiring suppliers to bring in-house production to fruition in a more rapid way.

Hublot was just a small business with no haute horlogerie team when Jean-Claude Biver  took over in 2004. However, following the 2009 financial crisis, Hublot’s main supplier ceased operations, so Biver hired its former owner, Mathias Buttet, to head its research and development department. Suddenly, Hublot had the capability to produce much more complicated timepieces, complete with its in-house movement, the Unico.

Montblanc catapulted into the fine watchmaking league in 2006 when Richemont decided to integrate Minerva, a specialist in mechanical movements, into the Montblanc brand. Similarly, Louis Vuitton acquired La Fabrique du Temps  last year and brought the brand’s entire watchmaking under one roof.

Brands are lauded every day for their timepieces made in-house, but this is not to say that ETA movements, or other third-party supplied parts, are inferior.

In fact, Chan says there is “absolutely no problem” with using supplied movements. “The benefit of using a supplied movement is that, generally speaking, they have a longer history of being on the market,” he says. “Some of the ETA movements are very robust and are well known for their stability and reliability.”

Ko says Panerai’s first generation of watches used a movement made by Rolex. Now that the brand is better known, serious collectors like to search for these discontinued models at auctions.

A Patek Philippe Ref. 2499, offered at Christie’s Hong Kong upcoming auction, is another example. 

“Considered the holy grail of all timepieces by the most discerning collectors, this watch features a Valjoux movement and is one of only 349 models,” says Frédéric Watrelot, head of the auction house’s watch department.

The industry does not look down on the use of third-party parts, but sometimes brands are not totally honest. “I don’t like it when brands take a supplied movement, change small amounts and call it something else,” Chan says.

The biggest advantage of in-house movements is the flexibility and creative freedom a brand gains from producing them. Rolex, Jaeger-LeCoultre and Vacheron Constantin generally only use movements that are developed, manufactured and quality checked within their companies.

“All our calibres are made at home,” says Jaeger-LeCoultre chief executive Daniel Riedo. “There is no exact movement we have that can be provided from others. This is part of our creativity and it is also the liberty we have to create what we want.”

Traditionally, the watch industry has never been fully vertically integrated and it is common practice for brands, even high-end ones, to use parts from other suppliers.

“What does in-house mean? It just means that the majority of the parts are made in-house; it doesn’t mean 100 per cent. Particularly the balance, the balance frame, the main spring; these are things that you would buy from a third-party supplier, and you could still call it in-house,” Chan says.

Aurel Bacs, senior consultant at Phillips’ watch department, believes that with more brands creating proprietary movements and their own watch parts, it means more diversity in the market. “For the end consumer, it means more choices and more distinct identities versus a crossover of similar designs and technologies.”

Watrelot says: “The best complicated watches combine striking designs with the most sophisticated movements and it doesn’t necessarily matter whether or not a movement was produced in-house.”