Watch Assemblers - Some Inside Baseball

This is a topic that has been touched on here before, but it seemed worth airing out again in light of an article I just read on a popular retail-cum media outlet regarding the ongoing ETA saga. The article pointed to statements that Hayek the Elder made prior to the launch of ETA's one-way express trip to crazy town. His statement was, essentially, that any asshole could go to a white label company and create their own watch, and by golly, that was WRONG! He referenced a conversation he had with a fashion house who approached him to make a watch for them, and he pulled an Enzo Ferrari on him, essentially telling him to stick to making tractors (or, in this case, suits). Now history will note that the Zegna watch was realized with the assistance of Girard-Perregaux/Sowind, and it fared about as well as could be expected - not very. But I would also remind you, gentle reader, that this bluster came from the fellow who brought us the SWATCH phone, sunglasses, and...

Who could forget that unforgettable fragrance -


                                                                     Courtesy of Omega

Yes, you too can smell just like a Co-Axial escapement! So it would seem that a call is overdue from the kettle to the pot regarding its hue.

While it's easy to look down your nose at someone and tell them to "stick to their lane", it is a bit ironic coming from the man who had his finger in so many pies ; )

It bears mentioning that A LOT of the brands you see out there are using white label companies to assemble their watches. Some quite old and literally dripping in hyperbolic watchmaking lore. So, does this mean that those are no longer real brands?

Now for me looking back? Hayek the senior's hyperbolic characterization about the gall that some brands had in calling themselves, well, brands was a little disingenuous. When we talk about the world of modern (meaning in the last 20 years) watch production, marketing and sales, private label assemblers are responsible for a much larger percentage of the Swiss watch industry than you might think. And I will pick my childhood favorite (and red-headed stepchild of the SWATCH group) Mido as a case in point.

A little over four years ago I found myself in Switzerland on other business and I managed to arrange a visit to Mido HQ in Le Locle. Now curious to relate, the HQ occupied less than a full floor of an administration building that was (at least at that time) shared with Tissot. I had asked if it was possible to visit the factory to see Mido assembly in action, and I received a fairly evasive response that essentially made it clear that for whatever reason, this would not be possible. When I asked where the assembly took place, this again was not anything that anyone was anxious or willing to share with me. Ever wonder why the factory pictures you see for some of the SWATCH brands are all "old timey"? Ever wonder why you don't see other heroic journalists visiting brand production sites other than Omega, Blancpain, and Breguet? Ever see leading horological luminaries of the Fourth and Fifth Estate visiting and reporting on the production facilities of some of the smaller, more affordable, less sexy brands in the SWATCH stable?

Yeah, not so much.

A reasonable assumption would be that the SWATCH group relies on a large internal facility or facilities to assemble these more mass market watches for several of the group's brands. In essence, a private label - private label.  We would all agree that these are real brands, would we not? And for the record, if I am way off base and there is a shiny (or even not-so-shiny) Mido or Certina factory churning out watches in the Alpine hinterlands? Well, I will sit in the corner and wear a funny hat.

But taken with Hayek Senior's hardline stance on what made a brand legitimate?

Well...

Who Really Made Your Watch?

Or the myth of origin.

This is a topic that comes up frequently (but quietly) around Switzerland, Germany and China, but curious to relate?  Not so often in the US, UK, the EU, Russia... in other words?  The countries where a lot of watches are actually bought.

Now I know what you're probably thinking -
"Of course those 'micro-brands' aren't making their own watches!"   Well, in some cases you would be absolutely correct.  Simply put, a lot of microbrands out there utilize companies that specialize in "white label" or "private label" production.  Many are what we refer to as off the shelf - meaning it is a pretty standard case and you can dress it as you like.  There is a reason why there are so many Rolex Submariner lookalikes out there.  And hey, fair enough.  People want it and will pay for it.  And beyond that, there are several firms that will offer you the opportunity to send them your own designs, and will then subcontract with a case manufacturer, dial manufacturer and assembler in (you guessed it) China.  And that is most often the situation even for firms based in, wait for it, Germany and Switzerland.

Fair enough!  You might argue that these are small independent micro brands, so who cares?  Well, get on any Facebook watch group or the dwindling number of watch forums still grinding it out, and you will find plenty of armchair experts ready to hold forth, and they DO care.  And these folks are experts because, like, they read other forums and can speak with absolute authority...

Well, I get it.  Passion is important.  And as they used to say back in the 70s and 80s as they were trying to convince us that illiteracy was not necessarily cool - RIF!  (Reading is Fundamental).  But having spent hundreds of hours moderating a brand forum (hours that I will never get back), I came to understand that a little knowledge can be a dangerous thing.  Why?  Half smart is the same thing as half dumb.  So as a public service announcement, I thought it might not be such a bad idea to shed a little light on the reality of who really made the watch you are wearing.

So what does it mean to "make" a watch?  Well, that again is up for interpretation, but if we look loosely at the rules, one of the basic premises is that the watch itself is assembled in the country reputed to be the one of "origin".  Well, that is pretty easy to achieve.  You can ship things here, there and everywhere.  But then the next question comes down to content origin.  And very often, that is something that is even more flexible than the ethics of several people working in the watch industry itself.  Consider that a case can be "started" somewhere else, be shipped within the "circle of trust" and be "finished" in Switzerland or Germany.  And Hallelujah!  It's a Swiss or German case!  And that is just regarding the brands that actually bother to try and at least appear to be following the rules.  And then we get to movements.  That is more often than not a critical factor in the "origin story".  I mean, a SWISS movement is a SWISS movement, right?  Well... yes and no.  It goes without saying that several movement companies have subsidiaries and subcontractors in countries where rice is more common at meal time than Rösti ; )

So chances are good, that your Swiss or German watch has a whole bunch of stuff sourced from other places.  Okay, but then surely these BIG brands have clean, pristine, SWISS or German factories where all of these disparate parts are assembled under the watchful eyes of the brand!  Well, actually, not so much.

As another great Ohioan said about the "confidence" he felt when dealing with contractors and subcontractors (attributed to John Glenn):

"I felt exactly how you would feel if you were getting ready to launch and knew you were sitting on top of 2 million parts — all built by the lowest bidder on a government contract." 

 

But suffice it to say, John Glenn made it back to Earth and NASA continued and we landed people on the moon and brought them back.  So surely using a contractor or subcontractor is not the worst thing in the world.  And perhaps the most significant (yet unheard of) part of the Swiss industry is the "assembly" sector.  Their role is pretty simple:

Brand A designs a watch.  They contact the assembler.  The assembler then subcontracts with the various component "contributors" and gets examples of cases, dials, crowns, straps and knocks together "samples".  Samples are reviewed, tweaked, and designs are finalized.  Orders are submitted (not paid for, but that is a story for another day) and once everything reaches the assembler, they are assembled.  I have been to a few of these places - NO NAMES - and I can tell you that this is not an horological urban myth.  You will see about 10 - 30 different brands being assembled side by side.  Well known brands that you have heard of.  And I can also tell you that very large as well as very small brands use them.  Even brands that are owned by larger groups.  Ever wonder why you never see journalists waxing lyrical about their visits to various brand factories?  Well as Anthony Bourdain once said:
"Can't believe it's not butter?  Well I can!".   Pals and gals, let's be real here for a moment, if a brand will spend hundreds of thousands of dollars on ambassadors, advertising, and press junkets to watch God knows what, you think that they wouldn't show you a factory if they had one?  Yes, just like when you heard that the Tooth Fairy, Easter Bunny and Santa were, in fact, your parents, I am sorry to harsh your mellow.

So there it is.  And if you think I'm wrong, let me ask you a pretty simple question -
Assuming that a Swiss brand's watch is, in fact, made in Switzerland, how do you think that this might be economically possible?  Let me give you a "for instance".  Ever buy a cup of coffee in Switzerland?  Buy lunch?  Pay rent in Switzerland?  Putting it simply, it is not an inexpensive place to live.  Now let me ask the question in a different way - do you think it is more expensive to make coffee, or to make a watch?  This is more of a way of asking this - how is it possible that a company can afford to make watches that they put a suggested retail price of $1,000?  Let's drill down further - consider that at an SRP of $1,000 in most cases the watch was produced and sold to a distributor for 1/3 of that amount.  Now think about that for a minute.  That means that they sold it for 33.3% or $333 of the retail and were still MAKING MONEY on that deal.  Okay, so let's say that means that, ideally, they are making at least 75% of that 33.3% (i.e. 25% labor and cost) - meaning about $250.  So that means that it cost the company $83 (more or less) to make that watch.  Again, nothing wrong with that, but it is pretty simple economics.  There is no way that watch was "made in Switzerland", regardless of the semantics in use.  

So what if?

What if a company, regardless of whether they were big or small, made a watch where they told you exactly where everything came from?  Although he can be a bit of a pill and a celebrity chaser, Beat Weinmann has embraced this concept and he and ochs und junior produce a watch that can be sourced down to the last detail, and they are to be commended for it.  But you will pay a price for this, and I think it is a fair one, but let's just say it is a wee bit north of that $1,000 we were bandying about in our earlier model.

And therefore I am wondering, is there a way to offer a REALLY good mechanical watch - nothing earth shattering, but solid, reliable, good looking and comfortable, and do it for a price that normal people could afford without going into unrealistically aspirational credit card debt?  And that you could do it while clearly labeling the source of origin?

Well, stay tuned!
 
 

Made By...

So an interesting discussion on Facebook regarding the legitimacy of putting Swiss Made on the dial of a watch when only a percentage is required to actually be, well, Swiss.

Now what I find fascinating in all of this is the "dog chasing its tale" picture that this paints for me:

1.  Watch company says - you should buy our watches, they are SWISS made which is, of course, the best!

2.  Well, we'd like to show you our facilities, but they are (of course) top secret!

3.  As you can see we are a true manufacture because we make our own movements right here!

4.  Well, no, we don't make our cases, dials, hands, crystals… we buy those from specialist suppliers…

5.  Well, no, we don't actually case (read assemble) the watches here.  It makes more sense for us to use an "assembling" company.

6.  We don't actually have production facilities "here", assembly is handled "elsewhere" - i.e. I could tell you, but I'd have to kill you ; )


So what does all of this really mean?

Well, I don't think that this is a "stop the press" news flash, but let's say that an unhealthy percentage of watch "brands" don't actually make watches.  So what exactly do they do?

Glad you asked!  Very often the "Brand" is some administrative offices that house sales, marketing, PR, Accounts Receivable, meeting room and the boss's office.  And POSSIBLY some storage for assembled watches before they get shipped.

So where are the other watches?  You mean apart from the "company watches" on the wrists of the employees there or the ones already put together awaiting dispatch to their distribution points?

Ah - this is the wonderfully elaborate shell game known as "Private Label".  Now what we would REASONABLY consider "private label" would mean that you are making a special watch for your company employees (Mercedes Benz did this back in 2002/2003 by making a manual winding alarm watch for their North American sales staff).  Okay, that makes sense.  A company orders a watch for its company, I get it.  Well, take that idea and feed it steroids and suddenly you become a "manufacturer for brands".

Okay you say to yourself, these private label companies must have ENORMOUS factories producing all of these watches.  Guess again.  Think of the "private label" company just like that brand that we were talking about earlier.  Administration offices.  And not coincidentally, "offices" in the "Far East".  While I am not an expert, I am fairly certain that Hong Kong is not a Swiss Canton.  Okay, so where do they "make" the watches?  Refer to point #6.

Think of the "private label" company as a general contractor.  Not unlike the folks who are putting your house together, they do the Swiss equivalent of driving down to the Home Depot to find the various parts, and then farm them out to the actual "assemblers" that bring it in for the best (i.e. lowest) price.

So, you go to your retail store to buy a brand "X" watch that was designed by a contracted designer.  The design was then sent to the private label company, who then farmed it out the various suppliers and assemblers and with a healthy dose of magic Swiss "pixie dust", the exclusive brand "X" watch is born.

One watch with hundreds of parents - It truly takes a village ; )