The modern manufacture d'horlogerie is nothing like the manufacture of the past. The correct and historically accurate definition of manufacturing is the cycle of operations that developed as the industry transitioned from craft to industrial production.
In this sense, any form of modern luxury watch production can be considered manufacturing, and in fact, this is not just limited to luxury watches. In general, there is a division of labor, and parts are mainly finished by hand in a variety of circumstances, as is also the case with the assembly of movements and watches.
Wind of Change
Before quartz and electronic technologies made it possible to have a precision time display integrated into a wide variety of personal devices, customers would choose mechanical watches based purely on their practical features. Priorities have changed with the passage of time, yet accuracy, durability, and functionality have always topped the list of the most important characteristics.
A stylish execution has of course always been essential, i.e. the design or appearance of the watch, the materials and decorative components used.
After the arrival of the quartz clock and digital watches in the 1970s, which irreversibly rewrote the rules of the game, the useful functions of mechanical watches were relegated to background features, no longer essential but expected. This new era needed fresh and impelling arguments to persuade customers to purchase mechanical watches. The main tactic adopted by prestigious watch manufacturers in the 1980s and 1990s was to spin a legend based on the brand's history and traditions, which renders absolute the value of manual craft work.
By the end of the 1990s, one of the new phrases that had entered the vocabulary used by people involved in the industry was "manufacturing system", but it was not used to describe the typical production line set-up, it was used instead to refer to the realities of the modern watch industry.
New era needed fresh and impelling arguments to persuade customers to purchase mechanical watches. For premium brands in the 1980s and 1990s, this argument was a legend based on the history and continuity of craft traditions, rendering the value of manual craft work absolute.
The first watch brands to have apparently used the word "manufacture" with its new meaning (a company that manufactures a watch almost in its entirety) were Jaeger-leCoultre, IWC Schaffhausen and A. Lange & Söhne, followed by members of the now defunct LMH group (Les Manufactures Horologères), which in turn once belonged to the German industrial conglomerate Mannesmann. The LMH group was chaired by Günter Blümlein, the visionary and strategic thinker who also formed the group, who sadly passed away in 2001. Perhaps it was Blümlein or one of his advisers who gave us a new understanding of the term "manufacture".
New Meaning
According to Günter Blümlein, this word meant a factory where a significant percentage of the watches it produced were equipped with in-house movements. The concept of "manufacture" was followed by another new term, "manufacture movement" (or "manufacture caliber"), which is now used to refer to proprietary movements produced in-house.
Although "in-house" was already being used by watchmakers to describe a similar concept, the word "manufacture" was louder, more pretentious, and even sounded fresher despite its age-old etymology. An important advantage of the new concept of "manufacture" was that it fit perfectly into a number of arguments that marketers of (mainly) Swiss brands were already using to justify the high price positioning of their timepieces.
The new manufacturing system strategy proved an excellent approach to developing the brands of Jaeger-leCoultre, IWC Schaffhausen and A. Lange & Söhne. These LMH group brands managed by Günter Blümlein performed exceptionally well. Then the time came for Mannesmann to bid its watch arm farewell due a planned merger with Vodafone, which had no interest whatsoever in the perspectives of the watch business, as its sales were nowhere near the massive telecommunications sales volumes generated at the time.
The LMH group was put up for sale and acquired by the luxury goods holding company and market giant Compagnie Financière Richemont SA in 2000 for an incredible 2.8 billion Swiss francs (approximately 1.8 billion euros). The manufactures of the watch manufacturers based in Langhe and Jaeger undoubtedly played a significant roll in raising the value of the acquisition, where proprietary movements are not bought in, but designed and produced in-house, while the Schaffhausen-based watch brand had already launched a program to produce its own manufacture movements.
More and more watch companies followed the pioneers and adopted this manufacturing strategy, including both companies which were already producing their own mechanisms and companies which decided to begin doing so. Fuel was added to the fire by the head of Swatch Group former Swatch Group Chairman and Founder Nicolas Hayek Sr. (known as Société de Microélectronique et d'Horlogerie until 1998), Switzerland's largest watch industry group.
People who were able to re-envisage the mechanical watch in this way could see that its movement had to be able to offer more than just telling the correct time and a fair level of reliability.
In December 2009, Hayek Sr. made an unexpected announcement that the ETA watch movement factory, a subsidiary owned by Swatch Group, had begun the process of reducing the number of movements and movement kits supplied to third-party watch companies, with plans to discontinue the supply completely.
Many brands interpreted this statement as an direct threat to their business, and seriously considered looking for new suppliers. The premium companies also began thinking about producing their own manufacture movements. These were difficult circumstances, but the manufacturing strategy paid off, especially in the upper segment of the market, where watches retail from 5-10 thousand francs per piece. This was because the new concept of the watch manufacture struck a chord with luxury watch buyers.
Standing Out from the Crowd
To understand why this strategy worked, we need to examine how the watch industry developed in the 20th century. Up until the 1970s, the market was dominated by mass-produced mechanical wristwatches. Watch brands had a tendency of striving to offer customers the most attractive product at the lowest possible cost, which led to most watch brands choosing not to produce watches exclusively in-house, who instead opted to source the components needed for production from specialized suppliers, and that included watch movements.
The division of labor had essentially existed in the industry in Switzerland since its inception, so there was no need to convince watch brands that this was a useful strategy. In fact, this largely remains the dominant structure in Switzerland to this day. From the 1970s onwards, mechanical watches were no longer the only personal means of measuring time, they became something more — a piece of clockwork mechanics that arouses feelings of nostalgia, a status symbol, a successful or unsuccessful investment, a collector's item, a watchmaker's work of art, a charming mechanical toy, or just an interesting expensive item that you can show off to your friends or subordinates at work who cannot afford one.
People who were able to re-envisage the mechanical watch in this way could see that its movement had to be able to offer more than just telling the correct time and a fair level of reliability. It now needed something else to help it stand out of the crowd. Are wristwatches with the same design as another brand and the same movement as several other brands good enough for the modern buyer with an appreciation for clockwork? Today, the answer is probably no.
Expensive, But Worth It
Of course, the manufacturing strategy has allowed watch companies armed with it to move into a slightly more expensive niche market. Unsurprisingly, this strategy was a double-edged sword. Not every company's clientele could see the justification for this new "manufacture" price tag, and brands were forced to do a u-turn and quickly abandon the concept of "manufacture" to go back to sourcing movements from their good old suppliers.
The Swiss luxury watchmaker Maurice Lacroix is a perfect example, which began to develop the unrealized Mémoire 1 project when the manufacturing strategy was taking off in 2008. It was estimated that the watch would have cost about 300 thousand euros.
IWC Schaffhausen, TAG Heuer and Breitling have all put a great deal of effort into developing their manufacturing programs, but they can easily reduce the percentage of "manufacture" pieces in their collections if the market situation changes by returning to prototypes like the Valjoux 7750, Eta 2824 or similar models produced by the Sellita manufacturer of mechanical watch movements until things pick up. However, the manufacturing strategy has been quite successful for many brands.
Rolex made a forceful effort to switch to its own manufacture movements in the 1990s, and the entire manufacturing program was completed in 2001 when its proprietary chronograph caliber 4130 was presented. After that, the brand essentially no longer needed third-party suppliers, although that does not mean that the Geneva-based company has stopped using all of their services.
The final step to become a manufacture was taken in 2004, when Rolex completed the legal acquisition of the Aegler watchmaking company in Biel / Bienne. Patek Philippe, Audemars Piguet, Vacheron Constantin, Girard-Perregaux, Panerai, Bvlgari, Chopard, TAG Heuer, Tudor, Ulysse Nardin and others have either made a full or substantial transition to "manufacture".
Producing manufacture movements is expensive, so some brands form partnerships to acquire stakes in supplier factories from each other, Hermès and Parmigiani Fleurier being an example of two watchmakers who did so. Thanks to the new Kenissi watch movement manufacture, an unforeseen area of common interest has emerged between shareholding brands Tudor, Chanel and Breitling.
The concept of manufacture mechanisms is given its own unique definition within watch manufacturing groups. For example, Swatch Group owns subsidiary movement manufactures ETA, Frédéric Piguet and Nouvelle Lémania, which supply movements to around twenty Swatch Group brands. Can these be considered manufacture movements? Surely not.
ETA, Frédéric Piguet and Nouvelle Lémania can be considered as manufacture movements? Surely not.
Surely not. It would be more accurate to call them "group manufacture movements", provided that models are not sold separately on the side like the old ETA range. Group manufacture movements are also produced by the Richemont Group, where the caliber 1847 MC developed for Cartier became the prototype for a family of movements based on it, which was produced with special modifications for the group's other brands. We can soon expect to see group manufacture movements beginning to appear in the LVMH group.