Business Is Good for Small Swiss Watchmakers

New York Times, Feb. 23 2015

GENEVA — For six days in late January, the Casino du Lac, a small gambling club behind the Mövenpick Hotel near this city’s international airport, hosted the first-ever Swiss Independent Watchmaking Pavilion, or SIWP, a showcase for 15 artisanal watchmakers. To find it, visitors needed to venture through a parking lot behind the hotel, into the casino and past the roulette wheels and poker tables, to a tucked-away salon, where a coterie of the world’s most daring horological thinkers eagerly awaited their arrival.

The setting served as an apt, if unintentional, metaphor. In an industry dominated by global brands owned by deep-pocketed foundations or luxury groups, investing in an independent watchmaking enterprise is nothing if not a gamble.

Yet at a time when sagging demand in China, a sinking Russian economy and the falling euro are wreaking havoc on the balance sheets of the industry’s three biggest luxury groups — Compagnie Financière Richemont, LVMH Moët Hennessy Louis Vuitton and the Swatch Group — independent watchmakers, nimbler and less profit-driven than their outsize competitors, are thriving.

A caliber being tested at Manufacture Royale. Credit Brian Walker

“Business is good; I can’t complain,” said Kari Voutilainen, a venerated Finnish watchmaker who participated in SIWP, where he showed the Vingt-8 wristwatch, a platinum G.M.T. model with a hand-fabricated movement. Priced at 81,000 Swiss francs, or about $86,000 at current exchange rates, the watch is one of about 50 timepieces he makes each year at his atelier in Môtiers, Switzerland.

Mr. Voutilainen said he did not intend to increase production, even if the economy continued to flounder. “A slowdown of 10 percent is five watches,” he said. “I can find five more customers.”

Such modest ambitions stand in stark contrast to those of the brands that showed at the nearby Palexpo arena in late January, when the 25th annual Salon International de la Haute Horlogerie, known as SIHH, drew some 15,000 buyers and journalists to Geneva.

The Richemont-dominated fair — home to 16 brands, including Cartier, Panerai and IWC Schaffhausen — was overshadowed by news on Jan. 15 that the Swiss National Bank had removed the three-year-old cap tying the Swiss franc to the euro. As the franc soared, executives at SIHH struggled to put the events of the week into perspective.

“Now we are just in the middle of the storm,” said Montblanc’s chief executive, Jérôme Lambert. “All the world has instability. You have to live with it.”

Until very recently, however, the high-end watch industry — especially as seen through the lens of the big brands — seemed immune to global instability.

In 2014, Swiss watch exports hit a high of 22.2 billion Swiss francs, according to the Federation of the Swiss Watch Industry, capping 30 years of growth that saw the mechanical watch business evolve from a fragmented trade composed of privately owned brands — many struggling to survive after being ravaged by the emergence of quartz models in the 1970s — into a slick global marketplace fueled by millions of dollars in advertising spending and rife with consolidation.

By the time the recession began in 2008, the Goliaths of the watch business were able to mitigate its effects by focusing their attention on the relatively unscathed Chinese economy, which revved into high gear in 2009. But within three years, an anti-corruption campaign that clamped down on gift-giving to government officials, coupled with a nationwide economic slowdown, proved that not even the monster appetites of Chinese luxury consumers could inoculate the Swiss from financial volatility.

While the big brands continued to host lavish parties and invest heavily in their manufacturing capabilities in the years following the crisis, they mostly stuck to tried-and-true product formulas — variations of successful models such as Hublot’s Big Bang or Audemars Piguet’s Royal Oak — unwilling to experiment beyond the icons that had endeared them to so many consumers.

“A lot of mainstream brands became too greedy to be at the forefront of creativity,” said Anders Modig, a watch journalist based in Basel, Switzerland, home to the industry’s largest trade show, Baselworld.

Into that vacuum of innovation stepped a number of independent watchmakers who had nothing to lose by letting their imaginations run wild. Take the watch brand Devon, founded five years ago in Los Angeles by Scott Devon, an entrepreneur. Best known for its avant-garde-looking Tread models, which incorporate interwoven belts and parts supplied by aerospace companies, the brand is now stocked by retailers in dozens of major cities, including Paris, Mumbai and Lagos.

“Our first Basel was 2010 and there were a number of journalists that said, ‘Finally, a breath of fresh air, something new and different,”’ said Ehren Bragg, Devon’s former managing director. “So we got a lot of press and traction, and that made room in the market.”

Mr. Bragg is now a distributor. His company, Envoy Trading, represents four independent Swiss watch brands in the United States: Dietrich, Franc Vila, Manufacture Royale and Snyper.

Although the term “independent watchmaker” can refer to a company that is either financially independent or does not rely on outside manufacturers to create the mechanisms in its models, the strictest definition comes by way of the Académie Horlogère des Créateurs Indépendants, or A.H.C.I., a Zurich-based coalition of 33 watchmakers and clockmakers bound by a fierce commitment to artisanal technique and freedom from corporate rule.

“When you become a member, you have to be independent in those two senses,” said Daniel Rincón Hanna, head of communications for A.H.C.I. “The academy is there to help those members who are starting out in their careers and are truly independent.”

The organization, which will celebrate its 30th anniversary at the Baselworld fair March 19-26, is considered a breeding ground for watchmaking talent. Some of the industry’s leading horologists, such as François-Paul Journe and Urwerk’s Felix Baumgartner, have used membership in A.H.C.I. as a launching pad for careers that have earned them great acclaim among connoisseurs.

“There’s always a market for the noncorporate watch brand,” said James Malcolmson, watch editor of Robb Report, a magazine for collectors. “Richemont, Swatch and LVMH are selling Mercedes and BMW — they’re known quantities. But a solid part of the watch market wants exclusivity. If you’re on your third or fourth watch, you want something that’s different, something that captures the romantic side of watchmaking.”

It is tough to beat the romance of Christophe Claret’s story. The French-born watchmaker started making timepieces when he was 14 years old. He worked behind the scenes in Switzerland for 22 years, designing complicated movements for some of the industry’s most respected brands.

In 2009, in honor of the 20th anniversary of his manufacture, a cutting-edge facility based in a mansion perched above the Swiss village of Le Locle, Mr. Claret decided it was time his own name appeared on his watches. The introduction of the DualTow, a single-pusher planetary chronograph and tourbillon, signaled the birth of the Christophe Claret brand.

Mr. Claret joined a growing community of industry veterans who had become disillusioned with the corporate watch world over the past decade and struck out on their own. Leading the charge was Maximilian Büsser, a hotshot young watch marketer who worked at Jaeger-LeCoultre and Harry Winston before founding his own brand, MB&F, in 2005.

“I used my savings and worked alone from my flat, and the first pieces came out in 2007,” Mr. Büsser recalled. “I was so close to bankruptcy.”

Mr. Büsser’s risk-taking ethos struck a chord with Nick Linca, a managing partner in Provident Jewelry, a retailer based in Jupiter, Fla. After a few disenchanting encounters with brands owned by the big groups — powerful brands have been known to dictate how much merchandise a retailer must stock, how it is displayed and which other brands may or may not be shown alongside them — Mr. Linca had grown tired of the politicking and dedicated his store to displaying only the creations of independent makers.

“I’d rather deal with real people,” he said. “When you purchase an MB&F, a Claret, a Devon, you’re actually helping that creator come up with his next piece, versus the others, which produce half a million pieces a year.”

Come next month’s Baselworld fair, Mr. Linca will find plenty of kindred spirits. On March 22, Mr. Modig, the watch journalist, will hold a party for 10 independent brands at a former brewery that doubles as a club and a creative space for local artists. “These brands don’t have the financial muscle to do anything on their own,” he said. “Half of them are somewhere between colleagues and friends.”

In the case of Manufacture Royale — a firm that dates back to 1770, when it was founded on the outskirts of Geneva by the French philosopher Voltaire — colleagues and family members is more like it.

The owners, Marc Guten and his cousins Alexis and David Gouten, combined their nearly 70 years of collective expertise working for the big brands to purchase Manufacture Royale at the end of 2013. At January’s SIHH fair, they showed their newest timepiece, a skeletonized version of the steampunk- inspired Androgyne model, known as the Origine, to journalists at the Beau Rivage Hotel.

When asked whether acquiring a relatively unknown brand at such a volatile time in the Swiss watch industry was a risky gamble, Mr. Guten was circumspect.

“It’s never a good time or a bad time; it’s just a question of opportunity,” he said. “We have a brand, we have history, we have a movement. I wanted to try this challenge at this point in my life. And if not now, when? There might never be another brand like this passing by.”