The Timex Group’s grand foray into the high reaches of the luxury mechanical watch market is ending. Swiss media are reporting that Timex is shutting Vincent Bérard S.A., the La Chaux-de-Fonds-based manufacturer of luxury mechanical watches, that it acquired in 2006. While neither Timex nor the Vincent Bérard firm has made any official announcement, sources close to Timex have confirmed to WatchTime that the Swiss reports are true.

Vincent Bérard, from a 2007 WatchTime feature.

The Vincent Bérard firm was founded in 2003 by Bérard, a French watchmaker and antique watch restorer who had worked in Switzerland for nearly 30 years. He launched his own brand in 2005 and began producing large carriage-style pocket watches. The next year, in a surprise move, the Timex Group acquired the firm, housed in a small atelier in a farmhouse in La Chaux-de-Fonds. At the time, Timex was in the process of transforming itself from the legendary king of the mass market into a multi-brand watch group active in all price segments. Vincent Bérard gave Timex a foothold in the then-booming luxury mechanical watch market. Timex invested in the firm, expanding the atelier and hiring staff. The next year, the first collection of Vincent Bérard wristwatches appeared. Bérard produced about 100 pieces per year, priced between $70,000 to $150,000.

Two of Bérard’s Quatre Saisons pocket watches. Below, Vincent Bérard’s home and atelier.

Three years later the Bérard brand is the latest watch casualty of the global financial crisis. The La Chaux-de-Fonds newspapers L’Impartial and Le Matin as well as RTN (Radio Télévision Neuchâtel) have reported that the manufacture will close and its 20 employees, including Bérard and CEO Herbert Gautschi, will be laid off. Unia, Switzerland’s largest union, confirmed the news the week of July 5. Loïc Dobler, a Unia representative, told L’Impartial that he was in discussions with Timex about terms of the employee terminations.

The Bérard firm was known to be struggling. In June, Daniel Dodane, a member of the Vincent Bérard board of directors, told the Swiss watch Web site World Tempus, “The financial crisis and the economic decline have prevented our group from achieving the sales necessary to make a profit. As a result, the company has not reached our commercial objectives and the losses are significant.” (Dodane is deputy managing director of Opex S.A., a French watch company owned by Timex and is the only Timex executive authorized to talk about the Vincent Bérard situation.)

Still, news that Timex was pulling the plug on the brand seemed to catch employees by surprise. In June, for example, CEO Gautschi attended the Couture jewelry and watch trade show in Las Vegas, manning a Vincent Bérard booth, and hoping to open new accounts in the United States. RTN reported that the employees were devoted to the company and were hoping to find a buyer for the brand. If they don’t, Vincent Bérard will join the list of brands like Villemont and Wyler Genève that are casualties of the Great Recession.

Nayla Hayek has been named chairwoman of the Swatch Group Ltd., succeeding her father, Nicolas G. Hayek, who died of heart failure at Swatch Group headquarters in Bienne, Switzerland on June 28. She was elected by a unanimous vote of the board of directors on June 30. Previously, she was vice-chairman of the board.

The move is doubtless the transition that Hayek Senior wanted. It ensures that the management of the world’s largest watch company remains in family hands. Nayla Hayek’s brother, G. Nicolas (Nick) Hayek, succeeded his father as Swatch Group CEO in 2003. Hayek Senior had two children. The fact that they now hold the two most important posts in the company that he founded guarantees that the policies and vision he put in place will remain.

Nicolas Hayek Senior controlled 40% of the shares of the Swatch Group through what is called “the Hayek Pool.” The Hayek family is understood to now control those shares. Nayla Hayek has been a member of the Swatch Group board of directors since 1995 and was for many years an advisor to the group. She had a career raising Arabian horses and as an international Arabian horse judge. In 2007, she began working in the Swatch Group, in addition to her board of directors duties. In 2008, she became CEO of Tiffany Watch Co. Ltd., which is a Swatch Group subsidiary via an agreement signed with Tiffany & Co., New York, in 2008.

Nayla Hayek is the mother of Marc A. Hayek, CEO of Blancpain and a member of the group’s executive management board. Blancpain is one of 18 Swatch Group watch brands.

Switzerland has responded to the sudden death of Swatch Group Chairman Nicolas G. Hayek on June 28 with a rare outpouring of grief, praise, and appreciation. Hayek, 82, was born in Beirut, Lebanon, but grew up in Switzerland and spent his entire professional life there. Hayek has been a prominent public figure in the country for four decades and one of the country’s most famous and, ultimately, beloved figures.

He founded a consulting company, Hayek Engineering Inc., in Zurich in 1965 and quickly became Switzerland’s most important consultant, the Mr. Fixit that both industry and the Swiss government called on to develop strategies to fix seemingly unfixable problems. Mr. Fixit became Mr. Swatch in the 1980s when the Swiss banks called on him to develop a plan to rescue the struggling Swiss watch industry.

The watch industry was dominated in those days by two giant groups, ASUAG and SSIH, both of which were hemorrhaging red ink, surviving on bank bailouts. Hayek submitted a detailed reorganization and recovery plan, which merged the two groups into a single group called SMH (Swiss Microelectronics and Horology); the name later was changed to the Swatch Group. The banks not only approved Hayek’s plan, they pressed him to execute the plan as chairman and CEO of the new group. The banks agreed to sell shares in the new and unproven company at extremely favorable rates to Hayek and a group of investors formed by him in order to get the new company on its feet. Through what is known as “the Hayek pool,” Hayek controlled these shares, which amount today to 41% of Swatch Group shares. The arrangement gave some financial stability to the new company and gave Hayek the control he needed to run it. In time, as the Swatch Group prospered, it made him a multi-billionaire.

Mr. Hayek at a 2009 Baselworld press conference announcing the Breguet at the Louvre exhibition.

SMH was launched in 1985. Its first great success was Swatch, the plastic analog watch that had been introduced two years before and sold for around $35. ETA had created Swatch in the early 1980s but could not get the money to finance it. Hayek, while working on his rescue plan, backed the project and got the banks to finance it. Swatch showed that Switzerland could master quartz technology and helped secure Switzerland’s industrial base. It was produced by ETA, SMH’s movement-making subsidiary in Grenchen, Switzerland. Swatch became a design icon. It also made Hayek famous in business circles as the man who competed with Japan’s electronic juggernaut and won. Hayek argued that Swatch was proof that Western countries could and should maintain their manufacturing bases, that it was possible for a high-wage country to produce high value, high quality, high volume consumer products at low cost. Swatch’s enormous sales success returned SMH to profitability.

A collection of Swatch watches.

In the 1990s, Hayek and his team turned their attention to restoring the fortunes of other group brands, particularly Omega. Today Omega is the second-best-selling Swiss watch after Rolex.

Hayek at a press conference flanked by former astronauts.

In 1999, Hayek acquired the Breguet brand and the Nouvelle Lemania factory from Investcorp. In a surprise move, Hayek named himself CEO of Breguet. Over the course of the last decade, he has orchestrated a stunning revival of Breguet’s fortunes. Breguet had annual sales of 30 million Swiss francs when the Swatch Group acquired it. By 2003, annual sales had soared to SF200 million. As for the Swatch Group, in the course of his 24-year reign as its head, sales rose to a high of SF5.97 billion in the record year of 2008.

Swatch Group extremes: below left with Breguet Marie-Antoinette No. 1160, and right with a Swatch plastic chronograph from the 007 Villains collection.

Hayek, ultra-intelligent, ultra-passionate, ultra-opinionated, was an outspoken and often controversial figure in Swiss political, economic and cultural life. He was a frequent and caustic critic of Swiss banks and a booster of causes like the environment. (He entered a joint venture with Mercedes-Benz in 1994 to develop an environmentally friendly city car, the Swatchmobile. Ultimately the Swatch Group pulled out of the project, but Hayek’s idea came to fruition as today’s Smart car, launched by Mercedes in 1997. Smart stands for Swatch Mercedes Art car.)

Internationally, he was an outspoken defender of his adopted country, an articulate ambassador promoting core Swiss values of uniqueness, neutrality and fairness, and manufacturing expertise. His death was huge news in Switzerland. Swiss President Doris Leuthard remarked, “We owe Mr. Hayek a lot.” Several Swiss papers devoted their entire front pages to Hayek, according to swissinfo.ch, a Web site devoted to Swiss news. Geneva-based Le Temps spent its first three pages on Hayek’s death and eventful life. In an editorial, Le Temps said Hayek “entered into the history books, among the greatest entrepreneurs of the 20th century. He who would become the emperor of the Swatch Group was primarily its messiah, then the entrepreneur who succeeded in restructuring what everyone thought was a lost cause. He renewed the mechanical tradition, re-established the supremacy of Omega, made Breguet rise again from the ashes, opened prestigious boutiques. The defeats of the watch industry were forgotten. The conquest of the world continued. It would never stop.”

A headline in Blick, a Swiss tabloid, said, “Thanks for Swatch! Thanks for Smart! Thanks for everything!” Said Blick, “Yesterday the greatest entrepreneur of Switzerland died, one of the most impressive personalities this country has ever known.”

Hayek’s death was also news internationally. Major newspapers like The New York Times, Financial Times, and Wall Street Journal ran obituaries. Johann Rupert, executive chairman of the Richemont Group, issued a tribute. “Nicolas Hayek’s death is an immense loss for Switzerland and for the watch industry,” Rupert said. “He was the driving force behind Swiss watchmaking; its leader and its savior. Our industry has lost one of its champions, respected by everyone who dealt with him; a man of honor, gravitas and great personal charm. He was a true leader and entrepreneur and an inspiration to me.”

Results for the fiscal year ended March 31 show that watch sales at Japan’s Big Three watch firms slumped for the second consecutive year as the Great Recession continued to suppress demand for mid-priced watches. Nevertheless, the watch divisions at Citizen, Seiko and Casio remained profitable. For the companies as a whole, only the Citizen Group reported a profit for year; Seiko and Casio both reported losses.

In the watch divisions, the hardest hit was Seiko, maker of Seiko, Pulsar, Alba and licensed brand watches; watch sales fell 31 percent to 64.5 billion yen ($693 million) for the fiscal year. Two years ago, Seiko’s watch sales totaled ¥117.2 billion. Since then, they have fallen a staggering 45%. Seiko now ranks third among the Big Three in terms of watch revenue. Seiko Holdings Corp. said operating income at its Seiko Watch Corp. subsidiary increased 38 percent to ¥2.2 billion ($23.6 million). Unlike Citizen and Casio, Seiko Holdings issued no statement discussing the financial results.

Watch and clock sales at Citizen Watch Co. fell 6.7 percent in the fiscal year to ¥123.6 billion ($1.33 billion). Regarding the Japanese market, Citizen said in a statement that “the slow recovery in consumption and other factors under prevailing economic conditions made for an exceedingly difficult sales environment especially for premium-priced products for the first three quarters of the year.” Overseas, sales in Asia, particularly China, were robust and far ahead of the previous year, Citizen said. “In the North American market, the largest for this business, difficult conditions continued through the first half, but gave way to a faster-than-expected market recovery in the second half and sales growth for Eco-Drive and other high value added products,” Citizen said. Citizen said sales at its Bulova Corp. subsidiary in the United States dropped for the year, although Bulova posted stronger second half sales “due to increased sales of mechanical watches and other differentiated products.”

Operating profit in Citizen’s watch and clock segment rose 7.1 percent to ¥9.7 billion ($104.2 million).

Sales of Casio Computer Company’s timepiece division fell just 2.8 percent to ¥78.1 billion yen ($839 million). “Sales of non-radio-controlled watches were affected by the harsh market environment in the first half,” Casio said in a statement, “but sales of radio-controlled watches were strong, particularly Casio’s high-value-added brands such as G-Shock, Oceanus, and Edifice.” Casio does not disclose the operating income of its timepiece division. Its overall electronics segment, which includes timepieces, reported a ¥19.9 billion loss ($213.8 million). However, Casio noted that timepieces “remained highly profitable.”

Watches represent only a portion of the sales of all three firms. At Citizen and Casio, watches outperformed other divisions. Net sales for Citizen Holding Co. Ltd. dropped 14.9 percent to ¥252.5 billion ($2.71 billion). Net income for the Citizen Group remained stable at ¥3.5 billion ($37.6 million).

Net sales for Casio as a whole dropped 17.4 percent to ¥427.9 ($4.60 billion). For the year, Casio reported a loss of ¥21.0 billion ($226.0 million). Casio said the primary cause of the loss was a sharp decline in sales of cellular phones.

Net sales at Seiko Holdings Corp. increased 33% to ¥230.7 billion ($2.48 billion). The increase, however, is due entirely to a reorganization of the Seiko Group in October that made Seiko Instruments Inc., one of the group’s two major manufacturing units, a subsidiary of Seiko Holdings. SII added ¥85.0 billion ($913.6 million) to Seiko Holdings sales. Without SII, Seiko Holding sales would have declined by 16 percent for the year. Seiko Holdings reported a net loss for the year of ¥3.6 billion ($39 million).

Big Three Watch Sales 2006-2010
(billion yen)

Source: Citizen, Casio, Seiko

Each year the Millward Brown Optimor consulting firm issues a ranking of the world’s top brands. MBO uses a complex formula to estimate a brand’s worth. Only one brand whose primary product is watches made the list: Rolex. MBO estimates that Geneva-based Rolex is the world’s sixth most valuable luxury brand with a value of $4.74 billion.

Of the five luxury brands ranked ahead of Rolex, four have watch lines: Louis Vuitton, Hermès, Gucci and Chanel. However, those brands made their names with products other than watches. Indeed, eight of the top 10 luxury brands have watch collections (see table), but only Switzerland’s Rolex is known exclusively for watches. (Reviewing the table, one wonders why there are no Hennessy or Moët & Chandon watches. What are they waiting for?)

What’s the second most valuable watch brand? The Millward Brown Optimor survey doesn’t say. No watches-only brand, including Rolex, appears in its 2010 BrandZ Top 100 ranking. To make that list a brand had to have a value of $7.28 billion or higher.

Cartier, however, can make a strong claim to the number two spot. MBO estimates the value of the Cartier brand at $3.96 billion, which puts it in eighth place on the luxury brand list. However, in addition to watches, Paris-based Cartier produces and sells jewelry and is a major global retailer.

MBO has issued its BrandZ report for 12 years. It uses in-depth financial analysis and quantitative consumer research in assigning brand value. Its full report has brand rankings for 17 product categories. (The report is available at www.millwardbrown.com.)

The value of all brands in the entire luxury category fell by a consolidated 3% in 2010, according to the report. It’s notable that Cartier (-19%) and Rolex (-14%) had the biggest year-on-year drops in brand value of the top 10 luxury brands. This doubtless reflects the severe slump in watch and jewelry sales globally in 2009.

“Generally consumers did not automatically feel entitled to luxury last year and needed a justification to spend,” the report states. “Even people with means felt constrained in purchasing luxury items. They wanted to avoid appearing insensitive to the general economic hardship…. Many of the luxury brands and categories were buoyed by sales in Asia, particularly China. Watch and jewelry sales at the lower price points of the luxury range ($3,000 to $4,000) were hard hit in the West, but remained strong in China. And while ‘stealth wealth’ characterized shoppers on Madison Avenue and Knightsbridge, Chinese consumers who could afford bling were flaunting it. The appetite for bling among Russians abated somewhat, however, as the oligarchs suffered from depressed oil prices.”

In case you’re wondering, BMO says the most valuable brand in the world is Google; its brand value is $114.3 billion.

For the most part, the Great Recession of 2009 pretty much mugged corporate sales and profits. In the watch sector, for example, the Bulgari and Movado groups reported red ink for the year. But there were exceptions to the battered sales and profits syndrome. Fossil, for one, had its most profitable year ever. Here’s a survey of the full-year results of publicly traded firms who are watch industry players.

SWATCH GROUP (Switzerland)

The world’s largest watch company (it has 19 brands ranging from Breguet at the top of the price pyramid, Omega and Longines in the middle and Swatch at the bottom) reported gross sales for the group of 5.42 billion Swiss francs ($4.97 billion) for the year ended December 31. That’s down 8.1% from the record sales of 2009. Sales in the finished watch division (which includes a small amount of jewelry sales) were down 7.7% to SF4.43 billion ($4.06 billion). However, the company noted that it significantly outperformed the Swiss watch industry as a whole, whose sales were down 22.3% for the year. Net income for the group was SF763 million ($700 million), an 8.9% decrease from 2008.

The company said in a statement that 2010 was off to a good start; its January sales were the second best in the group’s history. It said it is “very confident of achieving further organic sales growth and improved margins in 2010.”

LVMH GROUP (France)
The world’s largest luxury products group reported a drop of just 1% in total sales in 2009 to 17.05 billion euros ($24.2 billion). Net profit declined 13% to €2.03 billion ($2.88 billion). However, sales in the group’s watch and jewelry division, which includes the TAG Heuer, Hublot, Zenith, and Dior brands, fell by 13% to €833 million ($1.18 billion). Watch and jewelry division profit dropped by 47% to €63 million ($89.5 million). The company cited “considerable destocking by retailers and the decline of the American and Japanese markets” as factors in the slump. The watch and jewelry division represents less than 5% of the group’s total sales.

BULGARI GROUP (Italy)
Bulgari reported total revenue of €926.6 million ($1.32 billion) for the year ended December 31, a 13.8% drop. It reported a loss of €47.1 million ($66.9 million) for the year. Bulgari’s watch division sales, which includes the Bulgari, Gerald Genta and Daniel Roth brands, fell 24.5% to €212.2 million ($301.3 million). “However, we should note the excellent performance of watches (+20.2%) in directly owned stores in the fourth quarter,” the company said in a statement.

Bulgari announced at the beginning of 2010 that it had reorganized its watch division and that Gerald Genta and Daniel Roth would no longer be separate brands, but would become collections within the Bulgari brand. This process contributed to the watch division losses, the firm said. For example, following the integration of the brands, the company sold Roth and Genta brand product at clearance sales with lower profit margins. For the year, there were extraordinary, non-recurring costs related to the restructuring of €37 million ($52.5 million). “It must be underlined,” the company said, “that two thirds of these non-recurring costs are related to the integration of the Roth and Genta brands.” That amounts to €24.4 million ($34.7 million).

Bulgari Group CEO Francesco Trapani said he was optimistic about 2010. “The first two months showed a high single digit increase in turnover with all channels and product categories performing well…. I believe we can reasonably expect a mid single digit increase in turnover in 2010.”

MOVADO GROUP (USA)
Net sales for the Movado Group fell 17.9% for the fiscal year ended January 31 to $378.4 million. The group reported a loss of $11.9 million. The group designs, sources and distributes the Movado, Ebel, Concord, and ESQ brands as well as several licensed watch brands. “The decline,” the company said in a statement, “is primarily the result of the challenging macroeconomic environment, retailer destocking which occurred throughout the year, and proactive sales management in light of industry liquidation and credit risks.”

The company said that it expects sales to increase 10% to 15% in the next fiscal year (ending January 31, 2011), but that due to a tax expense, it anticipates recording a loss next year.

GUCCI (Italy)
Gucci, the flagship brand of the luxury good division of the PPR Group, reported revenue of €2.27 billion ($3.22 billion) in fiscal 2009, down 1.2% from 2008. Operating income amounted to €617.7 million ($877.1 million), down 1.1%. Watches accounted for 4.6% of total sales, i.e. €104 million ($147.7 million). That figure is down from the previous year; Gucci did not disclose the percentage. “For the full 12 months, indirect sales to third-party distributors contracted by 8.1%, notably due to the adverse impact on the Timepieces business of the falloff in the Watches (sic) market as a whole.”

FOSSIL (USA)
Fossil Inc., whose watch brands include Fossil, Relic, Zodiac, Michele, and Michael Kors, reported net sales of $1.55 billion, down 2.2% from the previous year. Net income, however, rose slightly to $139.2 million, a new record for the firm. The company did not break down total sales by product category. It did report that U.S. wholesale sales for watches at $276 million. Fossil also sells watches on international markets and directly to the consumer through its own stores and on its website.

The company said it expects net sales for fiscal 2010 to increase by 9% to 11%.

HÈRMES (France)
Hermès reported net sales of €1.91 billion ($2.71 billion), up 3.1% over 2008. Net income remained flat at €288.8 million ($410.1 million). The company stated that its watch sales were down for the year. However, it did not disclose watch sales data. It said it will release complete consolidated data by April 30. In 2008, watches amounted to 5.4% of Hermes’s total sales, about €95 million ($140 million).

The fiscal year for the Richemont Group, and Japanese watch companies Seiko, Citizen and Casio, ended March 31. Full-year results are expected to be released in May.

Sixteen years ago, two young men born and raised in the Swiss watch town of La Chaux-de-Fonds and working in the watch industry teamed up with the notion of getting their own watch brand. The question confronting Eric Loth and Pierre-André Finazzi was which brand? The Swiss names they wanted, they couldn’t afford. The French brands they could afford, they didn’t want.

On a lark, they decided to look into British watch names. They took what amounted to a horological field trip to England and discovered a rich chapter of watch history they didn’t know existed. The two Swiss were shocked to learn that the mechanical watch as we know it today was essentially an English invention.

Loth and Finazzi founded British Masters in 1995, having acquired the rights to use the names of several of Britain’s most acclaimed, albeit now obscure, master watchmakers. Today, British Masters, headquartered in La Chaux-de-Fonds, is run by Loth (pronounced Lote). (Finazzi left the firm and created a British master-inspired firm of his own, Ellicott SA, in La Chaux-de-Fonds, named after John Ellicott, 1706-1772.)

Loth’s British Masters has two brands: Graham and Arnold. Graham is George Graham, Honest George Graham, as he was known, one of the most illustrious (and apparently one of the nicest) watchmakers in British history. “It was George Graham,” writes Harvard historian David Landes is his magnificent book on watch history, “Revolution in Time,” “who, more than anyone else, was responsible for Britain’s horological preeminence in the first half of the 18th century.”

George Graham

Graham was born to a Quaker family in 1673. His father died when George was very young and he was raised by an older brother. At age 15, he entered a seven-year apprenticeship to a London clockmaker, Henry Aske. The quality of his work as an apprentice caught the attention of the famous Thomas Tompion, considered the father of British watchmaking. Tompion invited Graham to join him when his indenture ended in 1695. Graham did. He began with Tompion as a journeyman for two years, as required by the Clockmakers’ Company, then as Tompion’s protégé, he joined not only the business, but the family, marrying Tompion’s niece.

Tompion, who co-invented the cylinder escapement, died in 1713. His long list of contributions to horology and science (The Encyclopedia Britannica calls him “the man to whom watchmaking owes perhaps most”) earned him the honor of a burial in Westminster Abbey. In his will, he left his business and the bulk of his property to Graham and his wife. The following notice appeared in The London Gazette the week after Tompion’s death:

George Graham, Newphew [sic] of the late Mr. Thomas Tompion, who lived with him upwards of seventeen years and managed his trade for several years past, whose name was joined with Mr. Tompion’s for some time before his death, and to whom he left all his stock and work, finished and unfinished, continues to carry on the said trade at the late Dwelling House of said Mr. Tompion at the sign of the Dial and Three Crowns, at the corner of Water Lane, in Fleet Street, London, where all persons may be accommodated as formerly.

Thomas Tompion

Graham inherited not only Tompion’s business but his mantle as England’s top watchmaker. “His manual dexterity was remarkable and his precision of construction and thoroughness of work unrivalled,” notes the Oxford Dictionary of National Biography. Two years after Tompion’s death, Graham invented the dead-beat escapement, which eliminated all recoil, producing an unprecedented degree of accuracy in clocks and watches. It became the standard for the next 150 years. He also perfected the cylinder escapement designed by Tompion. Professor B. Humbert, of the Horology School of Bienne, in his 1990 book “The Chronograph” calls Graham “the father of the chronograph” because he was the first to construct a horological mechanism – it was for a clock – capable of measuring the duration of an event.

Graham was a member of the British Royal Society and was considered a brilliant mechanician and maker of scientific instruments. One of his inventions was the mercury pendulum, which eliminated the negative effects of weather on clocks. For the royal astronomers Edmond Halley and James Bradley he made astronomical instruments.

Graham was known for his generosity. On the occasion of his death in 1751, The Gentlemen’s Magazine noted that “He was generous. He frequently lent money, but could never be prevailed upon to take any interest.” In his will he left money “to the Poor of the Clockmakers’ Company.” “His principal view,” The Gentlemen’s Magazine continued, “was not either the accumulation of wealth or the diffusion of his fame, but the advancement of science and the benefit of mankind.”

Graham was buried in Westminster Abbey right beside his mentor Tompion. The American historian of science, Clarisse Doris Hellman, in an essay on Graham, observes that “Burial in Westminster Abbey was an honor not easily won at that time by a member of the middle class, and the grave of Tompion and Graham is a testimonial of the esteem in which they were held and of the growing interest in scientific matters.”
At the grave, a stone slab bears this inscription:

Here lies the body Mr. Tho Tompion who departed this life the 20th of November, 1713 in the 75th year of his age. Also the body of George Graham of London, Watchmaker and F.R.S. [Fellow of the Royal Society] whose curious inventions do honor to ye British genius whose accurate performances are ye standard of mechanical skill….

(This is the first of a series of articles on historical watchmakers whose names have been revived as contemporary watch brands.)

In 1986, Luigi (Gino) Macaluso, a Swiss watch distributor in Italy, bought the rights to the name Daniel JeanRichard from Lemania, the Swiss movement manufacturer. Daniel JeanRichard was not a watch brand. It is the name of a 17th century Swiss watchmaker, who was an extremely important, if obscure, figure in the development of the Swiss watch industry.

Macaluso at the time was contemplating a shift from being a Swiss watch brand distributor to a brand owner. The DJR name might come in handy one day, he thought.

Six years later, Macaluso made his move, acquiring the Girard-Perregaux firm. He moved to La Chaux-de-Fonds, Switzerland, where GP has been based since its founding in 1845, and proceeded to revive one of the industry’s premier marques.

Gino Macaluso

Later in the 1990s, when he had put GP on a solid footing, he launched Daniel JeanRichard (later shortened simply to JeanRichard) as a small sister brand to Girard-Perregaux in the Sowind Group, Macaluso’s holding company.

So who is Daniel JeanRichard and why did Gino Macaluso take an interest in him? “I was fascinated by the fact that Daniel JeanRichard lived at the beginning of the Swiss watchmaking industry,” Macaluso told WatchTime. “He is important. He is part of the roots of the watchmaking industry.”

Daniel JeanRichard was born in 1672 in Bressels, near La Sagne, in the Jura Mountains in what is now the Swiss canton (equivalent to a state) of Neuchâtel. According to the JeanRichard legend, around 1690, an English horse trader, while passing through the area, left his watch for repair with the teenaged JeanRichard, who was some sort of craftsman. (Some speculate he was a locksmith. Kathleen Pritchard, in her two-volume Swiss Timepiece Makers 1775-1975 says he was “probably” a goldsmith. No one knows for sure.) The young man took the watch apart and made drawings of the parts. The horse trader picked up the watch on his return trip. Based on his drawings, JeanRichard proceeded to teach himself and his fellow Jura craftsmen and farmers how to make watch parts. In this way he introduced watchmaking to the Jura.

Daniel JeanRichard portraits

Historians caution us to take the story of the horse trader with a grain of salt: a similar tale is told in France and Germany. If history is uncertain whether JeanRichard was one of the watch industry’s earliest knock-off artists, it is sure that in 1691 at the age of 19, he opened a watch workshop near Le Locle and proceeded to revolutionize the watch industry.

What he did was defy the power of the watchmakers’ guilds that controlled the industry in and around Geneva. As the guilds developed they became increasingly exclusive, the preserves of master watchmakers, whose guild rules protected their power and restrained competition. The masters refused to mechanize their production and forbade the use of tools which would permit mass production of watches. They kept the number of apprentices to a minimum and paid their workers, bound to them by cast-iron contracts, poorly. The guild system was designed to keep watch production low, watch quality high, and watch prices exorbitant.

JeanRichard scorned the guild system. He introduced division of labor to the industry, a system known as établissage. JeanRichard taught the local peasant farmers to make watch components, each specializing in producing certain parts, with final assembly by master watchmakers. Instead of restricting the secrets of watch production, he spread them throughout the Neuchâtel Jura. He also pushed mechanized watchmaking, working with local toolmakers to create horological tools to increase production so that watches could be more affordable. The Jura farmers turned quickly to watchmaking, which provided welcome income during the long, slow winters. In this way, JeanRichard paved the way for Swiss industrial watch production.

The new system, which was an early form of subcontracting, spread rapidly throughout the region and gave birth to more than a hundred new specialist professions – chain smiths, axle makers, hinge makers, escapement adjusters, makers of pinions, gongs, keys and other assorted watch parts – most of which have survived to this day. By the time of JeanRichard’s death in 1741, there were several hundred watchmakers in the mountain towns of Le Locle and La Chaux-de-Fonds and the surrounding villages. Later, watchmakers from the now famous Vallée de Joux learned the trade in the Neuchâtel Jura and adopted JeanRichard’s établissage system.

The seed JeanRichard sowed bore fruit. The next generation of Jura watchmakers produced geniuses like Abraham-Louis Perrelet, inventor of the self-winding watch, and Abraham-Louis Breguet, who contributed mightily to the making of the modern watch.

Jean Richard married a Le Locle woman and opened a watchmaking business in Les Petits Monts above the town in 1705. He was known for making plain watches that an average person could afford. A few of his watches have survived; two are on display in Le Locle’s Watch Museum. JeanRichard had five sons, all of whom became watchmakers.

Daniel JeanRichard statue

Le Locle still remembers its hero. In the center of the town, in front of the post office, stands a statue of young JeanRichard, apron askew, examining a watch. Macaluso, too, has done his part to keep the name alive. In addition to the JeanRichard SA subsidiary in La Chaux-de-Fonds, he has created the JeanRichard Museum of Tools in the city in a restored villa called Villa JeanRichard. The museum traces the evolution of watchmaking tools in the 300 years since young Daniel introduced watchmaking to the Jura.

Villa JeanRichard

When it comes to anniversaries, the once generally ignored 40 is the new 50. This year has been marked by a parade of 40th anniversary bashes: Woodstock, the moon landing, and in watches, the legendary Zenith El Primero movement. Now, with two weeks left in the year, there is still one monster anniversary to go for watch lovers.

Forty years ago on December 25 the quartz watch revolution began in Tokyo when Seiko unveiled the Quartz Astron, the world’s first quartz watch. Astron was the shot heard around the watch world, beginning an upheaval that radically rearranged that world. It shifted the balance of power to the Far East, toppled Switzerland as the world’s watch production leader, sent the Swiss watch industry into a two-decade-long tailspin (between 1970 and 1988 Swiss watch employment fell from 90,000 to 28,000), brought a quantum leap in watch accuracy, a quantum change in watch styling, and much more.

Both Seiko and Switzerland competed to develop the first quartz watch. For Seiko, the race began in 1959 with Project 59A, whose mission was to develop quartz crystal timers. One of the team’s first successes was a portable quartz clock called the Seiko Crystal Chronometer QC-951, which Seiko used as a backup timer for marathon events in the 1964 Tokyo Olympic Summer Games.

Seiko’s Crystal Chronometer

The big challenge was to make a mechanism small enough for use not in a clock but a wristwatch. Both Seiko and a consortium of Switzerland’s top firms tackled it. They were able to monitor each other’s progress through timing competitions sponsored by Switzerland’s Neuchâtel Observatory, where prototype watches were submitted for testing. The Swiss developed the first quartz marine chronometer in 1961. Seiko had one by 1963.

Seiko quickly caught up. Seiko and Longines were the big winners in the Observatory’s 1964 competition, both with prototype quartz board chronometers. Longines took the Grand Prix and Seiko took the next six prizes. The same results occurred in 1966 for prototypes of the world’s first quartz pocketwatch. At both competitions, more than half the winning products were from Seiko. In 1967, Seiko nabbed the Grand Prix for a quartz pocketwatch. That year quartz wristwatches were entered into the Neuchâtel competitions for the first time. The Swiss consortium entered its movement, known as Beta 1, and Seiko entered the Astron movement. Both groups raced to perfect the movements for commercial production and sale.

Seiko won. The Swiss were not far behind. The first Swiss quartz analog watches containing the Beta 1 movement arrived at the 1970 Basel Fair. But while Seiko embraced the new technology, the Swiss, burdened by a legacy of mechanical watch supremacy, hesitated, and paid dearly.

The Seiko Quartz Astron debuted in an 18k-gold case at a price of 450,000 yen. “It was more expensive than the family car,” Kuoji Kubota, a chief engineer on the Seiko Astron project, told me when I met him in Tokyo in 2001. Seiko Quartz Astrons are rare. Seiko only produced 200 of them. What’s not rare is the technology Seiko developed for Astron, including fork-type oscillators, open-type separated motors and one-second-interval movement of the second hand. They set the standard for all analog quartz watches that followed.
Seiko is marking the anniversary, it says, “with a year of celebrations.” It began this month with an exhibition in Tokyo of 40 new watch designs created by Seiko designers using the Astron as inspiration. (You can see the designs at www.seiko-watch.co.jp/p_design/e/). At Baselworld, Seiko plans to unveil what it calls “revolutionary quartz watches whose new functionality and design demonstrates the great future potential of this most important of watchmaking technologies.”

One final thought. In a delicious historical twist, 1969 also marks the 40th anniversary of another historical watch race: the race to develop the world’s first automatic chronograph. In the following two decades, the automatic chronograph was considered the final flourish (read “last gasp”) of mechanical watchmaking. We know now that that wasn’t the case. The quartz revolution was followed in the 1990s by the mechanical counter-revolution, and a stirring revival of the automatic chronograph. But guess who won the race to develop the first automatic chronograph in 1969: Yep, Seiko. (WatchTime’s Gisbert Brunner details the saga in “The Great Race of ’69” in the November-December 2009 issue.) Clearly, 1969 was a breakout year for Seiko. Who can blame them if they want to party all next year?

TechnoMarine made a big splash a decade ago. A new team is hoping to do it again.

The image of (left to right) Christian Viros, Vincent Perriard, and Steven Cohen, nearly up to their necks in water, is designed to make us wonder what these three bobbing Pep Boys are up to. The image is apt because that’s exactly the question lots of people in the watch world are asking.

These three have teamed up to try and revive the TechnoMarine watch brand. TechnoMarine, you may recall, was the world’s hottest watch brand 10 years ago. It burst on the watch scene in 1999 with a watch called TechnoDiamond that turned a faux pas into a fashion statement by brazenly combining diamonds with (egad!) plastic. It had 1.1 carats of diamonds in two rows around the bezel and a translucent plastic band that came in colors ranging from transparent to mauve.

TechnoMarine’s TechnoDiamond created a Techno-craze. Fashion and watch magazines hailed Franck Dubarry, the French advertising executive who created the company and the design pretty much on a whim, as a genius. Dubarry moved the business to Los Angeles and made quartz TechnoMarines a fixture of the jet set’s weekend wardrobe.

For a while. Dubarry had a good run, but eventually the brand fell victim to the two demons that plague all overnight-sensation watches: knockoffs and the need for a second act. (Think of Carlo Crocco’s gold-and-rubber Hublot and Severin Wunderman’s Corum Bubble.) Diamond and plastic watches proliferated. Over time the novelty wore off and the brand got tagged as a “one-hit wonder.” By mid-decade, the wind had come out of TechnoMarine’s sails (and sales). In 2006, Dubarry sold the company to an investor group and pursued other interests.

TechnoMarine made a splash combining diamond-set cases with plastic bands, as in this Cruise Star model.

TechnoMarine seemed destined to fall even farther off the watch world’s radar except for one thing: among the investors in the group that purchased the brand was Christian Viros.

Viros has a golden reputation in watch circles. From 1988 to 2002 he was one of the most important figures in the watch world. He is the man who devised and executed the strategy that catapulted Switzerland’s struggling Heuer brand into the international superstar that is TAG Heuer.

When the French company Techniques d’Avant Garde (TAG) acquired Heuer in 1985, it hired the Booz Allen Hamilton consulting firm to develop a plan for the business. Viros, then with BAH, led the team that devised the strategy. When he and his two BAH colleagues, Luc Perramond and the splendidly named Philippe Champion, presented to TAG management their recommendations for what to do with Heuer, TAG management said “Great. Do it.” TAG hired the three and, indeed, they did it. With Viros as CEO, Champion running the Japanese market and Perramond in the USA, TAG Heuer sales soared, primarily on the strength of strong design and superior sports marketing. The watches in those days were mostly quartz analog chronographs, made for TAG by Roventa-Henex and other Swiss suppliers.

The best measure of Viros and company’s success is that 11 years after they took over, TAG sold the brand to LVMH for an eye-popping 1.15 billion Swiss francs (equivalent to about $740 million at that time). All three had a grand payday and Perramond and Champion left the company.

After the 1999 acquisition, Viros became head of LVMH’s watch and jewelry division for a few years. He left the post in 2002. Since then he has been a consultant and an investor in various business. His resurfacing as the chairman of TechnoMarine has made the brand much more interesting.

It got more interesting still this summer when Viros announced that he had hired Vincent Perriard as TechnoMarine’s CEO. The news surprised the watch industry. Three years ago, the Movado Group had recruited Perriard to reposition its Concord brand. That he has done, giving the brand a radical new identity as an avant-garde, expensive sports watch. Under Perriard, Concord has introduced a number of eye-catching, attention-getting models like the SUV-inspired Concord C1 Chronograph and this year’s $480,000, structurally unorthodox C1 QuantumGravity.

First Viros. Then Perriard. Wassup with TechnoMarine, watch wags wondered. Perriard quickly hired former Movado Group veteran Steven E. Cohen as CEO of TechnoMarine North America. Previously Cohen was president of Ebel North America.

Recently WatchTime met with Perriard and Cohen in New York to discuss what’s going on at TechnoMarine. Details at this point are scarce. What’s clear is that Viros and Perriard are in the process of creating TechnoMarine’s second act. The situation is very similar to what transpired at Hublot earlier in this decade. Hublot founder Carlo Crocco startled the watch world in 1980 when he put rubber straps on gold watches. Crocco rode his concept as far as he could, but he never took the brand beyond the rubber strap shtick. It took an outsider, Jean-Claude Biver, to develop Hublot’s second act, the Big Bang watch.

TechnoMarine’s situation is similar to Hublot’s. The new management team will relaunch the TechnoMarine brand at Baselworld in March. “There will be a complete new brand concept and a new set of products,” Perriard says. What won’t change are the brand’s price points; it will remain in the $300 to $3,000 range.

“We need the magic touch,” Perriard says. “Franck Dubarry had it with plastic and diamond. We cannot do TechnoDiamond again. We have to come with something more.” Nevertheless, the new team intends to stay true to the spirit of what Dubarry did. What they want to do, Perriard says, is “to recreate a clash between two universes that don’t belong together.” That’s easier said than done. Nobody knows that better than Perriard, who has gone from one nerve-wracking, “create-a-new-identity” mission (Concord) to another.

Which is why TechnoMarine is turning into a compelling little drama. The new gang is far more watch savvy than in the Dubarry era. Viros has assembled an experienced team, including Michel Beziat, a former product development director at Jeager-LeCoultre. The pressure is on them to unveil something dramatic in 2010. No doubt they will. But we peanut-gallery critics should remember that Perriard only arrived in August. The new team deserves a full season to show their stuff. Given the lead times required to develop product, it will be the Baselworld 2011 collection that reveals the true new TechnoMarine.