ROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEXROLEX
21 November 2013, 12:54 PM | #1 |
"TRF" Member
Join Date: Dec 2011
Real Name: Steve
Location: USA
Watch: A few
Posts: 8,884
|
Watch Firms Buy Swiss Parts Makers
WSJ Article from 11/18/13 sharing with TRF....
ZURICH—The Swiss watch industry is becoming increasingly tightly wound. Earlier this year, Hermès International SA, RMS.FR -0.40% which makes its branded watches in Switzerland, bought the two-thirds of Swiss watch-case maker Joseph Erard SA it didn't own. The deal, for an undisclosed price, gives the French luxury group a steady supply of cases for such watches as its famous Arceau Le temps suspendu timepiece line. "We wanted to secure our future supply of strategic components," says Luc Perramond, chief executive of La Montre Hermès, Hermès's watchmaking division. Hermès isn't the only watchmaker snapping up parts producers. Geneva-based Cie. Financière Richemont SA CFR.VX +0.11% spent an estimated €80 million ($108 million) to buy Varin-Etampage, a Swiss maker of cases and buckles. And Moët Hennessy Louis Vuitton LVMH SA MC.FR -0.14% bought ArteCad SA, a dial maker based in northwestern Switzerland. Classique Ora Mundi 5717 watches, made by Swatch Group AG unit Breguet, on display last spring at the Baselworld watch fair in Switzerland. Bloomberg News Driving the acquisitions: concern that parts prices will rise, a worry that took on new urgency last month, when Swatch Group AG UHR.VX -0.25% won permission from Switzerland's competition authority to phase out selling a key component to competitors. Swatch, the world's biggest maker of watch parts, can further reduce sales of "movements"—the power hub of mechanical watches—next year and end them entirely by 2020. The potential shortage of mechanical movements is particularly sensitive because the part is among the most expensive elements of a watch. This year, the component's average wholesale price has risen to 122 Swiss francs ($133), or about 6% of the average wholesale price for the 5.3 million mechanical watches Switzerland exported. Watchmakers are also concerned they will have difficulty securing enough parts to qualify for the coveted Swiss Made label, a designation that helps luxury brands justify price tags that often run into the tens of thousands of dollars. At least 60% of a watch's value must be made in Switzerland to qualify. "There is pressure for companies to get what they need, which will drive more integration in the industry," says Deloitte AG consultant Howard da Silva, whose team is working on two deals. Since 2011, when Switzerland's competition body began looking into Swatch's request to cut back on component sales, watchmakers have spent nearly $1 billion on acquisitions, much of it on parts makers, according to estimates by Thomson Reuters, a data tracker. According to a Deloitte survey, roughly eight out of 10 watch-industry executives expect acquisitions of parts firms to continue for at least 18 months. Ulysse Nardin SA, a watchmaker based near Switzerland's border with France, snapped up Donzé Cadrans SA, a maker of enamel watch dials, when its owner decided to retire. The firm's enameling technique can produce intricate designs and nearly three-dimensional representations. Ulysse Nardin has used the technique on watches featuring engravings of famous warships, including the H.M.S. Victory. Chief Executive Patrik Hoffmann says the acquisition ensured Ulysse Nardin would have the skills to distinguish its watches from the competition. Enameling enhances "desirability for our clients," he adds. Some companies worry the consolidation process is concentrating more power in bigger watch groups, such as Swatch, Richemont and LVMH. They say that leaves the rest of the industry vulnerable. Privately held Parmigiani Fleurier SA, which makes its own watches in addition to providing parts to 17 other watchmakers, says smaller companies could be pushed out of business if they can't find Swiss-made parts because they won't qualify for the big Swiss Made price tags. "Some companies will have problems making honest Swiss watches," adds Parmigiani CEO Jean-Marc Jacot. That means the acquisitions aren't likely to stop anytimesoon. Earlier this year, Gucci Timepieces & Jewelry, a Swiss arm of French luxury group Kering SA, KER.FR +1.05% bought Fabbrica Quadranti SA, a maker of dials in the Italian-speaking part of Switzerland, for an undisclosed amount. The dials are valued for their elaborate patterns. But the company's parts also contribute to Gucci's designation as a Swiss Made brand. "The expertise brought by Fabbrica lends even greater autonomy to our watchmaking manufacture," says Michele Sofisti, Gucci Timepieces' chief executive. |
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests) | |
|
|
*Banners
Of The Month*
This space is provided to horological resources.