The ruling of the Swiss Competition Commission (COMCO) came a bit as a shocker to the watch family. I don’t want to go into the history and details – that is enough for more articles to be written another time – this article is to explore what are the options for a brand using ETA movements in many of their watch models – I chose Breitling as an example (but the same would apply to Tudor and others).
(Editors Note Check NSOW video for some other thoughts, especially on Breitling.)
Thanks to Sophy Rindler’s great article on the subject we have learned a lot. But what will this decision mean for a company like Breitling.
Breitling SuperOcean A17360 on Martu Leather strap
Breitling was going to a bit of a rough patch in recent history – quite a bit away from the sought after brand they once were. Dumping of plenty of inventory in the market eroded the perceived and real value of their remarkably well made, high-quality watches. Under the new CEO, Georges Kern the brand works hard on a comeback and is doing a stellar job so far. New releases getting a lot of love from the community, the design seems to evolve without losing its DNA. Sales look great, the trajectory is right, retail boutiques look fresh and exciting again, what could possibly go wrong? Cough, Cough – let’s swing the Swiss Appenzeller Cheese hammer, and ring some cowbells, shall we?
The situation right now:
Breitling has used ETA movements in the majority of their watches for a very long time, to say they have a very beneficial and close relationship would be an understatement.
Breitlingsource.com lists 11 in-house movements of more than 50 mechanical and quartz movements and variants that were used historically:
- the Breitling B01 and it’s derivatives: B01C, B02, B03, B04, B05, B06
- the Breitling B12 and the handwound B14
- the Breitling B35 in-house worldtimer movement
- the B20
Sidetracking a bit because – well I am sentimental: I love my Breitling SuperOcean A17360 (ETA 2824-2 COSC certified movement) that was more or less my first real luxury timepiece. It’s my only Breitling in my collection but not my only Breitling powered watch. How come? I also own a Tudor Black Bay Chronograph that uses a Breitling B20 movement build to Tudor specifications (different mainspring and some other changes).
Breitling SuperOcean A17360 And Blackbay Chrono
Breitling’s immediate future:
- Good leadership and vision, solid financial backing
- Probably has a stockpile of movements in their warehouse to not halt production
- Some drop-in replacements do exist from ETA clone manufacturers like the 3 “Esses” Selitta, Soprod and STP
- There is a secondary wholesale market that probably sits on lot of inventory to continue supply if an ETA movement is really needed without major changes
Medium- to long-term challenges:
- What is the ramp-up time to use new movements in existing models?
- How much retooling,
- restructuring of production lines is needed?
- How well can the existing manufacturers compensate and ramp up production to replace 500,000 movements a year that ETA supplied to 3rd parties?
- Explore alternatives in Eterna, Kenissi and other not yet known cooperations
- Half a million watches is a lot – there will be a higher demand for these movements – higher demand usually means higher prices
The Swiss watch industry is very secretive – an example is the cooperation Breitling is somehow associated with, but at least to me, it’s unclear how far their involvement goes. I am talking about the new factory that is being built in Le Locle by Tudor and Kenissi. Half of the area is for a new Tudor factory, the other half is for Kenissi (Tudor is invested in them too), a company that builds movements for Chanel (the new 12.1, exclusive to Chanel with which Chanel won the GPHG price with their revamped J12 model). Chanel allegedly bought a 20% stake in Kenissi – Chanel also owns a piece (20%) of F.P. Journe – and now they are in cooperation with Kenissi, so Tudor and by definition their owner Rolex.
Watch manufacturers will have to go the way the car industry went a long time ago.
Let me explain:
Developing a new car engine costs around $1billion – a lot of money. Let’s say, you want to offer a smaller car but you don’t have a small enough engine to drive it? Ask your competitors if you can use theirs. What sounds like blasphemy just one or two decades ago is now commonplace:
|Toyota||Lotus Exige, Evora|
|Mercedes-Benz AMG||Aston Martin (all)|
|Peugeot (PSA)||BMW 116i|
|Ferrari||Alfa Romeo Giulia QV|
More cooperation between brands
Due to the immense costs and time required to develop your own movements, more cooperation will evolve. Just looking at the fact that a Rolex owned company (Tudor) is cooperating and exchanging movements with Breitling is pretty mind-boggling.
Tudor however is in the exact same situation as Breitling – a lot of their older models still use ETA movements that they won’t receive anymore come 1st of January 2020.
The holiday period might be going slightly different than what people expected following these announcements, a lot of planning and thinking will happen in the management of all larger companies who cannot receive anymore shipments from ETA in 2020 until the “final” decision is made in the summer.
Isn’t it a good thing that this is happening?
Yes and no. The initial goal of the CEO of Swatch Group back in the days Nicolas Hayek when ETA supplied nearly everyone with movements and in-house wasn’t really a thing, the idea was to push the industry to work on its survival and get brands to produce more in-house movements to justify and diversify the offerings. This has already happened. ETA is not anymore in a market-dominating situation, the goalposts have changed dramatically. Goal achieved – this ruling is like a blast from the past, “Die ich rief, die Geister werd ich nun nicht los.” – Goethe (English: The spirits that I summoned, I can’t get rid of them– The Sourcerers Apprentice – Goethe)
For now and in this time of Breitling’s recovery/resurgence this is the last thing they need. It’s a distraction from more important things, takes away focus. This applies to every company in the industry depending on ETA movements. While it’s not unsurmountable – it surely is unneeded and costly. Demand might be higher for some time until supply can catch up – higher costs does not make things easier for the industry.
Let’s hope common sense prevails and the situation is judged not from the original intent 20 years ago but based on the situation we see right now.
I personally wish Breitling all the best and am confident they will weather this storm as well. My own Breitling surely will survive a bit of rain, it’s water-resistant to 5000ft/1500m!!