Best Of Swiss Watchmaking Industry

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Swiss Luxury Watches History

Watchmaking in Switzerland first appeared in the mid-16th Century, initially as a response by goldsmiths to Calvinist reforms which prohibited the wearing of jewellery.

Unlike the English watch industry, which in the 18th and 19th centuries was driven by the demands of maritime exploration and trade, in Switzerland improvements to watch design were driven largely by fashion and taste. This placed the Swiss industry in a commanding position as watches became more affordable, and through the adoption of mass production technologies at the beginning of the 1900s Switzerland established its domination of the world watch market.

This domination continued until the 1970s, when the introduction of quartz technology, combined with integrated circuitry, decimated the Swiss industry. Competitors from the U.S., Japan, and Hong Kong were able to produce watches which were simultaneously much cheaper but also far more accurate, and in ten years Swiss exports fell from 40% of the world market to only 10%.

Factories were forced to close, and many brands consolidated or were bought out. Throughout the 1980s and to the present day, the Swiss watch industry underwent a remarkable transformation, on two fronts. Firstly, SMHi (one of the conglomerates formed by the merging of previously independent companies) introduced Swatch, a precision-engineered quartz analogue watch, which once again signalled Swiss dominance of the low-cost fashion market.

Partly on the back of this success (Swatch Group owns the Breguet, Blancpain, and Omega brands, amongst others), Swiss watchmaking then aggressively marketed itself as the epitome of “fine timekeeping.” The notion of Swiss-made luxury was carefully managed and assiduously protected: in order to claim “Swiss Made” at least 60% of components by value must be Swiss, and assembly and inspection must take place in Switzerland. The success of this strategy is demonstrated by the statistic that in 2011, Switzerland manufactured only 2.6% of the world’s watches by volume, yet accounted for 54% of the market by value

Ulysse Nardin

Whilst it does not have the public recognition of brands such as Rolex or Patek Philippe, amongst watch connoisseurs and collectors Ulysse Nardin is regarded as one of the most innovative, having been awarded more patents than any other watchmaking company. Established in 1846, the company initially made marine chronometers before expanding to manufacture pocket and wristwatches.

Patents and prizes awarded in the late 19th and early 20th centuries attest to Ulysse Nardin’s reputation as the leading pocket chronometer maker, but after World War 2 the brand’s reputation diminished and it existed only as a minor player among the Swiss manufacturers.

This changed in 1983 when the company was acquired by Rolf Schnyder. In 1985 it unveiled the Astrolabium Galileo Galilei, which entered the Guinness Book of World Records as the most complex watch ever made, thus presenting the brand’s vision of itself once again as a leading Swiss watchmaker.

Nowadays the company is known for other innovations, particularly its perpetual calendars and jaquemarts, its “Freak” carousel tourbillon, and the use of synthetic materials such as silicium and polycrystalline diamond within its watch movements.

Bell & Ross

Bell and Ross was founded in 1993 by Bruno Belamich and Carlos Rosillo. Initially working in partnership with German watch manufacturer Sinn, the brand is known for large, legible displays intended to replicate aircraft instrumentation.

One of the youngest of the Swiss watch brands, Bell and Ross is now part-owned by Chanel and headquartered in Paris, though manufacture and assembly is based in La Chaux-de-Fonds in Switzerland. Unlike many other brands, including newer entrants to the market such as Urwerk and MB&F, Bell and Ross has not attempted to make a name for itself through the design of new complications.

Instead it has sought to establish its reputation through association with organisations such as Recherche Assiance Intervention Dissuasion (RAID), the French counterterrorism unit, and Groupe d’Intervention de la Gendarmerie National, the French hostage rescue unit (Hahn, 2012). In this way the company has become known as a maker of tough, reliable, and overtly masculine watches.

The “Ebauche” Tradition

The high number of Swiss luxury watch brands also disguises another aspect of the industry, namely the production of mechanical watch movements by what is known as the “ebauche” tradition.

Luxury watch brands pride themselves on their production of movements, and almost all incorporate complications manufactured in-house in their high-end and signature pieces. However, the majority of brands also use original equipment manufacturer (OEM) suppliers of movements in their lower price models, both to reduce costs and to concentrate on those aspects which bring most value to the brand, i.e., the design of the visible exterior of the watch.

In addition, the provisions of Swiss law require that a brand which claims its product is “Swiss Made” must use a Swiss movement. This has led to a situation in which only five manufacturers (ETA, Frederic Piguet, Sellita, TechnoTime and Zenith) supply movements to the whole of the Swiss industry.ii Thus, at least at the lower end of the market, many brands share the same internal movements, despite their dissimilar outward appearances.

The ebauche tradition is therefore an instrumental part of the production of artificial rarity, in that it allows the continuation of small, distinct brands which would otherwise be unable to manufacture highly sophisticated movements (Baker, 2000). However, it also plays a further role in the perception of exclusivity, in that it provides brands with platforms on which to create many variants of the same product.

The supply of movements by an OEM demands that brands incorporate a modular (rather than integrated) architecture within their designs, one in which, simplistically, the movement can be ‘dropped in’ to the watch case. This in turn allows brands to create small production runs of watches whose internal configuration, parts and assembly are identical. The power of a system in which multiple designs can be created using the same internal movement is illustrated.

Limited Editions

In parallel to the strategy of small production runs, the Swiss watch industry also uses limited editions to artificially induce exclusivity. Limited editions may incorporate a new design, such as the Ulysse Nardin Tellurium J. Kepler, limited to 99 pieces, but are more typically variants of standard designs, incorporating new material or colour combinations such as the Ulysse Nardin Acqua Perpetual, limited to 500 pieces.

In both cases, production is limited to a predetermined number of pieces even if customer demand suggests that more units should be manufactured. This not only generates publicity (brands will often announce limited editions at major trade fairs such as Baselworld), it also ensures a second-hand market amongst collectors in which prices are kept high, further adding to the reputation of the brand.


Pequignet: The Face Of The Renaissance

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Pequignet Watches

For French watchmaker Pequignet, its return to the annual luxury watch and jewelry show, Baselworld, signaled a new page in the company’s 40-year history. As the only “haute horlogerie”2 manufacturer in France since the quartz crisis in the 1970s, Pequignet had caught the attention of both the media and the watch collector community, despite going through receivership and a change of ownership in late 2012.

In addition to showcasing its Calibre Royal collection at Baselworld in 2014, Pequignet presented a new line of entry-level Moorea watches. However, detail-oriented watch enthusiasts quickly spotted an unusual object, a low-end Japanese Seiko calibre, on the back of these Moorea watches. To what extent was Pequignet affected by the ETA3 parts shortage? Would the company invest further in its manufacturing processes to make high-end mechanical watches? As an independent atelier, Pequignet had to address these questions in order to succeed in the highly competitive global watch market, which was largely dominated by Swiss watchmakers


The Pequignet brand was built upon the French haute horlogerie heritage, which could be traced back several hundred years. Watchmaking was a primarily French discipline until 1685, when Louis XIV revoked the Edict of Nantes, a treaty that protected Protestants’ rights in a country that was dominated by Roman Catholics. The revocation forced 2,000 Protestant Huguenots, many of whom were watchmakers, to flee France and enter neighbouring countries. Throughout the 19th and 20th centuries, many watchmakers chose to settle in the Franco-Swiss Jura Mountains.

Prior to the quartz crisis, in which cheap Japanese quartz watches flooded the market in 1972, approximately 250 French watch companies and 15 factories were located in a small French village, Morteau, providing jobs for its 6,000 residents. However, the introduction of quartz watches decimated the traditional mechanical watchmaking industry. Many French watch companies were forced to close or become training schools. In 2012 approximately 17,000 French watchmakers crossed the border every day to work at the factories of Swiss watch brands like Jaeger-LeCoultre, Audemars Piguet, and Patek Philippe in the Vallée de Joux. Pequignet former chief executive officer (CEO), Didier Leibundgut commented, “Out of Joux’s 6,000 watchmaking stations, 4,000 were occupied by French employees.

Without these French watchmakers, the Swiss brands would have difficulty in fulfilling their orders! Although a few French watch brands remained in France, none, except Pequignet, produced their own watch movements.


Since entering the traditional watchmaking business at 16, Emile Pequignet was passionate about his profession. He aspired to create beautiful watches using innovative designs and quality materials. The ambitious watchmaker founded Pequignet in Morteau on January 1, 1973, in the midst of the quartz crisis. His watches initially bore his full name, but the brand was later rebranded as “EP Pequignet”. Pequignet designs attracted a generation of elegant women who were looking for fashionable modern watches. Pequignet also invented a steel grain-shaped link that hinged with the bracelet in the brand’s Moorea watches.

“It’s a well-kept secret, but Pequignet makes some of the most comfortable and best-engineered bracelets in the business,” proclaimed James Gurney and Tracey Llewellyn of QP Magazine. The fashionable bracelet design successfully differentiated the Moorea collection from others. The brand became a true ambassador — particularly in the equestrian world (Emile Pequignet was an avid horseman) — in the 1980s and 1990s. For decades, Pequignet was largely known for the creativity and timeless beauty of its ladies’ collection.

The Cameleon, Sorella and Moorea models in this collection were honoured five times with first prize at the prestigious Cadran d’Or awards in Paris. Pequignet made use of imported Swiss-made movements and parts to assemble these watches. The brand was an inspirational hallmark of Swiss-made French elegance, and successfully positioned to be the “jewel in the crown of luxury watchmaking.


Pequignet was a family-run business for 30 years, until January 15, 2004, when Emile Pequignet decided to retire. He sold his company to Didier Leibundgut, who had previously worked as the marketing director at Zenith in Le Locle. Equipped with luxury watch marketing experience, Leibundgut had the vision to transform Pequignet into the only haute horlogerie manufacture in France.

Despite having difficulty in securing financial support from banks for this seemingly risky project, in 2006, Leibundgut was able to set up an haute horlogerie laboratory at Pequignet, fitted with advanced equipment such as Variocoupler instruments, binoculars with exposures to one 100,000th of a second, and 3D optical testing stations. Huy Van Tran and Ludovic Perez from Swiss company CompliTime SA joined Leibundgut to realize this haute horlogerie dream. “We wanted to do the right thing from the beginning,” said Tran and Perez during an interview in 2009.

“We want to achieve high performance in terms of power reserve, isochronism, torque, inertia for the precision and especially great reliability.”16 Tran became Pequignet designer and research and development (R&D) manager, while Perez served as the head of laboratory operations and prototyping. Together with Philippe Blanchot, who was responsible for quality control and vendor relations, Tran and his team were able to develop an in-house calibre called “EMP01” for use in its Manufacture collection after making 279 technical drawings. “I started by drawing the barrel, the balance and all the elements,” explained Tran. “Often, I went back to the original design to keep improving it.” A prototype was presented to the watch community at Baselworld 2009.

The exclusive 318-component calibre was “entirely designed, prototyped, tested and assembled” by Pequignet in France. Except for the palettes wheel and the palettes,22 the company designed all other components from scratch. The original Pequignet building was further expanded to accommodate modern production workshops to scale up production capability. A total of 3,000 calibres were planned for production in 2010. The EMP01 calibre was subsequently renamed the “Calibre Royal” for marketing purpose.


The male-oriented Manufacture collection was officially launched at Baselworld 2010. This collection drew the industry’s attention because it integrated all haute horlogerie complications into a main plate only 5.88 millimetres thick. With a frequency of 21,600 vibrations per hour (3Hz), Calibre Royal could store power up to 88 hours. It also featured a dual-window large date feature, dual-direction winding, a large barrel and a large four-arm diamond-polished balance.

All of these innovative designs resulted in nine international patents, and this in-house-developed calibre was argued to be the “symbol of the Renaissance of French haute horlogerie.” In 2011, the Rue Royale model was honoured with the “Best Watch 2011” award by the authoritative Chronos and Watch File magazines in Japan, and the “Watch of the Year” award in the Netherlands, Belgium and Japan. With the launch of the Manufacture collection, the “Royal fleur-de-lis” became the emblem of Pequignet.

With its production facilities, quality control, after-sales service, marketing and sales administration departments all located under one roof, the Pequignet team of 50 employees was ready to take on the Swiss brands that had dominated market for decades. In addition to selling its watches in 50 jewelry stores (mainly in Europe), Pequignet also operated its own brand boutique in Besançon, Strasbourg and a point-of-sale counter at Gallery Lafayette, the most popular department store in Paris. The company’s sales reached EUR 8 million in 2011.


Although a state-of-the-art laboratory and a team of talented watchmakers were put in place, the external macro-environment was not favourable to Pequignet in 2012. Since the financial crisis of 2008/09, the economies of the European Union had not yet fully recovered. A weak local market, combined with the sudden slowdown of growth in China, gave Pequignet poor timing for the launch of its Manufacture collection.

Faced with a cash flow problem and several million euros of debt, Pequignet had difficulty in paying its suppliers and employees. In May 2012, the company had no choice but to enter into receivership and let the local government of Besançon take over the firm. Pequignet was under government observation and administration for six months, but was given the opportunity to develop a continuation plan to take the company forward.

Media reports suggested that running a full-fledged manufacturing facility might be too much for an independent watchmaker like Pequignet. “The manufactory part of the business cost a lot of money to [maintain],” said Guy Allen, the former British distributor and brand manager for Pequignet. “Since October 2011, the company has struggled to find further financial backing for the manufactory.” In late 2012, Pequignet announced that local government had approved the continuation plan to take the company out of receivership. Pequignet creditors were given the opportunity to recover 40 per cent of their debts immediately, or they could choose to recover 100 per cent of their funds over a 10-year period.


October 2013 marked Pequignet 40th anniversary. The company organized a celebration event in Paris and invited customers, journalists, channel partners and local politicians to attend. The highlight of the event was the presence of Emile Pequignet. The company founder shared his entrepreneurial story and he witnessed the launch of a commemorate quartz watch called Moorea Equus during the event. A new pilot watch from the Manufacture collection, the Royale Titane, was also showcased.

The new Pequignet management team was in touch with the industry and its customers, and most importantly, had learned from the wisdom of Emile Pequignet, the brainchild behind the brand. The press and the watch community were excited about the anniversary celebration, and had eagerly awaited the comeback of the company. Under the new management, product development and marketing activities resumed throughout 2013.


The expansion of the entry-level Moorea collection was a welcome move by the new Pequignet. The company not only returned to the forefront of the international scene by participating once again in Baselworld, but also attending smaller, regional tradeshows such as the Salon Les Montres, Salon Belles Montres and the London Watch Show. “Pequignet believed that the London Watch Show provided a unique opportunity . . . to bring specific watch brands to the U.K. watch trade at a prime central London location,” said Joseph Beainy, international sales director at Pequignet.

The company also participated in local events such as “Les 24h du temps à Besançon” in 2014, in order to showcase its watchmaking innovations in the Franche-Comté region. In terms of online initiatives, Pequignet not only launched a new website but also increased its social media presence. Online contests were designed to promote the brand, and the company gave existing customers an extra year’s warranty to increase their satisfaction. All of these initiatives aimed to rebuild the damaged watch brand as it emerged from receivership. Pequignet hard work did not go unnoticed. In June 2014, the company was awarded the “Entreprise du Patrimoine Vivant (EPV)” label by the French government, a mark of recognition “to reward French firms for the excellence of their traditional and industrial skills


Proudly positioned as the only haute horlogerie manufacturer in France, Pequignet had the upper hand over other French watchmakers. However, that competitive advantage did not necessarily translate into success in the Swiss-dominated haute horlogerie market. Despite having an award-winning calibre and a team of talented watchmakers, Pequignet still lacked the rich history, prestigious branding and extensive sales network that were required to capture the attention of watch enthusiasts.

As a veteran in the high technology sector (prior to joining Pequignet as chief executive), Katz had experience growing a business in a fast-changing environment. The use of the Seiko movement in the new Moorea collection reflected his willingness to take risks and adapt swiftly in the highly competitive watch market. Should Katz invest further in the Manufacture laboratory and workshops to compete directly with other haute horlogerie brands, or stop the expensive haute horlogerie experiment to make Pequignet a leader in fashionable, affordable watches once again? Could the company retain its talent, especially with Swiss competitors located just miles away? Should Pequignet merge with other independent watchmakers or one of the conglomerates as an exit strategy? These were questions that needed to be answered.