Monday, 25 July 2011

How Richemont acquired Lange, IWC & JLC

It is now a little over a decade since Richemont acquired three of their main brands and most folk are unaware of how this came about. The piece below is an updated version of an article I wrote at the time.

In October 1999 one of the richest men in Hong Kong decided to sell one of his UK based companies. This decision was to have far reaching ramifications, including the world’s largest contested take-over, interventions by the German Chancellor, the British Prime Minister and the head of Mercedes Benz. When the dust finally settled, almost a year later, three of the greatest names in watchmaking found themselves controlled by a secretive South African family corporation whose headquarters are in Zug, Switzerland & Lichtenstein.

The Hong Kong Billionaire was Li Ka-Shing, owner of huge real estate holdings in the former colony, most of the worlds’ container terminals and a significant player in the international telecommunication field. He remained the largest shareholder in a UK cellular telephone company named Orange, but as the prices for these companies rocketed, he decided it would be time to cash in. He had sold under 5% of the company in February of 1999 and taken a profit of over HK$5 Billion (around $600 Million US) and still retained almost 45% of the shares.

The European cellular telephone market was “hot” because there were usually less than half a dozen companies in each country and as they all used the same technology, it was easy to “plug” someone’s clients & company into yours (if you could afford to buy a company). The new word was “seamless integration” and all the major players were trying. The leading proponents of this strategy in Europe were Mannesmann’s D2 German network and the UK’s Vodaphone, which was in the final stage of absorbing a major US network, Air Touch. The two companies (D2 & Vodaphone) had become allies, each buying minority shareholdings in the many smaller European networks and attempting to build a seamless pan European network.

However this strategy was overturned when Mannesmann approached Li Ka-Shing’s emissaries and proposed their deal. Mannesmann had made the decision to dump the Vodaphone relationship and buy their own UK operator instead because they saw that they would no longer be an equal partner with Vodaphone once it completed its Air Touch acquisition. They feared being swamped by the new giant and Orange was attractive for 2 reasons; firstly, although the smallest of the 4 UK operators; it had the highest income per customer and secondly, almost 45% of the shares were owned by (effectively) one man. So a deal could be done quickly without alerting the stock market, also whilst Vodaphone were in the throes of going through US regulatory hearings, it was hoped that their attention would be diverted.

Mannesmann had one other reason for wanting to put the Orange deal together, the head of the company, Klaus Esser, had worked for years to transform the firm from a heavy engineering company with its roots in steel pipe making into a twenty first century company based in telecoms & computers. As part of his strategy he announced that by the end of 2000 he would have split the company into two, one part the “old economy” the other the new one. Mannesmann’s bid of £20 Billion (approx $33 Billion US) was a significant premium over the market valuation and was intended to do three things; show that Mannesmann had the corporate “cojones” to play in the “big leagues”, also to frighten away other bidders but most importantly to render Mannesmann bid proof from a newly enlarged Vodaphone Air Touch (hereinafter referred to as VA/T). Because the cellular market in the UK is tightly regulated, VA/T would not be able to buy Mannesmann as they would then own two UK networks, if you included Orange and the government regulators do not allow this. Mannesmann’s bid may have demonstrated its self-confidence but that confidence was badly dented when the bid was made public and Mannesmann’s shares fell by 8%, whilst the rest of the market rose.

VA/T did not immediately make an announcement; they played their cards close to their chest and made a private approach to Mannesmann. Mannesmann declined the offer in public and VA/T had no option but to make their bid public. On November 19th, less than 4 weeks after the Mannesmann/Orange deal; they made a bid for the enlarged group, offering a 67% premium over Mannesmann’s share price AFTER the Orange deal. VA/T avoided the Orange “poison pill” by making an almost immediate disposal of Orange an integral part of its offer. The bid was unusual for two reasons, it was the largest merger/bid ever seen in Europe (it was considerably bigger that the Time-Warner/AOL deal for example) and it was, unbelievably to Anglo-Saxons, the FIRST contested takeover in German business history. Klaus Esser, head of Mannesmann disapproved of the bid and made comments to the press along the lines of “This is not the way we do business in Germany” and approached the German Chancellor (Prime Minister) Gerhard Schroeder asking him to intervene. Within days Schroeder gave an interview to a French newspaper saying; "Hostile takeovers destroy corporate culture," he said. "They harm the target but they also, over the medium term, harm the predator." He also decried the culture of “aggressive Anglo-American capitalism”. This was just one of the inept moves made by Esser who consistently misread the market. Vodaphone approached Tony Blair, Britain’s Prime Minister; who called the German Chancellor and intervened on the English company’s side.

However the most important intervention came not from a politician but from a man who could be called the most important man in Germany, Jurgen Schremp, chairman of Daimler Chrysler; Germany’s largest company. He called Klaus Esser and emphasised the fact that his resistance would erode the value that the market now placed on his company. He was also reminded of the fact that at the end of 1999 Esser had claimed that the Mannesmann shares were worth 300DM, he was universally ridiculed for this claim. Now the VA/T offer valued the firm at 375DM, Esser was rapidly running out of options.

The only prospective “White Knight” was the French industrial giant, Vivendi with whom Mannesmann had a couple of joint enterprises. Vivendi was a company, like Mannesmann, also in the process of re-inventing itself, transforming itself from its roots in water treatment & waste management into a communications giant owning advertising agencies, cable & satellite TV companies and internet providers.

The ground was suddenly pulled from under Mannesmann’s feet when suddenly Vivendi & VA/T announced a joint company, Vivazzi, designed to be an Internet portal for the new generation of mobile phones. Mannesmann then did the only thing possible and quietly acquiesced to the takeover. When the dust finally settled VA/T paid £113 Billion (approx $186 Billion US); obviously VA/T had to recoup some of this money very soon. Before the ink was dry on the agreement VA/T and their advisers were knee deep in offers, major European engineering giants such as Thyssen Krupp & Seimens were making unsolicited offers. For example Thyssen Krupp offered €9 Billion (approx $8.7 Billion US) for Mannesmann’s engineering & automotive operations. However VA/T were not interested in running a “fire sale” on the assets of the newly acquired Mannesmann; they chose their bidders carefully; firstly they sold the most highly priced (and prized) asset, Orange. Despite the fact that Mannesmann was widely considered to have overpaid at £20 Billion, VA/T were able to sell the firm to France Telecom for £26 Billion, making a quick profit of £6 Billion (approx $9 Billion US).

The bidding for the tiny segment of the VDO group known as LMH (Les Manufactures Horologères) was opened and initial offers were received from the “usual suspects”; PPR (sometimes known as the Gucci Group) & LMVH. These two French firms had been bitter rivals in the luxury brand market over the last few years, and as both had very deep pockets, it was expected that the bidding would be lengthy & protracted. The other expected bidder was the Richemont group, owner of the Cartier, Montblanc & Dunhill brands; however, as is their traditional way, Richemont said nothing. Nevertheless they were working in the background, and they had one major ace in their hand. They were major shareholders in the French group Vivendi, which they had acquired in September 1999 in exchange for their shares in Canal+ (a French cable operator). The acquisition contained a clause in which Richemont agreed not to sell any of their shares for a year, so they hedged the shares in December, effectively locking in a guaranteed sale price for the following September. This had two effects; they retained their good working relationship with Vivendi and they now had a huge pile of cash arriving in September 2000. Whilst all the other bidders were “sniffing” around LMH, Richemont made an oblique attack; they negotiated with Audemars Piguet, who were the owners of the 40% of Jaeger le Coultre not owned by LMH. These negotiations came to fruit on Thursday 8th June when the two companies announced that they has reached an agreement to co-ordinate their respective positions with respect to the sale of LMH. To all intents and purposes, the game was now over; although there were 7 more weeks to run before the “coup de grace”.

On Thursday 20th July LMH announced that they were in discussion with Richemont as exclusive bidders and the following day the agreement was signed. Richemont would buy LMH for 2,800 Million Swiss Francs and the remaining 40% of Jaeger le Coultre from Audemars Piguet for 280 Million Swiss Francs. Meaning they had paid a total of 3,080 Million Swiss Francs (approx $1.84 Billion US). Richemont were able to pay for the whole deal with cash from its war chest raised from the sale of its Vivendi shares and from the profits on share dealings in one of its tobacco companies.

Looked at dispassionately, it could be said that Richemont seriously overpaid for LMH, who sold 91,000 watches and 3,300 clocks in 1999 and had less than 1,500 retailers worldwide. They paid over $1.2 million per retail outlet, none of whom were LMH exclusive. But Richemont did not get to its towering position by overpaying for anything; I think that this is a very long-term proposition and certainly it is one of the last chances for anyone to buy major watch brands.

The strange thing about this whole enterprise is that no-one ever asks; “Who is Richemont?” I find this very interesting as this is what Richemont wants. All of the attention is focussed on the brands themselves and not on the holding company, in stark contrast to the Swatch group for example. Even the breadth of their holdings is not widely known; sure everyone knows about Cartier, Dunhill, Baume & Mercier, Montblanc and Panerai but how many know of their ownership of Van Cleef & Arpels, Chloe (the fashion house), the Italian fountain pen maker Montegrappa, Piaget, Hackett, Purdey (Gunmakers to the Queen) and Vacheron et Constantin?

The company’s tradition of secrecy began because it was originally South African and during the Apartheid era, South African companies traditionally kept a very low profile. The firm’s roots are in the tobacco business and began when its founder, Dr Anton Rupert, began manufacture of pipe tobacco in his garage (see, it is not just high tech firms which start in them!). In 1943 he was able to buy the South African arm of the giant British drinks firm Distillers and soon after started producing cigarettes. Before long he controlled most of the South African tobacco business and decided to form his divergent holdings into one company, Rembrandt in 1948. Seven years later he set up Richemont in Switzerland to handle all of his operations outside South Africa, leaving Rembrandt to handle the domestic operations. For several years Richemont’s main asset was the Peter Stuyvesant cigarette brand; named after the first mayor of New York (like Rupert, of Dutch ancestry). This was a cigarette packaged to look and smoke like an American cigarette at a time when imported American cigarettes were very expensive in Europe. They followed this with a new brand, Rothman’s, and then began to position the company further upmarket by buying the rights to famous names. This continued the strategy already established by Rothman’s when they bought the licence to make Dunhill cigarettes. In the 1960s and 70s, the profits from cigarettes enabled them to embark upon the acquisition of major companies. . Dunhill was the first company to be bought, in the late 1960s and in 1972 they bought a major shareholding in Cartier Paris (at this time Cartier was composed of 3 separate companies; Paris, London & NYC). Two years later, they bought the London operation and in 1979 the NYC one, giving them complete control of the name & the brand. Their masterstroke was to produce a “diffusion” line for Cartier, Must de Cartier, which became available at a much lower price point and in a much wider distribution network. In so doing, initially with cigarette lighters and then with sunglasses and watches, they increased the value of the company many times over.

So there we have it, a secretive South African owned corporation now controls three of the top brands in horology; but in the end does it really matter who owns the brands? Did anybody care that a giant German engineering corporation used to own them?

In conclusion I think it fair to say that the fate of Jaeger, IWC & Lange was probably the thing farthest from the mind of Li Ka-Shing, when he decided to dispose of his Orange Telecom shares, but the smallest stone sends its ripples to the edge of the lake.

So, where are the major players now when the game finally ends; Li Ka-Shing became one of the largest shareholders in Mannesmann and stayed there until V.A/T took over, when his shares were worth almost 3 times their original price. He “cashed out” and bought a major stake in VoiceStream the leading US cellular operator using the GSM technology used by V.A/T and most of the rest of the world. He subsequently sold VoiceStream to Deutsche Telekom, who then renamed the brand ‘T-Mobile’. He then went on to found the ‘3’ cellular networks across Europe & Asia. V.A/T merged its US operations with one of the “Baby Bells” to become Verizon Wireless, one of the largest cellular operators in the US; thereby giving it major coverage in the one continent it lacked. Vivendi went out and bought MCA, the owners of Universal studios and MCA Music; but, in so doing, outreached themselves and were later forced to sell Universal to General Electric and Dr Anton Rupert lived on in South Africa in contented retirement with his wife in the same house that they have lived in for forty years, until his death in 2006.

Tuesday, 12 July 2011

Swiss Competition Commission allows Swatch Group to reduce shipments to independents.

Smaller Swiss watch brands are angry with the announcement from the Competition Commission (known as ‘Comco’) that the Swatch Group can reduce its shipments of components by between 5% and 30% based on 2010 order levels. The actual levels of decrease will be 15% to those firms who buy completely finished movements from Swatch and the 30% level will be to those firms who buy just parts from Swatch and use them to build competing calibres, people like Soprod and Sellita.

Most of the firms declined to speak about this publicly, for fear of retaliation from Swatch, but Miguel Garcia (head of Sellita) is one who has spoken out against the decision and who plans to file an appeal against the decision on Monday, according to the Swiss newspaper ‘Le Temps’. But he will not be alone, the firms Frederic Constant and the movement company Lajoux-Perret will also be filing appeals as will numerous other firms once these leading lights have made the first step.

Peter Stas, Frederic Constant’s CEO says that “this could have a significant impact on jobs in the independent companies”, whilst Miguel Garcia goes further, saying that this will have a much wider impact; “as there will be fewer movements, there will be fewer orders for cases, dials etc.”

The firms anger is concentrated on the year chosen as the base year to decide the cuts upon, these orders were placed in 2009, at the depth of the crisis in Swiss watchmaking; so, being 30% below their 2009 plans will prove a real problem for the independents.

The reduced supply will mean that the independents will be forced to reduce their output, meaning fewer of their watches will be in the stores at a time when the market is expanding rapidly and so customers will most likely turn to brands from the Swatch Group.

There is also anger about where the 2009 base figures used actually came from; the Swatch Group, with only informal contacts with the firms involved, say the Comco, adding that the independents should have looked harder for alternatives, even during the period of Comco's investigation. Although I have to say turning to an alternative movement maker is not going to help if these makers are also being forced to limit their production due to reduced supplies.

But the brands should remember that the late Nicholas G. Hayek had proclaimed that he wanted to end the era of the “supermarket watchmaker” in 2009, but this was just a repetition of his intent stated a decade earlier to suspend the delivery of unfinished movements. They should have realised that these statements were serious and that the Comco was not guaranteed to be 100% on the side of the independents. “But there is no alternative to ETA or to Nivarox (hairspring maker), both members of the Swatch Group. While Sellita, Technotime, Soprod, Vaucher Manufacture, Lajoux-Perret or Dubois Dépraz supply parts but in insufficient volumes to meet our requirements," retorted one independent watchmaker. "They need more time," he concluded, like most of his colleagues.

This piece is based on reports from Bastien Buss, Le Temps de Geneve

Wednesday, 6 July 2011

Montblanc/Villeret The Toughest Review I have ever written

SIHH 2009 Montblanc/Villeret The Toughest Review I have ever written Feb 04, 2009 - 01:44 PM Go to previous message

This is a really tough report to write for a number of reasons; firstly it involves me saying that I am wrong, and as a guy, that isn’t something I relish. Also there is (as they say) ‘history’ between us (Montblanc, Minerva & me).

Let me try to explain; let’s be honest, Montblanc has never really been taken seriously as a watch company, they make nice pens, particularly the limited edition ‘Writers Series’ (full disclosure, I own a few of those pens & use one of the Alexandre Dumas pens to sign letters), but as to watches, they were pretty much ‘Johnny Come Lately’ and had little to attract the true watchnut. I always believed that the SIHH held a similar opinion, as the Montblanc presentation was always the last one on the last day for the press, usually many of the press would leave early and miss it, whilst others would show up only out of duty. In fact, I remember one Montblanc presentation where a watch writer fell asleep & started snoring during the PowerPoint presentation.

Then a couple of years ago it was announced that Richemont had bought Minerva watches, not just the brand but also the factory & shortly after it was announced that the Minerva brand was being ‘given’ to Montblanc. To those of us who had followed & cherished Minerva, it was as if a five year old had been given command of a Boeing 747. Those with long memories on Timezone will remember the close relationship between TZ & the Frey family who had owned Minerva. Around a decade ago the Freys made two limited edition watches for TZ, I think they were the first LE ever for us. They were based on their Pythagore watch dating from the dark days of WWII & a beautifully simple, classic time only watch. Both editions sold out & I still have mine, a black dial one with rose gold batons & hands. When the Freys sold out in 2000 to Emilio Gnutti, an Italian businessman with a somewhat checkered recent history, many of the TZ Minerva fans felt that the brand had lost its soul, particularly as the new management wanted to take it much more upmarket. In order to accomplish this move upmarket they hired one of the most accomplished watchmakers of modern times, Demetrio Cabiddu, who had worked with Genta on the design of the minute repeater sonnerie and subsequently at Minerva’s neighbour, Blancpain.
The decision to take the brand upmarket meant that the new management immediately increased the prices of the current models by a factor of two or three. To say that there was resistance on the internet watch forums where Minerva had found its new customer base would be putting it lightly, essentially there was a revolt & people looked on the new management as though they were the four horsemen of the apocalypse. It came to a head when I approached the Minerva stand at the Basle fair of 2002 on the Press Day, for the first time in my life (and so far only) I was thrown out of a stand; vituperation, in a heady, emotional mix of English & Italian was hurled at me as I scampered away; fully aware of how the world had now changed, at least as far as Minerva and Timezone was concerned.
Before long Mr. Gnutti had rather more important things to worry about than Minerva, he was Chairman, President, CEO or on the board of many companies in Italy including the recently privatized national telephone company & subsequently was caught up in the scandals surrounding the privatization of much of Italy’s infrastructure. At one point he was sentenced to six months in Jail, although via many appeals it is uncertain whether or not he has actually served any time behind bars. Nevertheless it must have been a relief to him when the deal was done with Richemont & the factory was no longer part of his portfolio.

Then last year, a couple of months before the SIHH, I got an email from Montblanc’s PR folks asking if I was interested in a one to one meeting with anyone at the SIHH. Only being polite I asked if they might have anyone from the Minerva operation who would be available & the reply came asking if I wanted to meet with the head of the operation, Hamdi Chatti. Suddenly my attitude changed, I have been around the watch business a little too long to have idols; but there are a number of people I truly respect & Hamdi is one of them. I first met him when he was running the Fine Watchmaking division of Harry Winston, where his responsibilities encompassed the Opus line of watches as well as absolutely amazing tourbillons & perpetual calendars.
However, before my meeting with Hamdi, there was another regular Montblanc presentation that I had to endure (or so I thought); for the second year in a row we were shown the Nicolas Rieussec single pusher chronograph, and last year I did little more than acknowledge its existence, this year I looked a little more closely and found much to admire. Students of language will know that the word ‘chronograph’ means ‘time writer’ and that is what the very first chronographs did, by virtue of a revolving dial below a stationary pen. Nicolas Rieussec invented this very first chronograph in 1822 and Montbanc (who, as we all know, have a history in writing equipment) chose to copy the layout of this writing chronograph rather than follow the more conventional design route.

The design of the chronograph features two small dials at the 4 and the 8 positions with fixed blued steel hands standing vertically above them. When the chronograph is operated the dial discs revolve and you read the elapsed time by the fixed hands. It isn’t just that they have chosen an unusual operating system that makes the watch stand out, the movement which powers it (the first from Montblanc’s own factory) is stunningly designed & finished.

I really like the design of the movement, with its balance assembly at the bottom of the movement, placed perfectly in the centre, the diagonal Cotes de Geneve are a nice touch and the symmetrical layout of the jewels on the chronograph bridge shows that there has been significant thoughts about the aesthetics of the movement itself.

So, by the time of my meeting with Hamdi Chatti I was feeling rather more favourably disposed towards Montblanc than I would ever, previously, have thought. When I arrived for my appointment Hamdi was still involved in a meeting, so I took the opportunity to wander around the stand and look at the stuff on display. On a table was a display of enamel dials in various stages of completion and next to them were a series of dial drawings & case drawings. A member of staff came up & explained to me that these were part of the new custom watch operation. A client can approach the factory, where they will work together with a designer, they will agree on the type of movement to be used, the layout of the dial, which material it will be made from, fired enamel, silver or brass, and whether it will be guilloche or not and if so, in how many patterns. The design of the case can be chosen, as well as the material and all of these choices are drawn on separate sheets of translucent paper and overlaid on each other until the client arrives at a combination they want and only then does manufacture begin. It is an interesting idea, halfway between having a watch completely custom made by someone like George Daniels and buying a regular limited production piece. It is obviously never going to be a major business, but it goes a long way towards establishing Montblanc/Villeret as different from the herd.
Looking further around the stand, I saw a display of movements and took the chance to examine them under my loupe, I was seriously impressed. It wasn’t just the finishing, it was the layout & the overall appearance that grabbed me.

They look as if they could have been made at any time from the turn of the last century to the 1970s, but certainly not in the 21st century. Look at that huge balance wheel, look at the beautiful curves of all the bridges & levers, gaze with reverence upon the sawn’s neck regulator lever & look at the humour inherent in the use of the Minerva trademark ‘arrow’ at the end of the blocking lever; Minerva being the goddess of both the useful & the ornamental arts and this movement most certainly qualifies for both categories.

This movement has been designed by someone with sensibility & feeling, as well as a thorough understanding of movement design. And when I saw the watch into which this movement is fitted, I also knew that whoever was in charge of watch design was equally talented.

Like every other Montblanc/Villeret watch I saw, the dial was stunning, a perfect 4 piece black fired enamel one with a depth that almost invited you to dive in.

By this time Hamdi was through with his meeting & I was able to renew my acquaintance with him, after the usual pleasantries we began to talk about how the Montblanc/Minerva/Villeret operation will continue. He explained to me how lucky they were when they bought Minerva, as it was almost a ‘time capsule’ of old style watchmaking. Although the Gnutti team had introduced new wire erosion machines & CAD/CAM systems, they had not got rid of the old machinery and tools. Also, because Minerva was so small and their specialization in sports timers & chronographs so tightly focused, they were not hit by the ‘quartz revolution’ nor by outrageous case designs; two maladies which decimated the rest of the Swiss watch industry during the 1970s and 1980s.
Demetrio Cabiddu and his young team have all stayed on after the Montblanc takeover and now a tightly focused program is well underway at the factory. Development of an automatic movement has been abandoned and all Montblanc/Villeret movements will be hand wound. Also, almost all the watch movement is made in house, because they choose to make their watches the old fashioned way with big balance wheels & 18,000 bph, they even have to make their own hairsprings and balance wheels. All the finishing work is done by hand with every completed part personally inspected by M. Cabiddu after finishing & before it is assembled. Obviously this limits the production, but the decision has been made at management level to pursue the goal of the highest possible quality rather than that of quantity.
The design of most of the current production was well under way when Montblanc took over, and it was considered ridiculous to scrap all the research and development which had been expended, so although they were developed under the previous management, it is important to realize that they were developed by the same watchmaking team who are now building them. As well as the chronographs with which Minerva made their name & which are now being made with the newly redesigned movements, Montblanc/Villeret have introduced as their flagship a watch which the old Minerva could never have thought of; a tourbillon. Let’s be honest, making a tourbillon nowadays is nothing special, if you are a watch company & you want to have one in your product line, there are number of companies happy to supply you with the entire tourbillon system, ready for you to drop into your movement, or even to build the entire movement for you. This path is not the one chosen by Montblanc/Villeret, rather they have decided to make the whole thing in house; just take a look at the top bridge of the tourbillon.

Inspired by the mathematical symbol for infinity, this bridge looks like two fine wires pulled into an elongated figure ‘8’; but it isn’t, in fact this bridge is made from a single piece of steel, initially machined into a rough facsimile and then painstakingly finished by hand. With a tourbillon this unique, you wouldn’t expect the watch to revert to convention with its time display, and it doesn’t disappoint. It may be one of the first wristwatches to use the mystery display, first introduced by Cartier in their pendule mysterieuse of 1913, where the hour and minute hands are replaced by two crystal discs with the outline of a hand printed on each one. The hands seem to float in space with no central post; whereas, in fact each disc is driven independently by gears on its outer rim.

The rest of the case top (I can’t really describe it as the dial) has some of the most stunning guilloche work I have ever seen, all of it hand done; it is much better than the work I have seen on recent Breguet watches and almost as good as the work on Urban Jurgensen or George Daniels. The case is a fitting housing for masterpiece contained within, almost heart shaped with the time dial extending the shape of the case below the expected circumference. It is a big watch, there is no doubt about that, but the design makes it look harmonious with the double stepped curved lugs flowing gracefully into the case with its domed bezel. Look closely at how the strap fits into the curve of the case bottom; I have rarely seen such precise meshing of two such disparate elements.

But the Mystery Tourbillon wasn’t the only special watch coming from Villeret this year & the next watch that Hamdi showed me was equally surprising, the Grand Chronographe Regulateur.

What appears to be a simple monopusher chronograph has a couple of surprises up its sleeve (if you will forgive the pun); the pusher at 10 operates a second hour hand which is usually hidden behind the regular hour hand. This system (similar to the one Louis Cottier patented for Patek Philippe in 1959) is one of the most convenient there is, giving an uncluttered dial in normal use and quick reading of the second Timezone when needed. Obviously because both hour hands revolve around a 12 hour dial, a day/night indicator is needed for the ‘home time’ and the watch has a tiny one near the 1 index.

As I mentioned earlier, all Montblanc/Villeret watches are manual wind only, so a power indicator is a good idea and not only does this watch have one, but it is one of the most interesting ones I have yet encountered. In the same way that most cars have a fuel gauge which slowly recedes as the contents of the tank decline & then, when you are down to the last 10% or so, a light will illuminate on the dash to reinforce the idea that it might be a good idea to find a filling station, the watch has a ‘Reserve Gauge’. This comes into operation when the watch gets down to just 12 hours power remaining, the silver power reserve hand stops at the 12 hour mark and a red hand comes out from behind it, slowly traversing the red reserve sector.

Once again the dial is a masterpiece, it is gold with multiple decentered Guilloche decoration, I love the little dramatic touches of red as accents on the quarter hour markers.
At 47mm, it is a nice sized piece; and, like all of Montblanc/Minerva watches has their patented hidden cuvette, which can be opened to reveal the sapphire back and the stunning movement.

These watches are handmade in tiny quantities, for example the last two watches I have discussed are made in a series of 8 each in both pink and white gold and a unique piece for each model in platinum. Distribution will be similarly limited, there are only 3 dealers in the whole of the US and just 2 in the UK. The plans are that there will never be more than 30 dealers worldwide.
After the Frey family sold the company in 2000, the new owners discussed their plans for the brand and stated that they wished to be talked about in the same breath as Patek Philippe & A Lange when high end horology was discussed. Along with the rest of the watch world, I laughed at the presumptuousness of the statement; now having looked at the watches coming out of the factory, I have to put my hand on my heart and admit “I was wrong”. These watches are easily the quality of the other two brands; the problem, as I see it, is that getting the quality to this level was an easy task compared to convincing the buyers that they have.

I wish them luck.

"The Attic", a trip into watchmaking history.

 Feb 11, 2011 - 04:13 PM Go to previous message

The watch industry likes to tell stories about the history and romance behind their brands, and we all buy into them, well most of us do but the rest of us know that the vast majority of the Swiss watch brands are all owned by one of three huge conglomerates and that there is as much romance about their history as there is about the sausage industry. But every now and then, you realise that there are some great stories in the business & when you come across one, you know that it is worth telling over & over again. The story of Charles Vermot and the Zenith El Primero movement is one of those, I have told the story before, but this retelling comes with some additional new information.

The tale goes back to 1975 when the US firm, Zenith Radio Corporation, owned Zenith; the quartz revolution was at its height and mechanical watches were in the doldrums. The owners decided that mechanical watches had had their day & the future belonged to electronic watches. Thus, an order came down from the US HQ to dispose of all the tooling for the movements & to sell the tools as scrap. Despite protests from management & watchmakers, the decision was irrevocable and furthermore the Swiss staff was ordered to dispose of the plans & blueprints, as these would also be of no use in the brave new electronic world.

However Zenith has a tradition and a history, people stay there for a long time; several of their current employees have been with the firm for over a half-century. This comes about through one thing; loyalty and it was this loyalty to the firm & its history & tradition that saved the El Primero. Charles Vermot was a senior watchmaker with the company & was entrusted with the disagreeable task of disposing of the El Primero tooling. Rather than follow orders, he meticulously wrapped each item, labelled it & took it to a disused area of the factory where the tools were arranged on shelves in the attic. And, in a notebook he copied down the exact procedures necessary for making the movement from scratch using the tooling he had saved.

And, it was in the attic that the history of the El Primero might have stayed if it hadn’t been for another small company in the neighbouring town of La Chaux de Fonds, who asked if Zenith might have some El Primero movements for sale. The resulting watch, the Ebel 1911 chronograph launched in 1982 proved to be a huge success for both firms, and so the tooling was recovered, put into use and before long Swiss watch companies were beating a path to Zenith’s door clamouring to use the only high quality automatic chronograph movement then available. The El Primero is a remarkably efficient movement, bearing in mind its 40-year-old design; it runs for 50 hours at full wind but if the chronograph is running, that autonomy is only reduced by 5 hours. However it is important to realize that the El Primero was designed in the 1960s when craftsmanship was at its height and it was not designed for large-scale industrial production, unlike (for example) the Valjoux 7750.

In fact during its 41-year history (including the enforced exile in Charles Vermot’s attic) the total of all El Primero movements ever made (including the hundreds of thousands found in the Rolex Daytona 16520) add up to only 600,000, by contrast over 1,000,000 Valjoux 7750 movements are made each year.

That is the story as it has been told here and elsewhere, here we go with the new stuff;

The original Zenith factory expanded over the years, winding its way down the hill on which it is built, the original part is a listed building which is not allowed to be externally altered in any way. There are plans underway to completely refurbish it internally very soon, but in its current configuration it is completely unsuitable for modern watch making and so has been almost completely abandoned. The watchmaking is currently carried out in the various buildings which have been added on to the original structure, this means that the different operations are spread out & so extremely inefficient, which is why the plan is to refurbish the old building then move all of the production there.

I was at Zenith recently to look at their Basel introductions and to spend some time with their CEO Jean-Frédéric Dufour who had recently been voted 'Man of the Year' by the world’s horological press, but after the meeting was over I accompanied Claire Ferrier out of the office building and up the stairs to the watchmaking area. After my visit she opened another door & we found ourselves outside staring up at the edifice of the original building.

She took an old key and opened a door which seemed to be made of old weathered fibreboard & beckoned inside; this was the view that greeted us:

This was the old control room where lubricating oils were sent throughout the building to each of the different departments, the floor was covered in dust and debris and cobwebs stretched across most of the fixtures, it was like walking into a time capsule of the Victorian age. From here we walked outside to another door, entered and found ourselves staring at a huge stone staircase, we slowly climbed it, gazing at the heavy chain hanging down the centre of the stair well.

At the very top of the stairs our passage was barred by a slatted wooden door, through it I could see some shadowy shapes.

Claire produced another old key and, with some difficulty, opened the door, turned on the light and invited me inside, this was the sight that greeted me as the first journalist ever to walk into the attic where Charles Vermot saved the firm's tooling.

Swiss watchmaking companies like to give the impression that they are all about precision engineering, micron tolerances and anal cleanliness; and, to be honest, that is how most watch factories operate, but this room was at the other end of the scale to those factories. It was dark, dusty and items were spread out all over the floor, stacked on chairs and on top of any other possible flat surface.

Not everything was in disarray, lots of items were on shelves, some neatly labelled and some not.

Lying in disarray on the shelves were the tools needed to make the individual calibres:

Including one of their most iconic calibres, the 135, winner of countless chronometer competitions from the 1950s until the competitions were finally abandoned in the 1970s.

Some of the wooden shelves were bowing under the weight of the tooling & I feared for the safety of the tools on the lower shelves.

Despite the fact that stuff was spread out all over the attic, covering any possible surface, there was one area which was clean & empty, this one;

When I looked down, I could see the label identifying what had been there

This is the Zenith internal code for the El Primero chronograph movement, and this small wooden space, tucked up in the eaves of a Victorian factory attic was where Charles Vermot had secreted them and where they had lain, safe from prying eyes, for almost a decade.

Here they are, back in use, and now on rather more sturdy metal shelves down in the factory.

The watch shown at the start of this piece is the limited edition El Primero chronograph that Zenith launched last year in honour of Charles Vermot, and this year they will launch a total of three watches named after the man who saved the patrimony of the company. 

The changes at Zenith

The last year or so has been a period of retrenchment for the Swiss watch industry, other than in one area; more watch company heads have departed during this period than I can count. And many of them were not just your basic managers, they were iconic heads, closely identified with the brands they ran, folks like Manuel Emch from Jaquet Droz and Frank Muller from Glashutte Original; but, perhaps no watch company head was as closely identified with his brand than Thierry Nataf from Zenith, and with his recent departure it is time to look at the company he has left and to think about its future (with a sideways look at its history).

If you had to describe Thierry Nataf in one word, it would be ‘flamboyant’ and flamboyant was the direction the watches also followed, Zenith were one of the first companies to open their dials to show the workings beneath, the cases became larger culminating in the XXT line which topped out at 45mm and, in the iconic El Primero line, huge Franck Muller like distorted numerals adorned some of the dials. If there is one common thread between all of the above, it is that they are about the look of the watch & not the movement and the truth is that Zenith has always been about the movements, going all the way back to its birth in 1865. The firm has an almost forgotten history as one of the leading companies in the Swiss chronometer competitions. Until the competitions ceased in the 1960s, Zenith always ‘punched well above its weight’ regularly beating the likes of Omega, Rolex & Patek Philippe to claim the gold medal.

It was with this history, ancient & modern, in my mind that I sat down recently with Jean-Frédéric Dufour, the newly appointed CEO & President of Zenith at Baselworld. We had two meetings, which amounted to almost an hour, in the company’s stand, and whilst waiting for our meeting to start it was interesting to note that the cabinets inside the stand displayed not the current models, but rather the watches from the firm’s recent history, the 1950s to the 1980s.

M. Dufour came to Zenith from Chopard, where he was the head of product development, prior to Chopard he had spent time at Ulysse Nardin & with the Swatch Group. In other words, he is a watch guy through & through, unlike M. Nataf, whose previous employment had been within LVMH’s champagne operations.

Ever the diplomat, M. Dufour declined to comment on his predecessor but his very different vision was encapsulated in the statement he made to me, “We plan to make classically beautiful watches between 40mm and 42mm”.

His first job at Zenith was the distasteful one of declaring almost a third of the workforce redundant, shortly after he took an even sharper axe to the model range. He pared the 800 models in the 2009 catalogue to a much more manageable 150 and slowly introduced new models all based on historic models from the collection and one significant new model, the El Primero 1/10th second Striking Chronograph.

Looking just like one of their watches from the 1970s, until you look much more closely and see that the date aperture has moved from the traditional 4:30 position to the bottom of the dial and then you notice the inner bezel marked from 1 to 10 with each division in turn divided into tenths. As is well known, the El Primero beats 36,000 times an hour, this can otherwise expressed as 10 times each second and it is this ability to ‘chop’ each second into ten individual units that the new model demonstrates. The red sweep centre hand (proudly bearing the Zenith star as its counterweight) makes a complete sweep of the dial every ten seconds. But much more than that, it stops dead on each one tenth of each seconds mark on the bezel. Thereby ‘striking’ each tenth of a second and it is from this ability that its name derives.

The technology needed to accomplish this feat is simultaneously simple and complex, essentially there is second escapement which stops and starts the sweep hand ten times each second. Careful study of these diagrams (supplied by Zenith) will probably explain it better than I can. The first is an explanation of the ‘basic’ chronograph, whilst the second explains the striking mechanism in detail.

The key to this new functionality is the chronograph stop function. When the chronograph is stopped, the hand-locking system brings the hand to an extremely precise halt, since the brake-lever positions the hand between two of the 100 teeth on the chronograph wheel, thereby further enhancing the precision of the 1/10th of a second read-off.
The original El Primero movement sweeps around the dial in 60 seconds in tiny 1/10th of a second jumps, meaning the chronograph hand performs 600 jumps a minute. In this new jumping seconds model, the ultra- fast stopping and restarting of this large chronograph hand 10 times a second calls for a greater amount of energy. The watch functions had to be significantly improved and optimised to enable this energy- consuming acceleration. Seeking to reduce the energy required naturally entailed making the movement wheels as light as possible, which is why the double wheel at the heart of the system is in silicon – a material three and a half times lighter than its traditional counterparts.

The watch is available in either steel or rose gold in a 42mm case and will be launched in the UK in April at a price of £7,300 including VAT.

The El Primero movement is the core of the product line for Zenith and from 1988 until 2000 when they were selling movements to Rolex for the Daytona; it is safe to say that the El Primero saved Zenith. But what is not so well known is that the El Primero itself once needed saving.

The tale goes back to 1975 when the US firm, Zenith Radio Corporation, owned Zenith; the quartz revolution was at its height and mechanical watches were in the doldrums. The owners decided that mechanical watches had had their day & the future belonged to electronic watches. Thus, an order came down from the US HQ to dispose of all the tooling for the movements & to sell the tools as scrap. Despite protests from management & watchmakers, the decision was irrevocable and furthermore the Swiss staff was ordered to dispose of the plans & blueprints, as these would also be of no use in the brave new electronic world. However Zenith has another tradition, people stay there for a long time; several of their current employees have been with the firm for over a half-century. This comes about through one thing; loyalty and it was this loyalty to the firm & its history & tradition that saved the El Primero. Charles Vermot was a senior watchmaker with the company & was entrusted with the disagreeable task of disposing of the El Primero tooling. Rather than follow orders, he meticulously wrapped each item, labeled it & took it home where the tools were arranged on shelves in his attic. And, in a notebook he copied down the exact procedures necessary for making the movement from scratch using the tooling he had saved.

And, it was in the attic that the history of the El Primero might have stayed if it hadn’t been for another small company in the neighbouring town of La Chaux de Fonds, who asked if Zenith might have some El Primero movements for sale. The resulting watch, the Ebel 1911 chronograph launched in 1982 proved to be a huge success for both firms, and so the tooling was recovered, put into use and before long Swiss watch companies were beating a path to Zenith’s door clamouring to use the only high quality automatic chronograph movement then available. The El Primero is a remarkably efficient movement, bearing in mind its 40-year-old design, it runs for 50 hours at full wind but if the chronograph is running, that autonomy is only reduced by 5 hours. However it is important to realize that the El Primero was designed in the 1960s when craftsmanship was at its height and it was not designed for large-scale industrial production, unlike (for example) the Valjoux 7750.
In fact during its 41-year history (including the enforced exile in Charles Vermot’s attic) the total of all El Primero movements ever made (including the hundreds of thousands found in the Rolex Daytona 16520) add up to only 600,000, by contrast over 1,000,000 Valjoux 7750 movements are made each year.

It is with this history in mind that one of M. Dufour’s first orders was to commission a version of the El Primero chronograph in memory of Charles Vermot, made in an edition of 1,750 watches (to commemorate the year he secreted the parts away) the 42mm steel watch has a blue dial and will be available this summer at a price of £6,000 including VAT.

The other famous movement is the company’s history is the manual wind cal 135, the one that won all those chronometer competitions in the 1950s, they still have a few of the original movements in their inventory & there are plans to case a few of them in an exclusive edition for collectors. It is significant that one of M. Dufour’s first public engagements was at a ceremony to honour Ephreem Jobin, the 100 year old watchmaker who designed the cal 135 movement just after the second World War.

M. Dufour is seen here presenting M. Jobin with one of the commorative watches whilst he holds one of his originals, at their feet are his original drawings for the movement.

The Zenith press release announcing the creation of a watch to celebrate this achievement is here.
Like all Zenith movements, the Calibre 135 stemmed from the company’s determination to create ever more accurate and reliable movements – a tradition cultivated since its founding in 1865, illustrated early on by its remarkably accurate pocket-watches, and accentuated by the emergence of wristwatches.
Introduced in 1948 at the height of the fiercely-fought race for precision between various watchmakers, the Calibre 135 comprised several innovative and sophisticated technical features that enabled it to win numerous prestigious Neuchâtel Observatory chronometry prizes, including five years in a row from 1950-1954 – a record in itself. Its total tally of such recognitions comprised around 200 individual honours, two-thirds of which were first prizes, as well as five for series- honours.

Ephrem Jobin, born in 1909 and doubtless the world’s oldest living watchmaker, played a variety of roles in the development of Zenith at this strategic time. During the period he spent at Zenith between 1939 and 1954, he was responsible for developing three complete calibres, including the legendary Calibre 135.
He quickly grasped the importance of reorganising manufacturing procedures based on a truly global vision of production. When commissioned in 1946 to invent “a 30 mm calibre” capable of meeting the norms of the Neuchâtel Observatory competition, he set about conceiving and developing it according to a set of standards designed to enable it to achieve the best possible chronometric performances. He single-handedly supervised the entire project.
Ephrem Jobin’s recipe for success with the Calibre 135 included using a large barrel to increase power reserve, as well as an oversized balance which, as part of the regulating organ, plays a crucial role in enhancing precision. This approach called for a complete rethinking of the movement design, including offsetting the minute wheel from the central axis so as to provide space for the enlarged balance. The observatory competition version of this legendary movement (Calibre 135.0) was equipped with a Breguet overcoil balance-spring, as well as a single or double arrow-shaped index or regulator ensuring balanced friction and enabling optimal adjustment.

Seen above is one of the gold medal winning cal 135 movements in its wooden testing box, the shape of the box allowed it to be easily placed flat in any of the 6 positions needed for the test.

Moreover, in addition to its outstanding chronometric feats, Calibre 135 was also adapted to produce commercialised versions, all of them chronometer-certified and sold with a rating certificate. They were equipped with an off-centred disc regulator and adorned with Côtes de Genève.

The chronometer-worthy precision of Calibre 135 entailed a naturally limited production volume reserved exclusively for high-end watches. 11,000 of these movements were produced, meaning that watches housing this calibre remain a much-coveted item among connoisseurs and collectors. The specialised press described it at the time as “one of the best wristwatch movement in watchmaking history” – a title it undoubtedly still deserves thanks to its superlative performances and surprising modern construction. This refined aesthetic appeal, accentuated by the classic design and the meticulous finishing of this calibre, vividly evokes the pure, restrained classicism of Zenith watches.
This historical retrospective tribute to Calibre 135 thereby honours an exceptional example of horological know-how, vividly embodied in the person of an archetypal master-watchmaker and distinguished centenarian, Ephrem Jobin.
Zenith has indeed decided to commemorate this jubilee by issuing a special 100-piece limited- edition watch in his honour and presenting him with the N° 100 model in a nod to his milestone birthday. It is powered by a self-winding COSC-certified Elite 689 movement having notably benefited from the technical progress made during Mr. Jobin’s time at Zenith.
The 18-carat rose gold case with sapphire crystals on either side frames an understated, elegant brown sunray dial graced by 18-carat rose gold faceted hands and hand-mounted applied hour- markers. Teamed with a hand-crafted brown crocodile leather strap lined with silky Alvazel calfskin and fitted with an 18-carat rose gold pin buckle, this handsome model eloquently conveys Zenith’s gratitude to Mr. Jobin for his major contribution to the history and development of the brand.

It was interesting to see that in the cabinets inside the Baselworld Zenith stand were several divers’ watches from the 1950s and 60s, even though the company does not currently have a true diver’s watch in the catalogue, when questioned about this M. Dufour responded “Divers’ watches are part of our history and will be part of our future”.

He also confirmed that movements will not be sold to companies outside the LVMH ‘family’ (Tag Heuer/Dior/Louis Vuitton) and that all Zenith watches will only be powered by Zenith movements.

During both our meetings M. Dufour was constantly interrupted by assistants asking for his presence elsewhere, it is to his credit that he remained focused on our meetings and the level of activity on the stand assured me that the continued future of the brand is safe and that it is even safer in his hands. 

My visit to the Rolex Factories Part II

24 Hours with Jack Bauer.
Or unbuilding a mystery;
inside the Rolex factories.
Part II

James Dowling

Churchill once described the Soviet Union as a riddle inside a mystery wrapped in an enigma and that is many peoples’ perception of Rolex. They are a very private company (in every sense of the word) and rarely make any comment, preferring to let their products speak for themselves. This vacuum has resulted in many people creating not only myths around the company, but also ascribing Machiavellian intents to perfectly normal actions. I have to confess that sometimes these theories even cross MY mind. So it was, one morning last summer when the vehicle taking me to visit one of the company’s new factories stopped briefly at a traffic light on the way out of Geneva. Right next to the traffic light was a Victorian building, now obviously empty; there was nothing out of the ordinary about it, other than the rather temporary looking white cardboard sign above the door, it proclaimed that the ex residents to have been ‘Rolex SA’.
The building used to house Beyeler, a dial manufacturer who had been in business for over a hundred years and who were purchased by Rolex in 1997 and who finally moved out of this building recently to the new factory at Chéne-Bourg
It was this purchase and consolidation of many different smaller suppliers into three giant manufacturing complexes that Rolex wanted to display to the press and, as such, was the reason for my invitation.
Buying their suppliers was not something new for Rolex, over the years they had bought many companies, ranging from case makers to makers of artificial sapphire, but most of them remained in their original locations using their original machinery, in some cases this machinery was older than Rolex, a company celebrating its centenary this year. This old machinery and locations inhibited innovation and made it difficult to change, so it was decided around a dozen years ago to start from a ‘clean sheet’ and build brand new manufacturing facilities that would not only be capable of containing the planned developments but would also have the ability to accommodate any future expansion.
The new factories were located in four locations, three sites around Geneva, two ‘green field’ sites and also on the current Rue Dassaud corporate headquarters site, which also underwent massive expansion. Beyeler’s previous dial operation and all jewel setting for cases, bracelets and dials is undertaken at Chéne-Bourg; whilst assembly and casing of movements and production of the 41XX movements takes place at Rue Dassaud. All other movements were still made in Bienne in another new factory, which replaced the old Aegler factory, this factory (in fact) predated the formation of Rolex by several decades. The purchase of the Aegler/Borer family’s majority shares in Bienne was the latest, largest and most important supplier purchase that Rolex have ever done.
The remaining and largest of the three sites was in the Geneva suburb of Plain les Ouates, also currently home to Patek Philippe, Vacheron et Constantin, Piaget, and half a dozen other manufacturers; this concentration of so many watchmakers in such a small area has produced the local nickname of ‘Plan les Watches’ for the locale. It was this site that was the first I visited, and one is immediately overwhelmed by the sheer size of the Rolex building, it is essentially a ‘T’ shaped structure, seemingly rising 6 stories from the old cornfields. In fact, this is an eleven-storey building with 5 of the floors underground, forming a ginormous subterranean vault with over 60,000 storage compartments. The compartments are accessed via a computerised retrieval system with robotised 12 meter (almost 40ft) frames which whiz along the length of the building, from which retractable arms shoot out, clamp on the required compartment and send it to the correct department, all without any visible human intervention. I was able to see all this action through a double thick reinforced glass wall, which is the nearest anyone gets to these vital components, access to this viewing area is through a massive safe door, which can only be opened by one of a small number of employees whose retinal scan is held in the system. Not even Danny Ocean’s team could get in here.
This level of security is needed when you realise that held within this vault are cases and bracelets in various stages of completion, many of them made of gold or platinum (to say nothing of the movements).  The value of these holdings can only be envisaged, but two simple facts should give you an idea. Rolex is the largest non-governmental user of gold in the world, when I asked Jaques Baur (head of R&D at Rolex) if he knew how much gold Rolex used annually, he smiled conspiratorially and replied ‘Yes, I do’ and changed the subject. The simple facts are that Rolex is the only company in Switzerland who make all of their own precious metal case alloys. Everyone else buys finished materials, either already made into cases or ready to be made into cases. Rolex take in shipments of pure gold, copper, platinum and silver; smelt them in their own furnaces to their own formulae and then make the cases from scratch.
This allows Rolex to have alloys of gold quite different to everyone else’s with quite specific properties; for example the white gold used in Rolex watches is not rhodium plated, it retains its colour without this additional treatment, this is due to the fact that Rolex add a high proportion of palladium to their alloy. Most other companies would not go to this expense, but Rolex justify it as it allows cases to be refinished at their service centres on the same machinery as the other watches without having to be sent off for replating after the polishing is complete. Similarly, the story of their red gold ‘Everose’ is now well known; the copper in ordinary red gold will leach out with prolonged exposure to chlorine, through the process of electrolysis.  This turns the red gold to yellow gold over time, although it would take a considerable amount of immersion in a swimming pool before the effects would be visible. But this was not good enough for Rolex, if people are paying a premium for red gold, then they should be able to expect it to remain red in all circumstances, including a daily swim. So, a new formula was developed where the copper content is ‘fixed’ in the alloy by the addition of 2% platinum.
Several times a day the furnace in the foundry smelts a new batch of gold (white/red/yellow) in batches of 2 litres at a time; that may not sound like much, but remember that gold is very dense (which is why it is so heavy) and 2 litres of gold weighs 35kg (around 80lbs). This furnace is currently working almost at full capacity; so a new furnace, more than twice the present volume, will soon be installed in addition to the current one; meaning that Rolex will be able to triple their alloy production.
The alloys are then formed into shapes that can be used in case and bracelet making, these are18mm tubes for the bracelets and rectangular bars for the cases. The tubes are fed through extrusion machines multiple times, under a pressure of 250 tons, until their profile is the desired one, then they are subjected to a heat treatment to harden them and then they are cut to the correct size for each link. The amazing thing is that the mirror like surface on the links is the result of the perfect finish on the extrusion die; they are not polished at all after coming out of the machine. It was this fact I found the most amazing, this (to me) is like taking several raw planks of wood, French polishing their surfaces and then building a cabinet from them.
The bracelet clasps are extruded, not stamped and this is why the new bracelets are of much higher quality than in previous days. The new machinery is capable of much higher precision than the old ones, if you think that the bracelets fitted to the Daytona and the new GMT Master II are good; wait until you see the one fitted to the new Sea Dweller Deep Sea. It reminds me of the retractable hard top fitted to the Mercedes-Benz SL & SLK, in the way the boot/trunk opens from either the front or the rear, depending on whether you are lowering the roof or accessing your luggage. In the same way, the bracelet adjusts from both ends depending on whether you want to lengthen it or to access the wet suit links.  The simple truth is that Gay Fréres (who under both private and then Rolex ownership had previously made all the bracelets) would never have been capable of such precision engineering.
The completed bracelets are subjected to random testing; a sample is taken from a batch, fitted to a watch head weighted to the exact weight of a movement and then the completed ‘watch’ is attached to the arm of a six axis robot over 2m tall. These very expensive machines are normally seen in heavy industries, such as car making, where they perform dirty repetitive tasks such as spot welding or door hanging 24hrs a day. Here the robot is used to simulate a year of wear in only two days, it spins the ‘watch’ through any possible position under high acceleration (much higher than a human would ever do) whilst occasionally slamming the ‘watch’ into a rubber cushioned bench (cushioned to protect the robot, not the watch). The robot can be programmed to perform any kind of contortion desired and due to the noise created by the constant impacts and the velocity at which the arm moves, the whole thing is encased within a giant glass booth.
It is often claimed by the company’s critics that Rolex is too staid and unadventurous in its products; yet I think a closer examination would show the opposite. They employ 250+ people in their R&D department, 30 of whom hold doctorates and they register 5 to 8 patents a year for completely new innovations. You may not like the look of the Yachmaster II, but you cannot criticise the technology involved in that movement. Whilst others may decry the lack of ‘finishing’ on their movements, but they were the first company ever to standardise the balance bridge on all their movements, replacing the centuries old balance cock and thereby almost completely eliminating the problems of endshake whilst massively increasing the resistance of the watch to shocks. The truth is that Rolex is a very innovative company; it is just that its innovations are mostly invisible and designed to improve the product gradually. They are not the same old ‘me too’ innovations seen by other companies, such as a new tourbillon or a different way of displaying the time; in other words, Rolex only changes a product when it feels that the change is an improvement, not just a change for change’s sake.
As is now well known, the steel used for cases and bracelets is not the 316L used by 99% of the watch industry. Starting in the late 1980s, Rolex switched over to 904L. Bought from a supplier in Austria, the rest of whose production goes to the petrochemical industry, 904L has a much higher resistance to corrosion than 316L. We have all seen 40-year-old steel watches with case backs and threads pitted from the corrosive mixture of dirt, human perspiration and high humidity. Rolex don’t claim that 904L will never suffer a similar fate, but the formulation of the steel means that it is much less likely during the normal lifetime of a watch.
The new machinery has also meant that the age old method of making an Oyster case has also changed; if you have seen lot 51 in Antiquorum’s recent Revolution sale, you will know the system. A slice is cut through a rectangular bar; this is then formed into a lozenge shape and by several other subsequent processes becomes the Oyster case we know & love. Then a circular disc undergoes similar processes and becomes the caseback. No longer; in a single press the rectangular slice is pushed through a tool & comes out in a rough shape of the case, the circular slug of steel that was previously in the centre of the case is now used to make the case back, meaning that not only are fewer processes needed to make a case, but also less steel is needed, further adding to the company’s ‘Green’ credentials.


We probably never think of the environmental cost of watchmaking, but I truly think that the new Rolex factory at Plain les Ouates can safely claim to be the greenest watchmaking plant in the world. All the flat roofs of the building are fully functioning gardens; lavender, rosemary and grass cover them entirely. Not only are the herbs used in the staff restaurants, but also much of the water used in the factory is recycled through these gardens; which, in fact, are quite sophisticated water treatment facilities.

What impressed me most about Plan les Ouates was the almost cathedral like scale and cathedral like silence, although there are 1,500 people and 1,700 machines there, the place is quiet, operating theatre clean and you hardly see a soul as you walk down the corridors wide enough to take two large trucks side by side. When I asked why the corridors were so wide when they make such small products at the factory, I was told the factory was designed to allow the simple removal and replacement of any of the machines or tools used. Including such items as furnaces or stamping presses. It is this planning for any possible future inherent in the building design that makes it unlikely that Rolex will have to go through similar upheavals in our lifetimes.
The simple truth is that Rolex are now probably the most vertically integrated watchmaker in the world (I say ‘probably’ because doing a full comparison to the only other possible contender, Seiko, would require both firms to release information that they choose to withhold) and the benefits and advances we have seen in the last few years have only been possible through this total control of every step of production. I genuinely do not believe that if Rolex was still spread out in dozens of small factories all over Geneva that we would ever have seen the new bracelets, Parachrome hairsprings, the Goldust dials or the development of the 4160 movement.
It was said of Henry Ford’s River Rouge plant in the 1920s that ships would dock at one end of the plant and disgorge their cargoes of iron ore, sand, tree trunks or raw rubber and finished Model As would drive out the other end, with every one of their parts having been made in the factory, right down to a paper mill & print shop which produced the owners' manuals from those tree trunks. Rolex is now a comparable operation and I hope that this small glimpse into their normally closed world has proved informative and has unwrapped some of the mystery and I apologise to Jaques Baur, head of R & D at Rolex who was one of my two guides for anglicizing his name in the title of this piece.