Saturday, 16 November 2013

Money is still being poured into the watch business

The three biggest 'players' in the watch business are all making big bets on the continued future of their industry; Swatch Group, LVMH & Richemont have all recently announced substantial investments. First out of the gate was LVMH, who officially opened their new TAG Heuer movement factory on the 5th of November. The factory will produce the current calibre 1887, as well as a new lower priced movement, called the calibre 1969, completely designed and produced in house, it will soon be joined by another (yet un-named) calibre designed for mass production. Meaning that the brand will double its current 50,000 watches per annum production rate within the next three years; by which time the firm will have invested around 60 million CHF (around $65 million US) in the factory.

Two days later, it was the turn of Richemont who stated their intention to invest €800 million (over $1 Billion US) in their operations this year, with a similar amount being invested in 2014/15. The firm who own such industry stalwarts as Cartier, IWC, JLC, Panerai and Vacheron Constantin are investing in factory refurbishment and expansion as well as many opening more single brand boutiques.

Earlier this week, Omega invited a select group of journalists to their new factory in Granges, dedicated to the production of its co-axial movements. But this isn't the only new factory for Omega; they are currently building another one next to their current Bienne HQ; as usual, Swatch Group declined to give figures for the costs involved, but building brand new factories has never been a pastime for the cheapskate. The one thing that they did reveal is that their current production is around half a million units per annum and that they plan to produce an additional 300,000 units per annum in the next few years.

Taken together, these developments show that the industry giants have just given the business, and Switzerland, a huge vote of confidence. Only time will tell if this confidence is justified.