September 18, 2000
Time is Money (Excerpts)
By: Joshua Levine
In late July Financire Richemont, a holding company for costly Swiss watch brands, paid $1.86 billion to acquire Les Manufactures Horlogres, another Swiss watchmaker. The price works out to nearly nine times sales. Was it fancy technology that Richemont got? Far from it. With Horlogres it picked up the 167-year-old movement-maker Jaeger-LeCoultre, along with the watch brands IWC and A. Lange & Sohne, which means that it got its hands on a collection of workshops where men in white aprons construct tiny little spring-wound timekeeping mechanisms accurate to within eight seconds a day. That isn't even as accurate as a $10 quartz Timex. Horlogres is not high tech. It is what the Swiss call "high mech."
"It's an antidote to the technology I work with every day," says the semiretired techie. "These things are made by people sitting at benches, not computers. When you look at one of these things through a magnifying glass, you can see that a human being worked on it. It can never match a $50 Swatch, but I really like the futility of that--there's something noble and tragic about it."
It takes eight to nine years to train the workmen who make the newest Patek Philippe model, due to arrive in stores in November. These artisans have broken new ground with a nonautomatic mechanism that carries a 240-hour power reserve, breaking the current standard by a full day. A hundred twizzles of the thumb and index finger and you're good for well over a week. Patek is making only 3,000 of these "Ten-Day" watches, which cost $27,500 and up.
Which leaves only Rolex, an unstoppable force that holds 25% of the high-end market with essentially one watch, the Oyster, while keeping the company's inner workings almost completely hidden behind a gold-clad fortress in Geneva. Rolex sells an estimated 650,000 watches a year, worth perhaps $1.4 billion at retail. But unlike other manufacturers that are constantly cutting new dies for new models, Rolex has far lower costs.
"Everybody is afraid of Rolex, but the true aficionado knows that it makes what is pretty much an indestructible watch," says Jeffrey Hess, who with James M. Dowling wrote an unauthorized history of the company. "We mind our own business," says a Rolex spokesperson, explaining in an interview with FORBES GLOBAL why the company will basically not comment about, well, anything.