Small watchmakers band together to navigate manufacturing hurdles

This August, three independent watchmakers banded together to form the Alternative Horological Alliance, a co-operative partnership aimed at maximising economies of scale, creating more efficient working practices, and providing support as its members navigate the ins and outs of watch manufacturing.

US-based brands JN Shapiro and Fleming have been joined by Malaysia-based watchmaker Horologer Ming, in an attempt to collaborate on projects that would prove beneficial for all three of them.

Ming Thein, who co-founded his eponymous brand in 2017, has to date released dozens of individual references and won several of the industry’s most prestigious awards.

Yet he is pessimistic about the prospects of anyone starting their own watch company today. Thein says people analyse the economics of making a watch and quickly arrive at the conclusion that the numbers are not sustainable. Citing unforeseen issues with quality control, foreign exchange fees, the cost of keeping spare parts, transaction costs, and other charges, he explains that, very often, a fair price will far exceed customers’ expectations of the cost of a new, unheard-of brand.

“By the time we factored all of that in, we lost money on every single watch,” he says. “We made the first two or three models, and we couldn’t correct that because we set an unrealistic expectation. It’s taken us literally until two or three years ago to correct to the point where we can charge a sustainable amount, but it’s not even enough margin to do retail.”

While Ming, like others, has ridden a wave of interest in watches, that has brought its own problems. “When we started out, a base, undecorated Sellita SW210 [movement], manual winding, was about SFr130 [$148]. They’re about SFr380 now. In the space of nine years, component cost alone has just gone through the roof.”

Across the industry, smaller brands are taking action to safeguard their future. Some, like MB&F, have taken on investment — in its case, from Chanel, already an investor in FP Journe and Romain Gauthier. Others, including De Bethune, have been acquired outright. Companies with larger staff numbers and higher production volumes, such as Ulysse Nardin and Girard-Perregaux, have availed themselves of government-backed furlough-style schemes to subsidise wages while demand slows.

The AHA is not a corporate partnership — each member remains financially independent — but the hope is it brings about savings for each, as well as enabling potentially profitable projects.

The first of these, announced at the same time as the alliance itself, might appear humdrum: a dark grey, five-link metal bracelet. But the metal in question is tantalum, one of the hardest substances to machine and polish. Moreover, it will come with end links in a variety of sizes, enabling it to work with watches from all three brands.

Designed by Ming and produced by JN Shapiro, it is a good example of the kind of collaboration facilitated by their partnership. Thein explains that, individually, none of the three companies could have afforded to produce it, and says that, despite its niche nature, interest has been strong.

Full production is yet to start, with some issues still to be ironed out, but the hope is that customers will soon be able to place orders.

It will not come cheap — Thein says prices will start at about $20,000 — but he points out that it is the only one of its type on the open market, and is cheaper than those offered behind closed doors by other brands to their existing customers.

In time, other projects will follow, and could, Thein says, even include the construction of a brand new watch movement — an undertaking that can come with a multimillion price tag. But there is little sense the AHA is going to run before it can walk.

More immediate benefits might include shared space at trade fairs and training watchmakers at their respective premises to repair and service watches from all three brands.

For the time being, Thein enjoys the unfamiliar role of elder statesman within the AHA, and says that, while he is happy to share advice with the two younger companies, it’s not a one-way street. “Everybody has to bring something to the table,” he says. “We share whatever we can, and we’ve been learning a lot from them.

“One week, we might help each other out with a production issue. We have people in Switzerland, so if you need us to go and bang on a door, we’ll go and do that for you. On the other hand, maybe we need a recommendation for a PR agency, or a contact at a certain outlet and they’ve got it.”

There is no firm plan for the alliance’s expansion, but Thein says it is hard to imagine it remaining manageable if membership numbers grow beyond single digits. “We are talking to a couple of other brands as well at the moment who are pretty keen to join, so I’m hoping we’ll have some announcements in the new year,” he says.

Members do not have to be watchmaking brands, either. To address some of the production issues facing the industry, Thein floats the idea of partners joining from across the watchmaking supply chain, or from outside the industry, altogether. It is no coincidence, he admits, that the three founder members are not from Switzerland, but he says this has more to do with lacking a native culture of watchmaking than any particular sense of “us and them”.

“It’s not so much non-Swiss as non-industry,” he says. “There are a lot of learning processes that all of us have to go through, and there’s no school that teaches you these things.

“If you grow up in a certain country, then you understand the conventions and the culture.” Future members of the Alliance could well be Swiss, Thein says. But, wherever they come from, putting up with the status quo is not on the alliance’s agenda.

“In our experience working with Josh [Shapiro, founder of JN Shapiro] for our own projects, he’s been much faster than anybody within the industry,” says Thein. “That’s not meant to be a complaint against the current state of the industry. But there is this expectation that the watch industry works in a certain way, and that has been the case for a very long time.

“What we don’t understand is why that must necessarily be the case. If you look at other industries, any sort of manufacturing, there are all sorts of services where you can get a prototype part within 48 hours if you absolutely need to. Why are we struggling with anywhere up to two years? Even that isn’t reliable, which makes it very difficult to run a business.”

No one in the AHA expects the horological world to reverse decades of habit overnight. But, by banding together in an alliance, at least some of its smallest players are finding their voice.