The Breitling Watch Source Forums

There is no way in the world that a move away from 40 year old designs produced in the millions every year and where the knowledge and skills to maintain is possessed by tens of thousands of watchmakers all over the world to an exclusive design made at well below 50,000 units per year and where the skills to maintain is owned by just a few hundred people (maybe less right now) is going to reduce costs.

Every watch brand in the world has an increase in maintenance costs with in house watches and every other product sees a similar situation - cars, appliances, etc, etc, etc.

This is no different than any other technology hitting coming to the market. It is expensive as the R&D has to be recovered over time. I would suspect that Breitling will not make profit on the new IH movement for a few years at best. As the R&D costs are recovered and more units can be sold the price may come down.

However, this is luxury product, and as the adage goes "if you have to ask the price you cannot afford it". Of course even billionaireswant to pay less if they can that is part of how they made their money. Time will tell if the price will reduce but there is still the economics of supply and demand at a certain price point. For example the threads discussing the cost df the EII and the number of units expected to be sold and how some on this site believe Breitling will never sell the number of units expected at the price. To the extend Breitling does not make money on the model (over time as discussed above) the price should decrease. But there are certainly enough people to pay the price to make either model profitable. Time will tell and is will depend on Bretling's client base and their ability or desire to pay the price. Of course the number of units to be sold is to make a product is much smaller with luxury product but the economics above still applies.

My question from a novice perspective is has Breitling built a base movement that can be adapted to the other models over time. That is where the cost efficiencies can really come into play. I am sure Roff can provide a few comments given his knowledge of the watchmaking business.

From my perspective I will never make enough money to be in a position to never elvaluate the price or try to consider the price or try to get it cheaper. However for all my luxury purchases (2 BMw's 2 Mercedes) I paid the price with whatever discount was offered and did not negotiate as hard as I would or have on other products. I am an insurance broker so I am a professional negoiater. IMO you just pay more for luxury products including profit well beyond the cost of the parts and labor to make them. I expect fit finish and materials to be well above any other similar product and the Ling on my wrist meets all that criteria as do my BMW's and MB's. But if you are not willing or able to pay the price buy a Timex or Chevy. I have bought more of those than luxury products for exactly the reason that I cannot or am not willing to pay the price. Fire away folks!

They have built a modular chronograph movement and all of the calibres that they have so far introduced are based on that base (B01). It was designed to allow for the addition of complications and is a tried and true approach to different complications. Breitling also claimed that the movement supported a 6 / 9 / 12 subdial layout but we have yet to see that.

They have developed a three hand movement which is a different base but have not yet been able to serially produce it at a cost that will allow them to sell it in a watch at what they consider to be a reasonable cost.

Roff what is your opinion on the long term success of Breitling's IH movement and long term prices? As they appear to not have much choice, unless someone fills the ETA void if that is even possible, hopefully your answer is positive!

Could we see a consolidation of independent swiss watch companies? Where a company with mostly IH movements buying others.....for example dare I say buying Breitling? Like Chrysler buying MB.

My question is from a business perspective not from one with a detailed knowledge of the watchmaking industry. But consolidation is a concept that has changed other industries at critical times for various reasons. Hopefully, you can educate me some more on the industry relative to my question and predict the future at the same time!

Breitling has publicly stated that it has scaled for 50,000 in house movements, so clearly that is well below current production levels. They have also stated that they cannot (yet) serially produce a non-chrono at economically viable costs. It's pretty clear therefore that for the foreseeable future they are going to be reliant on non in house movements. However, they have been producing parts for ETA designs for some time and can continue to do so - they are well outside of patent protection, and have relationships with other suppliers like Sellita for mainplates. The biggest challenge that they (and virtually everyone else faces) is to find a reliable supply of hairsprings. Breitling has said nothing about that and they have zero production capacity so they need to find a solution - I am sure that they are working on it.

In terms of consolidation in the market, we will continue to see the major houses acquire when they can, but there will always be a role for the independents. In the case of Breitling I do worry about their financial situation - they invested a lot of money over a lot of years into R&D for in house and then launched as the market was crashing - that had to hurt. Sales volumes have recovered in the industry, but regardless of what we think of Breitling designs, their sales have been slower to recover in terms of units (as a private company they don't release numbers, but they COSC certify every piece and COSC releases certification numbers each year). We have no way of knowing what the P&L and balance sheet look like, but I suspect that they are hurting a bit. Does that mean an acquisition, I don't know, but I wouldn't be overly surprised - although I would have said the same thing for the last 4 years and it hasn't happened yet!

Awesome answer Thanks!

That's very interesting.

I think we were also discussing the price of servicing the B01. Anyone with any idea on what the breakup is for materials, labour & overheads are on a typical AD service schedule? Would be interesting to know what the differences are compared to the B01.

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Jim

"You have Control".

Hasn't Breitling been building their own b13, etc, movements in house since 2006 anyway?

To a point.

They have been producing parts for ETA movements, but not complete movements - Sellita have been supplying some mainplates for example, and they still consume a lot of ETA produced movements. It's not the movements themselves that are going to be the issue going forward, it's the hairsprings which are going to be in global short supply when ETA cuts back. Tag has already abandoned trying to source from Switzerland and is going to be using Japanese hairsprings.

Japanese parts OMG!!!!!

Well TAG also sources its inhouse movement from Japan, so that sort of fits the bill... Now all they have left to do is write "S(eiko)wiss Made" onto the bottom of their dials.

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Cheers from Switzerland,

Fred

Not quite.

Their in house movement is a Seiko design, but the watches and movements still qualify under the requirements for "Swiss Made".

I'm sure they do, my remark was of a more cynical nature and not meant to be taken too seriously. Should have put in a winking smiley

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Cheers from Switzerland,

Fred

Does Tags Seiko design resemble other Seikos movements?

It's a licensed Seiko design. However, just like any other manufacture, Seiko has different movement designs.