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In House Movements
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Author:  alex** [ Thu Jan 29, 2009 7:09 am ]
Post subject:  In House Movements
I guess we all accept that at some point Breitling will have to develop in house movements or find an alternative but......

if they go in house will current models with modified 3rd party movements devalue?

whats your thinking on this?
Author:  BroncoSport [ Thu Jan 29, 2009 8:31 am ]
Post subject:  Re: In House Movements
I dont see the current models lower in value after Breitling starts making there own movements. There are TONs of ETA 7750's and such out there is various different brands of luxury watches and the demand will still be high for these models. BUT, having said that, after Breitling runs out of the ETA movements and HAVE to start inserting thier own movements (which by the way I would suggest are already well through the R & D stage, if I had to guess) I suspect we will see a 20% to 40% increase on the "new" models. Not only to cover their R&D, but also because typically makers that have thier own movements tend to get a lot more at the retail level. I only hope that Breitling doesnt price these watches out of my reach.

Scott
Author:  Foxyrenard [ Thu Jan 29, 2009 9:24 am ]
Post subject:  Re: In House Movements
Just a comment, ETA is not the only supplier for movements. Sellita and Gurofa provide ETA movements as well, as most of these movements are out of their patent restrictions..
Author:  Roffensian [ Thu Jan 29, 2009 10:57 am ]
Post subject:  Re: In House Movements
Foxyrenard wrote:
Just a comment, ETA is not the only supplier for movements. Sellita and Gurofa provide ETA movements as well, as most of these movements are out of their patent restrictions..


But can you honestly see a Sellita movement in a Breitling? I know I might sound like a snob, but no thank you.
Author:  mrbreitling [ Thu Jan 29, 2009 3:04 pm ]
Post subject:  Re: In House Movements
When will this in house change take place?
Author:  Breitling-nutt [ Thu Jan 29, 2009 3:19 pm ]
Post subject:  Re: In House Movements
ETA will continue to supply complete movements however, they are going to stop supplying semi-completed movements. This means Breitling will have to purchase complete movements, dis-assemble them, fit them with their desired parts, finish them and re-assemble. This practice will certainly increase prices.
Author:  Roffensian [ Thu Jan 29, 2009 4:40 pm ]
Post subject:  Re: In House Movements
Breitling-nutt wrote:
ETA will continue to supply complete movements however, they are going to stop supplying semi-completed movements. This means Breitling will have to purchase complete movements, dis-assemble them, fit them with their desired parts, finish them and re-assemble. This practice will certainly increase prices.


Wishful thinking I'm afraid - that won't be allowed.

As of 2010 Swatch Group (ETA and Valjoux) will only be providing complete movements, not ebauches. Breitling (and every other manufacturer) will not be allowed to modify them. If Breitling want modified movements then they will need to contract with ETA / Valjoux to do that work on their behalf.

That is what is driving watch companies to move away from ETA / Valjoux (to Sellita in the case of Oris for example) or to producing their own movements. A European AD member (Alien) advised of a rumour a few weeks ago that Breitling's first in house movement would be the Chronomat and so speculation is that it will be announced at Basel.

In house movements inevitably increase costs, but are seen as a desirable feature for luxury watches.
Author:  breitlingsource [ Thu Jan 29, 2009 6:19 pm ]
Post subject:  Re: In House Movements
Hey Roff.. that brings up a thought for me.. Its interesting to see that even with watches like the IWC Ingenieur, which has an In-house movement in their non-chrono, and a modified eta movement in their Chrono, the Chrono still costs marginally more at MSRP. IWC actually does modify the movements a considerable amount, which may account for some of this.
Author:  Roffensian [ Fri Jan 30, 2009 6:20 am ]
Post subject:  Re: In House Movements
breitlingsource wrote:
Hey Roff.. that brings up a thought for me.. Its interesting to see that even with watches like the IWC Ingenieur, which has an In-house movement in their non-chrono, and a modified eta movement in their Chrono, the Chrono still costs marginally more at MSRP. IWC actually does modify the movements a considerable amount, which may account for some of this.


I don't know the details of what IWC does, but it is entirely possible. The cost of a manufacture movement is really associated with two factors - first the R&D costs, and secondly the fabrication costs of the pieces that are produced in house - plates, bridges, etc. Obviously the first can be capitalised across every movement, the other is a variable cost associated with each movement. With in house movements parts and sub assemblies are still being bought in just as they would be for modified movements.

With the modification of a base movement the R&D costs will be less, but still there, and the fabrication costs may still be there depending on what changes are actually made - if IWC merely replaces wheels, escapement etc with better quality there isn't much (relative) additional cost. If they replace / add fabricated bridges and plates then the cost can get higher quickly.

The other factor is the economies of scale - shared parts across movements, numbers of movements produced / modified, number of years the pieces have remained unchanged etc.

It's fair to say that the R&D costs will always be higher on an in house movement, but if that cost is capitalised across 20 years for the in house and only 5 years for a modified movement then the per unit cost is very different. Similarly it's fair to say that there are likely more fabricated parts in an in house movement than in a modified one (though not always if comparing modified chrono with manufacture non chrono), but that doesn't always mean more cost.

Confused yet? :D
Author:  Foxyrenard [ Fri Jan 30, 2009 6:44 am ]
Post subject:  Re: In House Movements
To make things more confusing.. they could just copy ETA movements (like Sellitta), so they wouldn't have R&D costs. However, I believe there is a very high cost (capitalised) to make the machines that produce all these parts....
Author:  vorollo [ Fri Jan 30, 2009 7:05 am ]
Post subject:  Re: In House Movements
"As of 2010 Swatch Group (ETA and Valjoux) will only be providing complete movements, not ebauches. Breitling (and every other manufacturer) will not be allowed to modify them. If Breitling want modified movements then they will need to contract with ETA / Valjoux to do that work on their behalf".

Interesting post!

Many assumptions here. But which facts do we have? Breitling won't use ETAs from 2010 onwards? Isn't there any transition period in consideration? If not, Breitling will have to offer a complete new product range with complete new princing levels from 2010 on, right?!

Alternative thoughts: Are Sellita catching up with their ETA twins in terms of consistency of quality - and will Sellita therefore be able to deliver to Breitling soon? Has this started and do Breitling use the Sellita 200 and 500 (for ETA 2824 and 7750 I believe) already now?

What do we know?

Thanks.

V.
Author:  Foxyrenard [ Fri Jan 30, 2009 7:29 am ]
Post subject:  Re: In House Movements
I don't believe that Breitling would use Sellita at all, I was just speculating that they could.

However, my argument is: could Kelek (the movement house that Breitling bought in 1997 and is now called "Breitling Chronometrie") not take ebauches from someone else than ETA and modify them heavily and then would anyone tell the difference?

Is investing capital in all the machines to reproduce ETA or R&D + capital to make completely new movements worth it for them? Can the market or their margins carry that extra investment?
Author:  Roffensian [ Fri Jan 30, 2009 7:53 am ]
Post subject:  Re: In House Movements
vorollo wrote:
"As of 2010 Swatch Group (ETA and Valjoux) will only be providing complete movements, not ebauches. Breitling (and every other manufacturer) will not be allowed to modify them. If Breitling want modified movements then they will need to contract with ETA / Valjoux to do that work on their behalf".

Interesting post!

Many assumptions here. But which facts do we have? Breitling won't use ETAs from 2010 onwards? Isn't there any transition period in consideration? If not, Breitling will have to offer a complete new product range with complete new princing levels from 2010 on, right?!

Alternative thoughts: Are Sellita catching up with their ETA twins in terms of consistency of quality - and will Sellita therefore be able to deliver to Breitling soon? Has this started and do Breitling use the Sellita 200 and 500 (for ETA 2824 and 7750 I believe) already now?

What do we know?

Thanks.

V.


I think I need some help having the assumptions pointed out......

Will Breitling still use ETA (or Valjoux) from 2010 onwards - quite possibly - just not as ebauches, and likely not in all their watches.

Is there a transition period - yes, it's on now - that's why the announcement was made in advance in order to allow the watch companies to plan for it. Also, if memory serves, the 2010 date was originally 2008 before a legal challenge.

Could Breitling use Sellita, yes they could, but they certainly don't now, and as Foxyrenard says, it is highly unlikely that they ever will.

I don't know the internal though processes at Breitling, but I suspect that Breitling decided that if they had to invest money in preparing for this change then the investment that made the most sense was to turn Breitling Chronometrie into a manufacture. Is it more expensive than partial retooling for Sellita or similar, sure. But it's also the direction they need to go to compete with the people that they want to be grouped with.
Author:  alex** [ Fri Jan 30, 2009 8:17 am ]
Post subject:  Re: In House Movements
glad to see this has sparked some debate.

you could also consider that given the price rise which would be likely if the go 100% in house could make the old models effectively a bargin ie you get as much for a lot less cost so the older models could become more desirable.

i for one know that if prices went up by 40% overnight id not be buying more than one every few years as oppose to 5 in 3 years

Alex
Author:  alex** [ Fri Jan 30, 2009 8:22 am ]
Post subject:  Re: In House Movements
meant to also say. you cant just assume that the price rise would be huge there will be some savings in all of this too.

if in house no need to pay for R&D of eta movements which is effectively what they do, also they strip out the eta profit margin by bringing it in house, most the machinery and r&d costs will be capitalisable, the recovery of those costs will be over many year like a car production run.

they will get a synergy benefit from manufacturing and assembling the movements in house once rather than eta producing parts and Breitling swapping bits out and assembling.

plus no royalties etc if their are any currently.

so it could be that they go in house on a few key models like the chronomat first and do things slowly, id imagine they have been stocking up on eta movements since the announcement.
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