“The culture of silence will have to stop”
The decrease in watchmaking production over the year 2020 has had consequence on the Swiss industrial landscape. In order to protect it, Audemars Piguet wants to launch an initiative that would enable a recovery, with Swiss made as its key challenge. Exclusive interview of François-Henry Bennahmias, CEO of the brand.
By Cristina D’Agostino08 avril 2021
The historic drop of 21,8% (in value) of Swiss watchmaking exports in 2020 vs 2019 has caused the production capacity of the Swiss watchmaking landscape to slow down. Even though beginning 2021 has shown signs of recovery, including in the USA, last February according to the Watchmaking Federation’s insights, the road to growth seemed very uncertain still, with many financial challenges.
In order to better comprehend the issues at stake, Luxury Tribune has opened a series exploring the sanitary crisis and its consequences on Swiss watchmaking. Our first focus: the position statement of Audemars Piguet in favour of creating a common initiative that would enable the preservation of the Swiss industrial landscape. Interview.
What repercussions has the drop in production had, specifically on your external suppliers?
During the first lockdown and the closure of our manufacture, 8000 watches weren’t produced. However as of the reopening, our strategy was clear: avoid trying to regain this production at the end of the year at any cost, overloading our staff, or trying to recover our decreasing sales revenue. It would not have been the right message. We eventually produced 5000 watches short of what was scheduled for 2020 and recorded the lowest inventories of our history, with a drop in economic results of 8% vs 2019, our record year. Therefore, these are very good results. Regarding our suppliers, which are non-exclusive to Audemars Piguet, we called them on the first day of closure, so they would keep us informed of potential problems. We assured them of our support and rescheduled our production. Only one of them seemed to be experiencing difficulty. We offered our helped, but they didn’t need it in the end. That was our commitment towards them.
Globally, what was the percentage of suppliers experiencing difficulty?
None of our main suppliers - forty of our two hundred suppliers – experienced any major issues. However, I am not saying Swiss suppliers did not suffer, far from it. Some brands, pre-Covid, were already relocating their production in Asia. This can be understandable when it comes to mid-range products. Saving 50 francs on a watch that will sell at 500 is comprehensible. But over several tens of thousands of francs, it is not…
That’s where Swiss made steps in. Would now be the time to imagine alliances between brands to help suppliers?
I am convinced there are things that can be done by partnering with other brands to preserve heritage. If strategic suppliers disappear, know-how will leave. It’s an aberration. The Japanese example is interesting: the government supports some industries and artisanship to preserve savoir-faire. This responsibility could be the mission of watchmaking brands: supporting suppliers by giving them work.
Have you also engaged in this action with the Swiss Confederation?
No. But I started to approach some brands, to know if they would be interested in such a project to find common interests. We are only at the state of intent at the moment. However, this isn’t linked to the strategy we are already developing with other groups in order to share know-how about some components, such as Nivachron with the Swatch Group. Here, we are talking about protecting Swiss savoir-faire.
Would you want to increase the level of Swiss made well over 60% of the watch’s value?
No, I am not challenging this level, as it exists for good reasons. But as of a certain price level, I think 100% should be the norm. Yet, that is not the case. That’s not acceptable.
But won’t this endanger the Swiss made concept by pressuring it, with brands that won’t want this label anymore, as it will become too expensive to produce?
In watchmaking, the real challenge is to understand that if we lose our Swiss savoir-faire to Asia, brands will be undermining their credibility. We have a duty to preserve it and margins in this industry allow it. The young generation wants clarity and transparency from brands. Today, it is time to do better rather than do more. Audemars Piguet did not aim at increasing its production volumes over the past five years, but at favouring quality and at securing a certain number of parameters. The result: a resilient brand through 2020.
Very few brands today are openly advocating for Swiss Made. Don’t you feel a bit lonely?
I will answer one thing: the culture of silence in watchmaking will have to stop. Traceability is key. Where are the leathers, gold, diamonds on watches coming from? Clients will ask these questions repeatedly. We will have to be able to answer and brands will be forced to reveal themselves. Just look at fashion, it has already been through this.
For the end client, isn’t Swiss Made rather a sum of Swiss know-how than a percentage of components? Shouldn’t the effort be here as well: increasing the financial support for innovation?
We have an annual budget reaching tens of millions for R&D. This work is done with Swiss partners in Switzerland. Of course, if we asked an end client the ratio of Swiss components needed in a watch to be qualified as Swiss made today, no one would know. But clients now understand the work that a watch encompasses, they know to appreciate a manufacture’s savoir-faire. The message needs to be consistent with the product.
What should Swiss Made represent?
For Audemars Piguet, Swiss Made is a commitment. The commitment to produce 100% in Switzerland and to support the supplier landscape, often families established for generations, that are fighting to innovate. Unfortunately, some brands continue to cancel their orders to Swiss suppliers and would rather produce in Asia for five times cheaper, dropping the supplier who had already invested money for development. The commitment I am talking about is thought to avoid these kinds of damages.
What would be the structure of this association between brands, a foundation?
I still can’t talk about it now. But these conversations should materialize by this summer. It’s a real mission, as savoir-faire is in jeopardy today.
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In an exclusive interview, François-Henry Bennahmias, CEO of Audemars Piguet, explains how the pandemic has pushed him to radically change his relationship to clients, as well as towards his colleagues.
Like most industries, Swiss watchmaking took some heavy hits from the pandemic, but the sector was already in the midst of a profound transformation. And according to Deloitte’s 2020 Industry Study, it looks set to come through it stronger.
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