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Thread: ETA will start reducing movement deliveries to competitors

  1. #1

    ETA will start reducing movement deliveries to competitors

    http://www.bloomberg.com/news/2011-06-0 ... eries.html

    Swatch Group AG (UHR), the biggest maker of Swiss watch motors, will be allowed to start reducing deliveries to competing timepiece manufacturers next year as it seeks to end a regulatory requirement that it sell components to rivals.

    Swatch, the Biel, Switzerland-based maker of the Omega and Breguet brands, will be permitted to scale back sales of mechanical movements to third parties to 85 percent of the level sold in 2010, the country’s competition regulator, Comco, said today in a statement.

    The world’s biggest watchmaker has been required to supply movements to third parties because of its dominant position. Swatch’s ETA unit manufactures as many as 80 percent of the mechanisms made in Switzerland, according to a Sanford C. Bernstein estimate. Swatch has sought permission from Comco since 2009 to choose who it sells movements to.

    The company has shown that it’s willing to accept a “gradual” solution, Comco said.

    Swatch rose as much as 40 centimes, or 0.1 percent, to 403.60 Swiss francs and was trading at 403.50 francs as of 9:48 a.m. in Zurich.

    Next year’s permitted reduction in motor deliveries forms a provisional measure while the regulator conducts an investigation into the matter, Comco said.

  2. #2
    Grand Master markrlondon's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    So, the time has finally come. So many other manufacturers seem (from what I can see as a customer, potential customer and generally interested party) to have made very little preparation for the disappearance of ETA movements from the market. I guess Sellita and Miyota are looking forward to a bonanza in new sales. The Miyota 9015 was a well-timed introduction.

    I wonder what Rolex will do for their Tudor range. Go for Sellita movements perhaps?

  3. #3

    Re: ETA will start reducing movement deliveries to competitors

    I thought this happened ages ago, well that they planned to do it

  4. #4

    Re: ETA will start reducing movement deliveries to competitors

    Its not like the other manufacturers haven't been expecting this. And remember they're not switching off ETA supply, just pulling back.

    It'll be the mid-priced ETA customers who will be most affected, especially those outside the Swatch huddle. I should think/hope the 2012 ranges will start showing some new directions with Miyota.

  5. #5
    Grand Master markrlondon's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by NikGixer750
    I thought this happened ages ago, well that they planned to do it
    It's been planned for years but it seems to me that, because the day of actual sales limits never seemed to arrive (until now), non-Swatch Group manufacturers seem to have become complacent. Perhaps they can switch over sourcing of movements more easily than I thought. We'll see what happens to prices.

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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by markrlondon
    I wonder what Rolex will do for their Tudor range. Go for Sellita movements perhaps?
    Seagull.

    They will need a fairly sizeable number of high grade movements and there are not many movement manufacturers who have the staff for that.

  7. #7

    Re: ETA will start reducing movement deliveries to competitors

    seams to me there is a excellent opportunity for someone here :lol:

  8. #8

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Huertecilla
    Quote Originally Posted by markrlondon
    I wonder what Rolex will do for their Tudor range. Go for Sellita movements perhaps?
    Seagull.

    They will need a fairly sizeable number of high grade movements and there are not many movement manufacturers who have the staff for that.
    Use Rolex movements? Nah. That'd devalue the already horrendously over-priced Rolex in-house calibres. Hey ho. Rolex still remain the only supplier who refuses to pass on economies of scale to the consumer (cf Zenith). And consumers still remain unwilling to question Rolex prices. Hmmm...

  9. #9
    Grand Master markrlondon's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Broussard
    Quote Originally Posted by Huertecilla
    Quote Originally Posted by markrlondon
    I wonder what Rolex will do for their Tudor range. Go for Sellita movements perhaps?
    Seagull.

    They will need a fairly sizeable number of high grade movements and there are not many movement manufacturers who have the staff for that.
    Use Rolex movements? Nah. That'd devalue the already horrendously over-priced Rolex in-house calibres.
    Indeed. It is ironic that Rolex have the in-house ability to make movements but cannot do so for commercial/market perception reasons for the Tudors.

    Seagull? That well known Swiss brand... I think not. ;-)

  10. #10
    Master EdRonax's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    It will be interesting to see the impact this has. There seems to have been quite a number of in house movements over the last few years, is that just a coincidence, or am I heading down the wrong road.

  11. #11
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by markrlondon

    I wonder what Rolex will do for their Tudor range. Go for Sellita movements perhaps?

    Stay with ETA of course. They are long-time customers who buy large volumes, of course they will still be supplied.

    ETA will only sell complete movements from now on though and wont take on new small-scale customers. Like hayek said, he didnt want ETA to be a "movement parts supermarket".

  12. #12

    Re: ETA will start reducing movement deliveries to competitors

    Does this affect you as a buyer purchasing off the shelf replacement eta movements???

    James.

  13. #13

    Re: ETA will start reducing movement deliveries to competitors

    I've never really understood why someone doesn't start producing copies of a great movement that is no longer covered by intellectual property protection, e.g., the Longines handwind chrono movements (my watchmaker loves them and says they are the best chrono movements ever made). The R&D is essentially done. Would putting together modern tooling to make the movement really be that expensive?

  14. #14

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by david stinson
    I've never really understood why someone doesn't start producing copies of a great movement that is no longer covered by intellectual property protection, e.g., the Longines handwind chrono movements (my watchmaker loves them and says they are the best chrono movements ever made). The R&D is essentially done. Would putting together modern tooling to make the movement really be that expensive?
    The tooling would be very very expensive to make, just think how many different parts have to be made in a chronograph, in reality you would want to get hold of the original tools and remake where necessary and you would really have to produce in large numbers to get the per movement production cost down to a point where you could actually sell them.

  15. #15

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by dutchgray
    Quote Originally Posted by david stinson
    I've never really understood why someone doesn't start producing copies of a great movement that is no longer covered by intellectual property protection, e.g., the Longines handwind chrono movements (my watchmaker loves them and says they are the best chrono movements ever made). The R&D is essentially done. Would putting together modern tooling to make the movement really be that expensive?
    The tooling would be very very expensive to make, just think how many different parts have to be made in a chronograph, in reality you would want to get hold of the original tools and remake where necessary and you would really have to produce in large numbers to get the per movement production cost down to a point where you could actually sell them.
    They do and they have???
    It's just a matter of time...

  16. #16

    Re: ETA will start reducing movement deliveries to competitors

    This will more than likely only affect small/tiny companies like Steinhart, Kemmner and other independant makers. They'll have to resort to Selitta or Seagull. I remember a big outcry when Steinhart suggested putting Seagull and Selitta movements in his watches. It will be difficult for the small manufacturers.

  17. #17
    Grand Master Glamdring's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by dutchgray
    Quote Originally Posted by david stinson
    I've never really understood why someone doesn't start producing copies of a great movement that is no longer covered by intellectual property protection, e.g., the Longines handwind chrono movements (my watchmaker loves them and says they are the best chrono movements ever made). The R&D is essentially done. Would putting together modern tooling to make the movement really be that expensive?
    The tooling would be very very expensive to make, just think how many different parts have to be made in a chronograph, in reality you would want to get hold of the original tools and remake where necessary and you would really have to produce in large numbers to get the per movement production cost down to a point where you could actually sell them.
    Hence the Chinese acquisition of the Venus tooling so they could make the pretty ST19 to slot into the SeaGull 1963.

  18. #18

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by markrlondon
    Quote Originally Posted by NikGixer750
    I thought this happened ages ago, well that they planned to do it
    It's been planned for years but it seems to me that, because the day of actual sales limits never seemed to arrive (until now), non-Swatch Group manufacturers seem to have become complacent. Perhaps they can switch over sourcing of movements more easily than I thought. We'll see what happens to prices.

    The plan was to stop supplying ebauches to 3rd parties, not complete movements.
    The only companies affected by that are the bigger players. Brokers will still buy for around the same price in the same quantities as before and the song will play on.

    I have two emails from ETA, one stating what I have wrote above, and the second


    "Unfortunately we need to inform you that due to our limited production possibilities and the resulting very long delivery lead time it is impossible for us to acquire new customers at the moment. We are already completely sold out for mechanical movements for the next year and 2012 is fully booked by reservations from our existing customers.

    Should you be looking for mechanical ETA movements we would suggest you contact one of the following big clients of ours that are reselling our movements:

    Soprod Les Reusillles
    Sellita, La Chaux-de-Fonds
    Multitime, Losone

    Should the situation change in the future we will let you know at once.

    Thanks for your understanding."

    best regards,

    Jann Diethelm


    Area Sales Manager Mecaline
    Service Unit Marketing & Sales

    ETA SA, Manufacture Horlogère Suisse
    Bahnhofstrasse 9 | 2540 Grenchen | Switzerland
    Phone: +41 32 655 2763 | Fax: +41 32 655 7174

    jann.diethelm@eta.ch | http://www.eta.ch

  19. #19

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Glamdring
    Quote Originally Posted by dutchgray
    Quote Originally Posted by david stinson
    I've never really understood why someone doesn't start producing copies of a great movement that is no longer covered by intellectual property protection, e.g., the Longines handwind chrono movements (my watchmaker loves them and says they are the best chrono movements ever made). The R&D is essentially done. Would putting together modern tooling to make the movement really be that expensive?
    The tooling would be very very expensive to make, just think how many different parts have to be made in a chronograph, in reality you would want to get hold of the original tools and remake where necessary and you would really have to produce in large numbers to get the per movement production cost down to a point where you could actually sell them.
    Hence the Chinese acquisition of the Venus tooling so they could make the pretty ST19 to slot into the SeaGull 1963.
    Good movement that in the PRS 5 :D Just need SeaGull to do a good auto chronograph now.

  20. #20

    Re: ETA will start reducing movement deliveries to competitors

    I can't see why they would do that if they make money from selling movements, if they can't match the market need as they claim, they can increase the price and build more factory if needed.

    But from a consumer's point of view, I can't wait for this to happen, if it really would happen. Rather happy to see more in-house movements, rather than the ETA on every watch in the market. Call me naff but an in-house / exclusive movement is a big plus point to me. Even though they are probably more costly to repair, less accurat or less reliable than a bob standard ETA, I don't mind at all.

  21. #21
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    Re: ETA will start reducing movement deliveries to competitors

    Swatch Group controls the market; prices are going to go up a lot and they can as ETA is fully booked. They are increasing capacity a little too every year. Now that they are only supplying fully assembled movements with logo engraved rotors, prices will go up in the market. Customers need to book and pay in advance....wait for a long time before they get their products. I bet that ETA will rise prices too and minimum orders, charge more for special orders and just only supply higher grade movements, which will force a lot of the small to medium sized watch companies to use the brokers as they can't tie up so much cash for such a long time in advance. This will mean that they will buy from brokers at anywhere between 50 to 100% more than direct from ETA. Higher movement prices amounts to much higher watch prices and of course this means that Swatch can increase prices throughout their range of companies while holding competitors at bay. At the beginning of the automatic renaissance ETA as part of the Swatch Group was subsidised as they could not make a healthy profit; so in fact Swatch subsidised the whole Swiss watch industry. Now its pay back time. If a price on a movement increases by GBP 20.- one can expect the finished product to increase anywhere between GBP 150.- and 200.- when sold in the high street.

  22. #22
    Thomas Reid
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    Re: ETA will start reducing movement deliveries to competitors

    Cousins has a blurb for watchmakers on Sellita movements, saying that watchmaker's should be on the lookout for them. They also carry parts for them. So, it looks to me like some folks have been gearing up for this.

    Best wishes,
    Bob

  23. #23

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by rfrazier
    Cousins has a blurb for watchmakers on Sellita movements, saying that watchmaker's should be on the lookout for them. They also carry parts for them. So, it looks to me like some folks have been gearing up for this.

    Best wishes,
    Bob

    Many watchmakers knew this was coming they tried to do this years ago but they were stopped from doing it and forced them to give five years to enable watchmakers to plan ahead for it, Which is why the likes of Breitling and such came up with in house movements they simply had no choice :lol:

  24. #24
    Master pashmolean's Avatar
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    ETA will start reducing movement deliveries to competitors

    Like a previous poster, I'm glad this is happening and only wish it had happened sooner.

    I got into watches because I was (am) fascinated by the movements. The main reason I collected only vintage to start with was the variety of movement. I could have 10 watches all with very different movements.

    It got to a point a few years back when you could own a IWC, Omega, Breitling, Oris, Tag, Tudor, longines, ML, UN etc,etc and have the same movement in every watch! Step back 50 years and and most of those brands would have had totally different movements (generally speaking).

    I'm looking forward to more in-house Calibers, Omega's new movements ( with the new free-sprung balance) are lovely as is Breitling's stunning new Chronograph movement.

    I also really like the new Miyotas.

  25. #25

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Dibetu
    Swatch Group controls the market; prices are going to go up a lot and they can as ETA is fully booked. They are increasing capacity a little too every year. Now that they are only supplying fully assembled movements with logo engraved rotors, prices will go up in the market. Customers need to book and pay in advance....wait for a long time before they get their products. I bet that ETA will rise prices too and minimum orders, charge more for special orders and just only supply higher grade movements, which will force a lot of the small to medium sized watch companies to use the brokers as they can't tie up so much cash for such a long time in advance. This will mean that they will buy from brokers at anywhere between 50 to 100% more than direct from ETA. Higher movement prices amounts to much higher watch prices and of course this means that Swatch can increase prices throughout their range of companies while holding competitors at bay. At the beginning of the automatic renaissance ETA as part of the Swatch Group was subsidised as they could not make a healthy profit; so in fact Swatch subsidised the whole Swiss watch industry. Now its pay back time. If a price on a movement increases by GBP 20.- one can expect the finished product to increase anywhere between GBP 150.- and 200.- when sold in the high street.

    OK, that would sound about right to me. Most people are confused though.
    A post a few above this, I posted part of a letter from ETA, echoing part of your post, but looks like no one read it, or yours, as most seem to think ETA have cut off all supply.
    I actually don't think it will hurt the bottom line too much of the smaller companies as ETA would not deal with them anyway. Brokers will capitalize on this, more depending on the quantity of the order but I cant see them taking it too far, as there are alternatives and good ones too in the way of the A10 movement.
    The biggest effect was on companies like IWC, Brietling and CO. These are the companies that see so many watches that the bottom line figure is massive, and I am sure ETA will have actually done them a favor in the long run, as well as the general public too, in the way of choice as it forces these companies to either take a hit on profits which i doubt their willing to do, or make in-house.

  26. #26
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    Re: ETA will start reducing movement deliveries to competitors

    Totally agree, there are some good alternatives out there now. The ones you mentioned in the ETA letter are the Swiss products but there are also a few others in development in Germany and France. I would bet that in the case of Soprod and Sellita that the movements are of equal quality and consistency; but they do cost a little more that the ETA products. For some reason though a lot of people especially on the watch forums seem to think that ETA movements were something superior, which they are not and a lot of the boutique watch companies that cater to the WIS crowd shy away from anything that is not ETA. On the other hand there are many examples out there that are using these new movements for a few years now with success. (Tudor, Eterna, Tag Heuer)
    In the case of the very large classic customers like IWC I would think that ETA will continue as before; what we often seem to forget is that ETA also makes "in-house" movements for other customers like IWC for example and I don't think or have not read anywhere that they will discontinue to do so.

  27. #27

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Dibetu
    Totally agree, there are some good alternatives out there now. The ones you mentioned in the ETA letter are the Swiss products but there are also a few others in development in Germany and France. I would bet that in the case of Soprod and Sellita that the movements are of equal quality and consistency; but they do cost a little more that the ETA products. For some reason though a lot of people especially on the watch forums seem to think that ETA movements were something superior, which they are not and a lot of the boutique watch companies that cater to the WIS crowd shy away from anything that is not ETA. On the other hand there are many examples out there that are using these new movements for a few years now with success. (Tudor, Eterna, Tag Heuer)
    In the case of the very large classic customers like IWC I would think that ETA will continue as before; what we often seem to forget is that ETA also makes "in-house" movements for other customers like IWC for example and I don't think or have not read anywhere that they will discontinue to do so.

    I was under the impression that Sellita have Asian manufacturing as well, which could possibly put some off and Soprod are entirely Swiss and are hand assembled. Soprods do cost more and more than ETA, so you might start seeing them appear less than the Sellita due to cost in the beginning, but in the end it will be more Soprod A10's that are in the higher priced brands.
    I have one now, and they are certainly finished nicer than the ETA top grade and this one appears to run well within specs so far.

  28. #28

    Re: ETA will start reducing movement deliveries to competitors

    I think it would be better for the more expensive brands to go completley in house as it resolves all sorts of issues of supply and future avalability etc etc, This maybe why they have stopped producing the Emergency and possibly very soon the Aerospace and new chronospace.Unless of course they class as finished movements in which case supply should continue :lol:

  29. #29
    Master
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by sonyman
    I think it would be better for the more expensive brands to go completley in house as it resolves all sorts of issues of supply and future avalability etc etc, This maybe why they have stopped producing the Emergency and possibly very soon the Aerospace and new chronospace.Unless of course they class as finished movements in which case supply should continue :lol:

    ETA has always and will also continue to do so in the future: Produce so called " in-house" movements for anyone who wants one, providing the customer is willing to pay and order a certain amount.
    The customer buys the registered design of the movement and ETA manufactures to specification. They have the capability to do so in large quantities. But minimum orders are very large; so if its not in the thousands one would need to go to the likes of Renaud & Papi, Hublot or if its only tiny orders the likes of Paul Gerber or others who will build in smallest quantities. In-house movements are very rarely designed and produced in-house. Most use the help of specialist firms or contract them to produce. Of course in the marketing brochure its the brands own engineers and geniuses that have designed and produced it and of course on paper they have because they purchased and paid for it. The real designers are only ever mentioned if they are celebrities that will sell the watch better than the own brand, like Ludwig Oechslin for Ulisse Nardin for example.

  30. #30
    Grand Master markrlondon's Avatar
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    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by t20569cald
    Quote Originally Posted by markrlondon
    Quote Originally Posted by NikGixer750
    I thought this happened ages ago, well that they planned to do it
    It's been planned for years but it seems to me that, because the day of actual sales limits never seemed to arrive (until now), non-Swatch Group manufacturers seem to have become complacent. Perhaps they can switch over sourcing of movements more easily than I thought. We'll see what happens to prices.

    The plan was to stop supplying ebauches to 3rd parties, not complete movements.
    That is very interesting, thanks for posting the info.

    I was previously under the impression that the plan was to eventually cease supplying all movement to all non-Swatch Group companies. If the plan is to simply cease supplying ebauches then the situation is not so bad as it seemed, especially for the smaller players.

    Thanks again for the correction.

  31. #31

    Re: ETA will start reducing movement deliveries to competitors

    Quote Originally Posted by Dibetu
    Quote Originally Posted by sonyman
    I think it would be better for the more expensive brands to go completley in house as it resolves all sorts of issues of supply and future avalability etc etc, This maybe why they have stopped producing the Emergency and possibly very soon the Aerospace and new chronospace.Unless of course they class as finished movements in which case supply should continue :lol:

    ETA has always and will also continue to do so in the future: Produce so called " in-house" movements for anyone who wants one, providing the customer is willing to pay and order a certain amount.
    The customer buys the registered design of the movement and ETA manufactures to specification. They have the capability to do so in large quantities. But minimum orders are very large; so if its not in the thousands one would need to go to the likes of Renaud & Papi, Hublot or if its only tiny orders the likes of Paul Gerber or others who will build in smallest quantities. In-house movements are very rarely designed and produced in-house. Most use the help of specialist firms or contract them to produce. Of course in the marketing brochure its the brands own engineers and geniuses that have designed and produced it and of course on paper they have because they purchased and paid for it. The real designers are only ever mentioned if they are celebrities that will sell the watch better than the own brand, like Ludwig Oechslin for Ulisse Nardin for example.
    That about sums it up.

  32. #32

    Re: ETA will start reducing movement deliveries to competitors

    I reckon this might have less effect than people think/fear. ETA are a successful business doing what they do i.e. supplying movements to outsiders. What would they do with all their capacity if they were to just stop? The main change was when they stopped selling kits a few years ago. Apart from that, a few very small brands might get squeezed out.

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