ndreas Felsl and Jonas Nydegger have long been active both on the supply side of the watch industry (via the K1) and on the product side (via the brand Horage, which recently launched a tourbillon model at CHF 6,990 excluding VAT). In a context troubled by the pandemic, they explain that they are now looking to “help independent brands to create their own turnkey movement division.”
This is the raison d’être of a new R&D platform called THE Plus. Andreas Felsl: “More than ever, watchmakers need a business model that combines low inventories and high flexibility. We can take advantage of the modular architecture of our movements, like the K1, which can be offered in 18 different versions, with silicon escapement and 65-hour power reserve.” Around 8,000 kits of the K1 movement have been produced to date – enough to provide an understanding of the metrics behind smaller scale industrial production cycles.
“More than ever, watchmakers need an operating model that combines low inventory, high innovation and flexibility.”
Reducing development costs
THE Plus now wants to take this approach further by offering not only the sale of calibres as such, but also the provision of intellectual property to establish an internal production line. “Today, a modern watch brand that wants to appeal in the CHF 2,000-4,000 range must offer something different from a standard calibre. But if a single brand wants to develop a movement industrially from scratch, it will take at least seven years, at a total cost of CHF 8 to 20 million. This is the equation we are tackling with THE Plus.”
- The 18 variations of the K1 modular movement
The programme set up by the team of THE Plus proposes setting up a movement division over a period of three to five years. “We can’t compete on production volumes, but we can help brands become more independent and innovative,” says Andreas Felsl. “We help them to become a manufacturer of movements to serve the specific needs of their brand.”
The service package includes an entry fee and then a monthly fee based on the duration of the project, the type of movement and the degree of exclusivity. This process is carried out using THE Plus’s existing supplier network and assembly structure. The implementation is calibrated to the needs of the client brand. Andreas Felsl adds: “It’s like investing in your own movement, but with a known result and an already operational infrastructure. The risk is therefore low, as the heavy R&D costs have already been borne by THE Plus over the last 12 years via the K1, K2 and Tourbillon movements.”
“The heavy R&D costs have already been borne by THE Plus over the last 12 years through the K1, K2 and Tourbillon movements.”
The project was born in the midst of a pandemic, which has completely reshuffled the cards of watchmaking production. While this troubled time is doing nothing to encourage investment, it at least has the merit of forcing all brands to rethink their operating methods. “In the current situation, we need to think about new business models to keep the industry alive,” says the entrepreneur.
- Example monthly fee calculation for the implementation of custom movement production, shared between eight partners over five years.
With the sharp drop in volumes and the growing desire of consumers to know exactly what they have in their hands, in a more mature market, Andreas Felsl is convinced that the future lies in original and authentic movements. “This situation does not necessarily benefit the biggest brands, which have heavily commoditised their movement portfolio. On the other hand, smaller brands can no longer afford to invest as they used to. Our proposal uses a mix of internal and external expertise in order to acquire horological credibility at a controlled cost.”
In fact, the watch industry is in a delicate position today: it must succeed in maintaining or even increasing innovation if it is to attract new customers in a stunted market, while at the same time managing sharply declining revenues. “We are targeting existing brands that want to switch away from standard movements to more elaborate in-house movements, and market this transition in a credible way,” says Andreas Felsl. “Uncertainty is a poison for any industry. We are proposing a way to put an end to this uncertainty.”