At 76, Walter von Känel still rules Longines with an iron hand.
This colourful and charismatic former Swiss army colonel is affable, but
firm. “The Boss”, as his troops call him, is a veteran of many battles and has
succeeded in making Longines a veritable “war machine” in an affordable
price segment often neglected by the upper echelons of Haute Horlogerie.
Today, Longines is on the way to achieving a turnover of 2 billion.
Who gives the orders?
“When I started at Longines in 1969, the watchword
was: ‘technology gives the orders, the market follows’.
It took us a while to reverse this attitude.
Moreover, up to 1988, Longines was a ‘manufacture’ (although
there are as many definitions of ‘manufacture’
as there are pages in the Bible!), producing in-house
cases and movements, including chronographs, but
no dials or hands.
When SMH (the future Swatch Group) was created,
they conducted a study and took the decision to stop
manufacturing movements in-house and work solely
with ETA movements. Mr. Hayek Sr. had decided to make
a clear distinction between the brands, the movement
manufacturers and the services, such as timing (see our article about Swiss Timing).
And let me tell you, I don’t regret it, even if it was frustrating
at first. So, on 3 February 1988, I had to inform
the troops that we were stopping manufacturing
movements and were delegating that to ETA.
Today, we’re fortunate enough to have very high-quality
product development partnerships with our brothers-
in-arms at ETA. So we succeeded in changing the
mindset at Longines and since then, it’s the market
that gives the orders, and the technology follows!”
The mission: occupy a territory
“In 1984, Nicolas Hayek Sr. entrusted one sole and
unique mission to me: ‘Walter, you’re going to be
number one in your price range.’ It was clear and simple
– a colonel who receives an order as simple as that
needs nothing more!
As far as Swiss watch export statistics are concerned,
we can measure ourselves against the rest of the field,
and let me tell you, I’m perfectly happy in my price
bracket! We account for more than one-third of Swiss
exports in the 1,000 to 3,000-franc recommended price
range. I generate two-thirds of my sales with 50 references
(in terms of cases).
Last year we produced 1.5 million watches, 80% of them
mechanical, divided 50-50 between men’s and ladies’
models and with special emphasis on the three-hand
and calendar models. Backed up by the industrial strike
force of Swatch Group, Nick Hayek recently announced
we were heading for the two-billion-franc turnover mark.
It’s a high-volume market. People are interested, that
stands to reason… So we’ve created a ‘reception committee’
for those who come along.”
Reconnoitring in
an electronic minefield
“When I first started, in 1969, I was sent to the United
States as an intern. After that, I was assigned to cover
Japan just when quartz was developing. Watchmaking
was changing, we had to react.
As regards electronic watches, in terms of batteryrun
movements we used the Dynotron, and then the
Mosaba, which was a tuning fork watch, in response to
the Accutron by Bulova.
Sales pressure prompted the Longines team to venture
into analogue quartz territory and quite rightly. In
1969, we launched the Ultra-Quartz, then we began to
buy quartz movements from EM-Marin and then ETA.
Quartz dominated for a time, but today it accounts for
only 20% of our production.
We launched our own counter-offensive and were precursors
with the V.H.P., which performed better than
the traditional quartz – and which we re-issued just
last year.”
Basic infantry division
“As regards mechanical watches, we had a handful
of very powerful in-house movements, which were
transferred to ETA. That soon gave us the advantage
of being able to invest strongly in brand recognition
and the end product, unlike other brands.
And thanks to our excellent relationship with ETA, we
developed two movements specifically for the highvolume
market, one men’s and one ladies’. They’re our
basic infantry division!
For the men’s watch movement, we started with the
ETA 2892A2, which at Longines became the A31. Its performance
reflects the evolution in component production.
For example, in the Record collection, the A31
exists in a silicon and COSC version.
The ladies’ movement accounts for around 50% of our
automatic watches. Historically, it was the ETA 2000/1,
a small round-diameter calibre (diameter 19.4mm,
thickness 3.60mm) that allowed us, combined with
other improvements, to make 25.5mm watches, which
we improved by making it 0.5mm thicker. That became
our A20 and it’s a very important product.
All that is done in dedicated ETA workshops on our
own premises: 250 people work there.”
An industrial war machine
“The degree of automation of our production lines
depends on the component. If you’re talking about
high-volume movements, it’s incredible how many
ETA is capable of producing. The model most emblematic
of this industrial strength has to be the Sistem51
by Swatch. And I’m very glad that the group is helping
automate or mechanise calibre production.
Even so, for a calibre as sensitive as the ladies’ model,
I’m impressed by the production lines. For example,
you don’t get the glitches you used to see in the oiling
operations, which were caused by human error.
And then it’s impressive to see how the case manufacturers
have evolved. I do a tour of our suppliers every
month. The performance of the new generation of the
CNC machines that do 20-30 operations is beyond belief.
Hand production is also largely automated now,
but much less so the dials. And where machines haven’t
been able to replace the human hand is in polishing, especially
the cases and bracelets.”
The battleground of customer service
“Given the volumes we produce, I’m very committed
to customer service. It’s very highly developed
at Longines. I always say that’s the best publicity we
could have, and the cheapest. Today, news of bad customer
service gets around; on social media that kind
of information spreads like wildfire.
All the customer service on the basic calibres is done
either in our workshops at St-Imier or directly in the 37
branches of the Swatch Group all over the world. The level
after that is the retailers. The best ones are approved
for customer service and can request components.
We also have a special Heritage workshop where we do
all the customer service for watches produced during
Longines’ in-house manufacture period, up to 1988.
The Swatch Group has made a great leap forward in customer
service in terms of quality and effectiveness, including
making reception premises, more welcoming.
But the public enemy number one of watches today is
magnetism. I’m certain we’re going to make a big hit
with the VHP that’s highly resistant to magnetism. The
watch will stop if you enter a magnetic zone and automatically
catches up the lost time.”
Blasting the parallel market
“As for e-commerce, we’ve just opened our own site
in China, after the one in the USA. We also sell at the
same prices, without discount, on e-commerce platforms.
We started last year with TMall, a subsidiary of
Alibaba. If it’s not the official price, we don’t sell!
In Beijing, I met the director of TMall, which also sells
on the parallel market. But we’re fighting the parallel
market, that’s my personal war! I recently blasted parallel
market players in Italy, Germany and Austria. And
in terms of volume we’re not talking peanuts, let me
tell you. We’re also putting pressure on TMall to curb
the parallel market.
Since 1867, all our watches have had a personalised
reference number on the back of the case, so we have
traceability throughout our entire network. I know
immediately who I sold each model to. Our subsidiaries
have the obligation of recording the reference
numbers of watches they sell to retailers. We have to
cut off supplies to retailers who feed those markets!
We recently seized a huge haul of watches on the parallel
market thanks to the Chinese customs. We have
very good relations with them, which means we can
trace back the supply lines. We do the same with counterfeit
watches. We produce huge quantities and unfortunately,
that attracts parallel marketeers or counterfeiters.
It’s the price of success.”
“We’ve been present in China for a century and a half. It’s
a significant market for us and one that’s still growing.
To balance our markets, we have to make more effort to
promote and distribute our watches in Europe and the
United States. But they’re very competitive markets.
Luckily, we haven’t had any problems of surplus stocks.
Every morning, I receive the lists of sales by reference
and country. I can still look myself in the face!”
“My first Baselworld was in 1969. In the Swatch Group,
we decided that the Baselworld question should be
decided by HQ. And we’re obedient soldiers who do
as we’re told.
What counts for us at Baselword is the retailers. And
it’s a pity that the larger retailers have to come to
Switzerland twice because of the different dates of the
Geneva and Basel trade fairs. Having said that, we’ve
always done well at Basel, but I never show a watch
there that isn’t already in production. I have to deliver
the same year... Basel is also the first litmus test to see
whether what we’ve put in the pipeline is relevant.”
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