40. time-keeper


The battle for the heart of the watch

INDUSTRY

October 2017


The battle for the heart of the watch

Positioning itself as an alternative to Nivarox as a supplier of regulating organs, Atokalpa intends to offer “supply security” in relation to its great rival. But how can this subsidiary of the Sandoz Family Foundation hold its own in such a difficult climate? Its managing director, Sébastien Jeanneret, responds.

T

o find Atokalpa which, together with Parmigiani Fleurier and Vaucher Manufacture, is part of the watchmaking “hub” of the Sandoz Family Foundation, you have to travel to Alle in the Ajoie region (Jura canton). Originally an independent family business producing micro-gears for watches before it was integrated into this extremely wide-spectrum industrial group, today it produces, on the one hand, wheels with special finishes (using diamond polishing, wire lapping, polishing with a wooden grinding wheel, snailing, sunray brushing, circular graining and smoothing down).

The battle for the heart of the watch

But more importantly, it produces oscillators, thereby positioning itself as one of the rare alternatives to the powerful Nivarox, a member of the Swatch Group, which has a virtual monopoly on the regulating organ and the watch industry’s key component par excellence, the balance spring.

“We produce around 200,000 oscillators a year,” says Sébastien Jeanneret, Atokalpa’s managing director. This has to be placed in the context of the estimated six million balance springs produced every year by the giant Nivarox which, according to diverse sources, occupies some 90% of the market (Editor’s note: since the Swatch Group provides no information about its subsidiary’s annual production, these estimates are to be treated with caution). Besides Atokalpa, other rare alternatives exist, such as Precision Engineering (a sister company of manufacture H. Moser & Cie in Schaffhausen), Soprod and Concepto. Otherwise, you have to look outside Switzerland and source your springs from Seiko or Citizen...

“The industry needs more choice in oscillators. It’s in a permanent state of uncertainty.”

The battle for the heart of the watch

Sellita also aims to produce regulating organs

Nevertheless, despite the currently very difficult economic conditions for subcontractors and for Sandoz’s watchmaking arm, Sébastien Jeanneret continues to believe in the need for a solid alternative to Nivarox. For the moment, that’s just wishful thinking. In 2016, its workforce fell from 150 to 115 as orders slumped against the backcloth of a gloomy business climate in the industry. So the first mission is to climb back up the slope.

“The industry needs more choice in oscillators,” underscores Sébastien Jeanneret. “It’s in a permanent state of uncertainty, given the prevarications of the Swatch Group about its willingness to supply movements and regulating organs to its customers.” In a recent interview in Le Temps (7 May 2017), Sellita’s managing director Miguel Garcia announced that he was “working on the matter” and was in the process of “learning this new line of business”, also with a view to gaining independence from Nivarox in the long term. Will we be witnessing the start of a new saga over oscillators similar to that over the supply of movements by ETA that has gripped the narrow world of watchmaking during the past decade?

The battle for the heart of the watch

Atokalpa’s prices remain higher than those of Nivarox, which has the advantage of its critical size and important economies of scale for this standard component, which it produces in huge volumes. Sébastien Jeanneret defends these prices: “We offer a much more personalised technical approach. Moreover, all our innovations are available to third parties, while for certain components Nivarox gives priority to the brands of its own group. We’re strongly developing production of silicon escapements to optimise the function of the balance spring. We’re working to achieve technological breakthroughs. One parameter needs improving: the return on investment of escapements, which is still very low, around 35%.”

Robotics or artisanship?

Battle is also set to continue on the average price of the regulating organ, which today is situated at around 30 francs at Jura-based Atokalpa. So how are things going for them this year, when certain encouraging signs are perceptible, although still weak for an industry that sometimes seems still to be ‘high’ on its past growth? “We’re beginning to breathe again, but we’re still below the 2015 level…”

Another potentially revolutionising factor is the introduction of robotics into the production processes of “standard” watch components (on this, read also our analysis of the Tissot Swissmatic). This is one point on which, Sébastien Jeanneret confides, he is working as a priority – even if, for a small structure like Atokalpa, salvation might first lie in small, bespoke series of 10 items which today can sell for 1,000 francs, notably for “concept watches”.

So, do you give priority to value or volume? Do you automate production, or promote artisanship? These are the questions tormenting the entire watchmaking industry, not just this player in the Jura.