The Luxury Report 2016: Ronda CEO Erich Mosset interview

 

Quartz movement manufacturer Ronda announced at Baselworld 2016 that it had developed a new mechanical movement for the first time since the 1980s. The Luxury Report editor James Buttery talks to Ronda chief executive officer Erich Mosset about the CHF 25m project.

Whatever your opinion on Swatch Group’s decision to restrict the supply of its mechanical ETA movements, it would be difficult to argue against the fact that it has prompted the longest sustained period of investment in manufacturing that the Swiss watch industry has seen since the golden age of the wristwatch.

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Not only have watch brands been obliged to invest tens of millions of Swiss Francs into new manufacturing facilities to safeguard their supply of movements, but genuine competitors to ETA have emerged as a result.

Sellita was once an out-sourced assembly house for ETA movements, piecing together ETA movements and selling them on. Following Swatch Group’s announcement, the business changed direction and began producing its own movement (its SW200 is based on ETA’s 2824-2, the patent of which has long-since expired). With the same dimensions as the 2824-2 – the most commonly used movement in the industry – watch brands were presented with a real choice of movement supplier.

Other manufacturers such as Festina Group-owned Soprod, Fossil-owned STP and Vaucher Manufacture have since burst onto the scene and increased the options available to watch brands at all price points.

Now Ronda – for the past 25 years a producer of solely quartz movements – has entered the fray with its new R150 mechanical automatic movement. When I sat down with second generation chief executive Erich Mosset (his father William founded the company in 1946) at Baselworld, he appears uncomfortable with my brief summary of the situation.

“We were approached by customers over at least the last 15 years,” he explains. “People have really almost begged me to do something like this. You used the words ‘go back into mechanical’, we haven’t done anything mechanical in the last 20 or 30 years. We have had to start again.”

Interchangeable

Ronda’s new movement is an 11.5 ligne diameter movement and as such interchangeable with the most popular ‘tractor’ movements on the market, namely ETA’s 2824-2 and Sellita’s SW200.

“We are a bit slimmer than the competition, we are 4.4mm instead of 4.6mm. 40 hours power reserve, so we’re a little slimmer and still have a longer power reserve [the ETA has a stated power reserve of 38 hours]. But it’s made for the volume market, the product is one thing, but at least as important is the fact that Ronda comes in [to the market] because we are a third player in this game in Switzerland. For us it’s a beginning, it’s only the first step, but it’s the most important step because it’s the biggest.”

Equipment upgrades at Ronda’s Lausen factory now mean that certain pieces of machinery can be used to produce components for both quartz and mechanical movements, meaning that Ronda did not have to start with an entirely blank canvas, but that’s not to say the project hasn’t required huge investment, Mosset estimates some CHF 25m (£18m) has been poured into it.

“We are competing with the big groups like Swatch Group and the Japanese. We’re a dynamic company but we have limited resources, we cannot just build structures because then we’re not competitive. We’ve built this quartz business; we had to get the market and get a good, solid position in quartz, so now we will create a second line in mechanical.”

History

That core business began life as a manufacturer of mechanical movements but by the 1970s Ronda had responded to the quartz crisis by moving into the production of quartz movements. Ten years later the company had moved away from mechanical almost entirely.

“At the end of the 1980s – when I started working at the company – we had one, eleven-and-a-half [ligne]calibre with a small rotor that was not the best design because it was quite dated. Then at the beginning of the 1990s we had had the quartz price war with the Japanese – Citizen and Seiko – which brought down all the prices in the Far East and put entire watch manufacturers under pressure. Comparable companies at the time like PUW (Pforzheimer Uhrwerke) and France Ebauche, they disappeared; ISA also had problems. It was an exercise in survival at that time. We had to reorganise because our father died in 1985, so I really took over responsibility at the end of the 1980s.”

Mosset looked to the basic processes so vital in any business, but even more so in a business that deals in huge volumes. Today Ronda produces 20 million quartz movements every year so any error, shortcoming or inefficiency is not committed once, but 20 million times in single year.

By the millennium, Ronda had a comprehensive array of basic quartz calibres and turned its attention to producing new, affordable quartz chronograph movements.

“We had a very modular system, a platform on which we could build alarm watches, second timezone and all these chronos with different indications such as big date, two eye, three eye. This was variety that the other [companies] didn’t have and so became a big success.”

Over the years Mosset kept a weather eye on developments in the mechanical sector whilst incrementally upgrading the quality of Ronda’s manufacturing facilities, even developing its own linear CNC machines.

“The challenge in mechanical is obviously quality but the other thing for our market is the positioning, simply speaking, the price. I had several people, really important guys, telling me a few years back, ‘I can buy 50,000 mechanical calibres from you at the cost of CHF 120 (£84)’, ok sounds good, but we never wanted to go into the market because these were the boom times. When you create a movement it has to have a life cycle of at least 20 years and the boom is not going to keep going for decades, that’s why we’ve always said forget about the grey market prices, we have to be competitive on a level with people like ETA.”

Rather than take short term advantage of exaggerated boom years prices, Mosset looked to develop a solid, sustainable business, starting from scratch with Ronda’s own designs and carefully selected machinery. As such, Ronda has been able to develop its movement for “60-something francs” a comparable price to ETA and Sellita’s movements.

“At the press conference there were a few people astonished by this, it’s no use for us to go into the market between CHF 100 and CHF 200 (£71-£142). We want to be in the market and for that we need the volumes, then we can make a business out of it.”

Lessons

The company has learned a great deal so far from the ‘project’. Mosset explains that despite the availability of excellent computer modelling software there is no substitute for actually building a watch from physical components and observing how they interact.

“We have produced the first 1,000 pieces and we’re getting the assembly line in motion, so our learning curve is quite steep but that’s the challenge of mass manufacturing. On the luxury side you can have some super watchmakers who can make the biggest complications, on our side you need to have the definitions and the processes under control.”

Nothing will shake Mosset’s studious approach to the ‘mechanical project’, he is in no rush to sell huge numbers and plans to begin making the first shipments at the beginning of 2017, starting with a few tens of thousands of units annually.

“The main thing is not to sell as many as we can as soon as we can, we want to get into the market and ensure the quality and the processes. Obviously our goal years from now is to sell a few hundred thousand pieces.”

While Ronda is in rude health with a world-recognised name in the production of quartz movements and a new line in mechanical diversification, Mosset is concerned about the state of the Swiss watch industry and its ability to react to future developments.

“It’s not just the money, you need the industrial base,” he explains. “The Japanese have it, the big groups have it, Rolex has it. But outside, independent manufacturers? It’s a problem of the Swiss watch industry, it’s moved up and up and up in terms of price, more luxury, small quantities. Beautiful watches, but at the end of the day you need the industrial base to be competitive at certain quantities. Otherwise you get super specialists at single items, but then you’re not going to be competitive at volume.”

Given that Mosset has been able to expertly navigate Ronda through the fallout of the quartz crisis and emerge on the other side with an incredibly successful, sure-footed business, it’s probably worth taking note if he identifies a problem.

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