Timex started making watches in its home town of Waterbury, Connecticut, in 1854 and continued production in the area for more than 100 years. More recently, like so many American brands, it moved manufacturing offshore to the Far East for high volume inexpensive pieces and to Switzerland for more prestigious timekeepers. This year Timex is firing up a production line in Connecticut as part of its 165th anniversary celebrations and is committing to make up to 500 watches per month in America. Could this be the shape of things to come? WatchPro spoke to Silvio Leonardi, senior vice president of Timex Global, to find out.
Timex can trace its history back to the town of Waterbury, Connecticut, when the company was born in 1854. 165 years later and America has lost its role as a significant watch manufacturing nation, and Timex produces pieces for volume brands in Asia while its luxury division manufactures in Switzerland.
This year Timex will bring a little bit of its manufacturing back to Connecticut, where it will assemble a new collection called American Documents from American and Swiss parts. Although the movements will be Swiss quartz, the rest of the watch is American-made from parts sourced from partners all over the country. Dials will carry the branding: “Made in America Swiss Mov’t”.
Leather straps are made with hides by craftsmen in Minnesota, and the watches use an “Aged Waterbury Brass” case back coin and crown insert that honors Timex’s original headquarters.
Silvio Leonardi, senior vice president of Timex Global, told WatchPro that the assembly line will be capable of making up to 500 watches per month. There will be roughly 1,500 available at launch and they are expected to be sold directly to consumers via the Timex website for $495. As part of the launch, Timex has worked with photographer Bryan Schutmaat to chronicle the people, culture and diverse landscapes of America, from the Northeast, through Texas, across the desert and into the Rocky Mountains, to demonstrate what makes our land truly exceptional. A downloadable package of the photography will be provided with the purchase of each American Documents watch.
While production of 500 watches in Connecticut is more of a symbolic move to highlight the history of making watches in America by Timex, it is part of a much bigger and highly significant story as the business adjusts to a world where Apple is outspending the entire global watch industry in research and development for its Apple Watch and younger customers are being won over by the shiny new technology for their wrists.
Mr Leonardi recognizes the dramatic upheaval taking place in the current market, and believes that producing mechanical watches in America is part of a strategy to make Timex’s history and consistent belief in the enduring value of analogue timepieces. What he will not do is commit Timex to taking Apple and its peers in the technology world head on. He points out the massive research and development budget at Apple — the corporation spends around $15 billion per year — and suggests that developing Apple Watch, alone, cost around the same amount as a full year’s sales for Swatch Group. “We made a strategic decision some years ago not to go into smartwatches. We will not compete directly with Apple and Samsung. How can you compete with a company that spends $8 billion developing the Apple Watch? That is the annual turnover of Swatch Group being spent creating a single product line,” Mr Leonardi says.
Instead, Timex will focus on making its analogue watches as attractive as possible to consumers that might never have worn a watch, are moving on from fitness trackers or smartwatches, or simply want something more stylish on their wrists. The philosophy at Timex is to treat watches as fashion accessories rather than timekeeping instruments, and certainly not microcomputers for the wrist. “The concept of analogue watches as timekeepers is dead,” says Mr Leonardi. “It is all about making watches as fashion accessories now. We have to focus on design details and storytelling,” he adds.
Main rivals Fossil Group and Movado are also focusing on making watches as fashion accessories, but they are hedging their bets by developing smartwatches and connected hybrids within many of their brands’ collections. At one point Fossil said it would stop making any more Michael Kors watches for men that could not talk to smartphones. The policy appears to have been quietly dropped, even though there are signs that some smartwatches from the likes of Emporio Armani, Fossil and Michael Kors are finding a market.
A report by retail analyst The NPD Group on the American watch market in 2018 concluded that sales of watches across analogue and smartwatches were up 13% in 2018, but the total value of traditional watches at all price points declined by almost 7% while smartwatch sales rose by 54% and now command 44% of the overall market. The market for watches priced at under $300 was down by more than 7% last year.
“The market is very challenging right now. We have to outperform our competitors while producing products that are new and better than ever before,” Mr Leonardi says.
While maintaining its focus on analogue watches, Timex aims to deliver ever-increasing bang for a customer’s buck. $500 for a watch that is assembled in America using American materials and Swiss quartz movements is a demonstration of the additional value for money the company is bringing to market today. “What you get for $500 today is of far higher value than in the past. These watches are very high quality with fantastic attention to detail,” Mr Leonardi promises.
The current Timex Marlin range is another example. For just $250 customers can get their hands on a Marlin Automatic with a clear case back exposing the mechanical movement within. The company is seeing rising demand for mechanical movements so more of its watches are switching from quartz to automatics or hand-wound pieces.
Being able to see a mechanical movement through the back of a watch is part of a wider strategy to help Timex’s retailers attract customers into their brick and mortar stores. “The retail environment is a challenge for everybody right now, and most challenging to small independent brick and mortar shops,” suggests Mr Leonardi.
“Interesting products are vital to attract people into stores.” The average selling price is also higher, with quartz Waterbury chronographs selling for $139 while Marlin automatics and hand-wound watches cost $200 to $250.
Changing customer demand is not restricted to the watches they buy, it also extends to how and where they want to shop. Timex’s biggest retail point of sale is its own website Timex.com, which Mr Leonardi says is growing at double digit rates year after year. Independent and jeweler chains along with department stores saw sales decline in 2018 even through average transaction values across these retailers rose by 8%, NPD says.
Mr Leonardi concedes that Timex.com competes with the company’s network of hundreds of retail partners, but does its best to maintain a level playing field so its partners can compete. The company divides its product lines into very high volume collections that fly through giants like Amazon — almost always at heavily discounted prices — and more selective lines that it sells through Timex.com and its brick and mortar partners.
These watches are less likely to be discounted so customers cannot play one retailer off against another. “What we always promise is to be as transparent and straightforward as possible with our retail partners, but we are in a revolution right now and there are going to be winners and losers. We have to appeal to younger customers and they are in control of how they spend their money,” he describes.
Timex is also a diversified group today. As well as making watches under its own name, Timex Global has a global license to make watches for fashion brand Ted Baker and is a distributor for Timberland and Ingersoll watches in North America. Sequel is a wholly owned subsidiary of Timex, and holds the license to make watches for Guess and Gc, while Timex Group Luxury Division designs and distributes Swiss-made watches for Versace, Versus and Salvatore Ferragamo.