Junghan’s CEO, Matthias Stotz, thinks the German brand is bouncing back from a catastrophic mistake in 1976 when it stopped making mechanical watches. The company now produces its best selling Max Bill and Meister collections with three different options for movements: quartz, mechanical and radio-controlled. Will the strategy return Junghans to its glory years of the 1950s, when it was the world’s third largest maker of chronometers, behind only Rolex and Omega? WatchPro’s Rob Corder sat down with Mr Stotz to find out.
WatchPro: Most retailers around the world these days want to stock fewer blockbuster watch brands, and this is putting pressure on the likes of Junghans. What is your pitch today to convince retailers — those you currently work with, and those you would like to — that Junghans will work for them?
Matthias Stotz: The retailer is the most important channel. In Germany we used to have eight stores, but we have withdrawn from that business. Our brand has a great history, and here in Germany we have a great story that we also need to speak about internationally. Junghans has a history as one of the biggest watch and clock companies in the world.
To help us demonstrate this history, we have spent the past three years renovating our Terrace Building which traces the history of clock and watchmaking here in the Black Forest right back to the mid-19th century when they were using wood to make clock movements by hand.
At the end of the 19th century, America was starting to mass produce products, and Junghans realised that it also had to change the way it made clocks and watches into an industrialised process.
You can then look at how we developed from mechanical to quartz and radio-controlled watches, always striving for greater accuracy, and at the same time miniaturising what we have done in clocks so that our movements can be used in pocket watches and then wristwatches.
We can show all of these inventions and stories now that we have a great museum. The museum shows that we are not just a great marketing company, we are an amazing watch brand.
The history and these stories are part of the reason we should be welcomed by retail partners, but of course we also need to make successful products today. During our lifetime we have made great watches like Meister and Max Bill, and these are still attractive today.
Junghans is known today for elegant and accurate watches, but in the nineties, it was more known for radio-controlled watches.
In the past, Junghans was a very well-known brand around the world. For example, in 1961 we were exporting to more than 100 countries, we had 6000 workers in 104 buildings. The company was really great.
Today we are much smaller. With all of the developments in the quartz watches era in the 1970s, Junghans was one of the companies that made a mistake in its development because we always wanted to make the most accurate watches, which were at the time quartz. This led us to dropping all mechanical watches in 1976.
That was a long time ago, and Junghans continued to focus on the most accurate timekeepers. We followed quartz with radio-controlled watches and for me, Junghans did not pay enough attention to the rebirth of mechanical watches in the 1980s.
In 1990, we created the first Swiss-made radio-controlled wristwatches, which put us in the lead with that technology, but we did not have any mechanical watches. That lost us the opportunity to rebuild the business into one of the biggest in the world in the 1990s and 2000s.
I joined Junghans in 2007, and since then we have changed our image to become known again as a classical watchmaker, and that is our position today. If you see our watches you will feel they have great tradition and design; they have incredible history and a fantastic price. This is the reason why I hope the trade and its customers will explore the background of Junghans.
WatchPro: Do you think Junghans will develop its own in-house movement?
Matthias Stotz: When I started in 2007, my first dream was to develop our own hand wound movement, but for Junghans it was a big jump sideways from radio-controlled to that sort of watchmaking. The product that you are seeing today is the product of many years work in development, design and testing.
WatchPro: You said you wanted to return to classical watchmaking when you joined in 2007, but going back to radio-controlled watches feels like a step in the other direction.
Matthias Stotz: No, for me it is a step forward. When I started in 2007, Junghans had two types of watches and two types of customers. There were radio-controlled watches that were the most accurate in the world, and mechanical watches like Meister and Max Bill.
The radio-controlled watches had a different face, different appearance and different customers to our mechanical watches. For me that was a problem. It was like when you are skiing and your legs go in different directions. What will happen? You will fall on your face.
It was very clear that we needed to sharpen our brand image and to make beautiful watches. If we do a Mega watches in a design that is more classical [like a Meister or Max Bill] that is a great move forward because we will be focusing on our energy in one direction.
WatchPro: Now that we have had a couple of years with the smartwatch sector developing and maturing, would you say it is becoming more of a threat to watchmakers like Junghans?
Matthias Stotz: We feel the pressure not as strongly as the fashion brands, some of them are getting into trouble and could disappear. The entry price for smartwatches is very low already, and competes with these fashion brands. The technology companies have enormous resources to control that part of the market.
For real watchmakers like Junghans, people expect a real face, something valuable, an investment that will last for many years. Smartwatches are like mobile phones, you know you are going to want a new one in two years’ time. A watch, for me, is something that brings pleasure when you look at that.
When I look at Apple Watches, I see only a black screen. But if I look around a room of people with real watches, I can tell a little bit about people’s style and personality. A watch is not a necessity, it is a statement of your individuality.
We put feeling into our watches so that people buy them to love them. I don’t think you get that with an electronic device.
WatchPro: How much does Junghans follow a classical German style of watchmaking that is unique to this country, and different to Swiss or Japanese brands?
Matthias Stotz: We are Junghans and want to maintain and develop our own identity. If you look at the Meister and Max Bill looks, you see designs that can be traced back to 1951. We take references from the 1950s and apply modern watchmaking to bring it up-to-date. We look inside our own museum for inspiration, and then create fresh designs.
The value of our antique watches has been rising in the past few years, which suggests there is demand for these classic designs. It also means we are moving at a pace that is comfortable to our customers.
WatchPro: When you look at Junghans is today, how does that compare to where you hoped you would take the company when you took over 10 years ago, and how do you expect the company to evolve over the next 10 years?
Matthias Stotz: When I started in 2007, we were in a phase where we needed to think about our identity. We stopped selling imported watches and decided to only sell watches that we assembled here Schramberg so that everything would be made in Germany. We would be smaller, but everything would be assembled here. In 2011, our anniversary year, we had a great chance again to write about the brand and take a closer look at its history. The result is that the company turnver has doubled in size in the past 10 years. The share of mechanical watches was very small 10 years ago, but today it is more than half our production. There is a good balance between mechanical, quartz and radio-controlled watches today.
We want to continue to grow over the next 10 years. We export to 28 countries today. Looking back to 1960, we exported to over 100 countries, and I would like to increase to add many more countries. In the 1990s, when we made almost exclusively radio-controlled watches, we lost all the customers and countries that liked mechanical watches, which was a mistake that we will not make again.
WatchPro: Would you like production to increase significantly from where it is now?
Matthias Stotz: Of course. We have many countries where we do not operate today, and we want to grow. We make beautiful watches, we have reachable prices, so I do not know why we will not sell more watches.
WatchPro: How much attention to you pay to the secondary market, and how it affects prices and demand for new watches? Do you see these online marketplaces as a good guide to whether you have created the right products in the right quantities so that supply does not exceed demand?
Matthias Stotz: Compared to other watchmakers, we do not have so many watches on these platforms. But I understand the question perfectly and I agree that if make a bad decision on supplying our retailers and distributors with too much of the wrong product, then they will appear on these platforms.
But the online marketplaces do not take the trouble to explain watches and their stories to customers. This is what the [authorised dealer] trade has to do, or it will die. They have to handle customers and fulfil their requirements. If all they want to do is sit at home and click, then we do not need shops.
Looking at older Junghans watches, I see that 1972 Pilot watches are increasing, and I am happy about that because this gives customers and owners of our watches a good feeling. We need to take care with our new watches that we do not oversupply, because this will affect the prices.
One reason that I do not think we will over-supply is that, unlike the bigger groups, we are not big enough to push our distributors to take larger quantities of watches than they want. We always have good relationships with our distributors, and we do not over-challenge them to buy too much.
WatchPro: Might the museum have an effect on prices for vintage models because people can see the whole history? If demand for vintage causes prices to rise, that is likely to stimulate demand for new watches as well.
Matthias Stotz: I think so. The museum will have a lot of positive effects. You can see a lot of Facebook groups that are actively following what we are doing and are interested in it.
Are you actively acquiring historic pieces for the museum?
We have more than 6000 pieces here, so it is a big store. If a great clock or watch comes up and it is reasonable, then we would consider it.
Do you know how many watches and clocks we have produced in the past 150 years? 500 million. That is a lot of watches and clocks. Even in the 1960s, Junghans was the third biggest manufacturer of chronometers after Rolex and Omega.
Will you continue to use ETA movements?
Yes. We have a good relationship with the Hayek family, and ETA gives us great movements for our price range.