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“The watch industry is about to enter one of its greatest...
Point of View

“The watch industry is about to enter one of its greatest challenges” (2/2)

Thursday, 17 November 2011
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Fabrice Eschmann
Freelance journalist

“Don't believe all the quotes you read online!”

“In life as in watchmaking, it takes many encounters to make a story.”

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6 min read

At 44, Antonio Calce has taken a stake in the capital of Montres Corum Sàrl which has been under his stewardship since 2007. This is a strong signal for the markets as the Swiss watch sector prepares to face important industrial challenges. The young CEO talks about why he decided to become a shareholder, and gives his expert view of where the branch is heading. (Part 2)

Corum has acquired Les Artisans horlogers, a movement developer in Le Locle. Is this another step towards vertical integration?

Antonio Calce: We didn’t take over the bankruptcy assets. We hired the founder, Laurent Besse, and bought a number of files, plans and tools that concerned us as the starting point for our own development studio. This opportunity arose for us to take a giant step forward, and move ahead with vertical integration faster than planned.

What will the next stage be?

Six months ago, I had a five-year plan that I thought was watertight. Now Swatch Group’s decision to focus production on its own brands, a decision I respect, means we must review our choices. Everything happens so fast! By ending deliveries of regulating mechanisms, Swatch Group is forcing us to add another string to our bow.

Was it a mistake not to have thought about this earlier?

Absolutely, although if we consider the situation in the market in the 1990s, nobody apart from Swatch Group had integrated production. Richemont was barely in its infancy, Cartier only did quartz… Very few people realised the importance of what is now a priority. Just ten years ago, watchmakers were playing Lego! It’s amazing how fast the situation has changed. I think we warrant some indulgence; we’re facing up to a challenge that takes more than money.

Do Swatch Group supplies concern all your products?

No. One of our flagship collections, Corum Bridges, isn’t exposed at all.

What's the next stage in Corum's development?

We will have to forge alliances and develop common solutions that will show horological patriotism. Ideas for European supplies are in the pipeline. We’ll also be taking on new staff to glue balance springs and make balance wheels. The aim isn’t to manufacture balance springs but to bring the regulating mechanism, the entire movement in fact, under our control.

What exactly would these alliances entail?

There are companies making balance springs in Germany. This would involve adapting structures to take delivery of parts, inspect them, etc.

Does "alliance" mean taking a stake in suppliers' capital?

Yes, but not always. It can also mean placing joint orders or setting up joint resources.

The hunting season is open!

And everyone has their sights trained on the little there is to hunt! But were a company to come onto the market, Corum couldn’t integrate it all by itself. Volume and profitability need to be considered. Also, doubling production isn’t necessarily a goal. Instead we should be looking, with partners, to secure those segments that are a cause for concern. Which leads me to think that movement-makers’ business model, like that of outside design studios, has a limited lifespan; all brands, once they have reached a certain size, start integrating, and not just to secure production. It’s a question of credibility too. There comes a time when you have to father the child yourself, so to speak. A brand that doesn’t have its own identity can’t last.

Corum has plans to extend its facilities in La Chaux-de-Fonds at a cost of 15 million Swiss Francs. Is this still on the cards?

Yes. The plans are ready. However, even though Corum is in good health, we can’t embark on a project this size when the macroeconomic situation is anything but serene. As CEO and minority shareholder, I can’t take that risk. For the moment, staff are squashing up. Obviously though, I can’t wait another two years to speed up integration.

What's your forecast for growth at Corum in 2012?

We’re fairly optimistic, given the high growth potential in some of our markets. In Italy, for example, we doubled revenues in 2011.

Corum is sold at 500 points of sale in 80 countries. There are four Corum stores and you have subsidiaries in North America, South America and Germany. How will this network evolve?

We just moved our American subsidiary from Irvine, near Los Angeles, to Miami where it will open in November with new management. It’s a driving force, a “new generation” subsidiary that employs fifteen people.

How important is the American market?

If we’re talking revenues, not that important. We have around 50 points of sale. But we are very pleased with results over the past five years and the warm reception our products have enjoyed. Robb Report Magazine recently singled out the Golden Bridge for its Best of the Best Award. We’re meticulously rebuilding the brand with our Admiral’s Cup and Corum Bridges flagships. We’ve put together a network of targeted retailers for the latter collection, fifteen of which only carry the Ti-Bridge and the Golden Bridge.

What about China?

We entered the Chinese market two years ago, where we now have around fifteen points of sale. Ideally, we’d like to increase this to forty. China is a very important market: not for making money – the margins are poor – but for drawing attention to the brand. It’s vital for a brand to have a good image in China. Some points of sale in Italy and the US depend on how the brand is perceived in China. In Rome, tourists account for 80% of sales.

What percentage of your sales are in China?

In China itself, not much, but the Far East accounts for more than 50% of our sales.

China has been something of an idyll for the luxury industry, but with its economy forecast to slow, is this about to change?

I’m confident. Corum hasn’t yet reached maturity in China. Our growth isn’t founded solely on growth in the economy but also on increased awareness of the brand. The Golden Bridge, for example, really sets us apart. We can’t keep pace…

Article published in BIPH

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