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HODINKEE Podcasts
The Business of Watches [021] La Joux-Perret CEO Jean-Claude Eggen
01:00:38
The head of the Swiss movement maker explains the economics of producing the engines that drive timepieces, whether mechanical or (solar) quartz. Plus, everything you need to know about Tad Kozh, a new initiative to preserve and develop the metier d'art in fine watchmaking.
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- [00:01]
A
Welcome to the business of Watches, the Hodinkee podcast, where horology meets high finance. And we go behind the scenes of the watch industry to find the economic drivers making things tick. I'm your host, Andy Hoffman. This week we're back in Le chaux de fall to get to the real heart of watchmaking on an industrial scale. Movement maker La Joux Poiret is growing fast from less than 10,000 movements a little more than half a decade ago to about 200,000 per year now. The company, controlled by Japan Citizen Group, has even attracted investment from lvmh, which has acquired a minority equity stake following the development of a solar quartz movement that's now driving Tag Heuer's revive Formula One watches and seen on F1 racetracks around the world. We sit down with Jean Claude Eggen, the La Jour Parade chief executive officer. He gives us a lowdown on what it takes to make watch movements, to supply the Swiss industry and beyond. But first we get personal with a brand new non profit organization launched in Switzerland to develop watch industry savoir faire and miche des arts for young watchmakers. It's called Tadcos. Now there's a competition to win specialized and costly watchmaking machines as well as time and instruction with masters to learn how to use them. There's also a series of limited edition brand collaborations celebrating these specialized skills. Baudouin Vaness of the French language podcast Tourbillon Watch tells us why he started Tadcos, how it works and the personal connection that gives the initiative its name. Van Ess of Tourbillon Watch. And now Tadcos, a new nonprofit watchmaking skills development organization here in Switzerland. Welcome to the business of watches.
- [02:25]
B
Thank you, Andy. Thanks for having me.
- [02:27]
A
Excellent. So Tad Koase is something that has just launched here. We're going to talk about all about what it is and how it works. But let's talk about the name Tad Koase. What, what does that mean?
- [02:41]
B
What does it mean exactly? So it means something. So the word come from a French region name Brittany and it means grandfather. So we decided to pick the name because first it's also related to my roots. My mom, born there in Brittany, grew up there and I spent most of my holidays at my grandparents.
- [03:09]
A
Right.
- [03:09]
B
So Tadkus in Breton, grandparents, a grandfather. And also in my family we are really into nicknames. I will not give you mine, but one of my.
- [03:22]
A
I will find it out one day.
- [03:24]
B
And one of my grandfather's nicknames was dad, so I was used to call him Tad. Yes, because for children it's Way easier to call someone Tad rather than tad calls. So it means grandfather. And also why we decided to choose that name for such a project, because what the grandfather means, it's this figure that it's a loving figure who is here to help you to make sure that everything is fine for you. And also my grandparents on my mother's side was my first connection to craftsmanship because my grandmother was a framer and I spent hours with her choosing the right frame for the right painting, cutting glasses, et cetera. And my grandfather was an architect. As an architect, he has his own workshop. And every drawing was perfect and every realization was also perfect.
- [04:25]
A
And so you've called this organization and this project Tadcodes, inspired in part by your grandfather. And this kind of passing on of knowledge and this education, this experience that someone in that kind of position has. So what are we trying to do with the organization? How does it work? It is basically an apprenticeship, sort of scholarship program to develop what we'd call metier d' arts Savoir faire skills in watchmaking.
- [04:57]
B
Exactly. So basically behind TATCO there is two pillars. The first one, which is just we want to promote metier d' art to make sure that those and metier d'
- [05:09]
A
art for those, you know, is craftsmanship
- [05:12]
B
skills, enamel, know how marquetry, micro mosaic, it's you name them that, that the technique that makes the watch beautiful in a way. And we want to promote those matier and because we want to make sure that those artisans have some work to practice their metier d'.
- [05:34]
C
Art.
- [05:35]
B
That's the first pillar where we challenge brands on metyedars that they never used before in order to create limited edition that are sold through a subscription program. To make sure that the collectors, when they have the piece on the wrist, know who the craftsperson is, the techniques, the challenges, etc. But not only that. And we arrive with the. With the second pillar, which is we want to make sure that horological know how is in a way preserved. And the solution we found is, okay, let's help young watchmakers that want to become independent by assemble the best condition possible for them. So we set up a competition where you have to explain your project on the business and on the technical sides, you have to explain everything. The jury will do a selection and this selection will have to come to Switzerland and they will have to manufacture and decorate a component. So we want to make sure that those people, they have a clear view for the project, but also, technically speaking, thinking they are reliable.
- [06:50]
A
Yes.
- [06:51]
B
And what they will Win. So if you are.
- [06:54]
A
If you are chosen by the jury,
- [06:55]
B
if you are chosen by the jury, if you are. So if you want to apply to the competition, go to tadcos.com apply you will have to write down to fill sorry, your candidature. And it will stop on July 15. And you have to be a watchmaker between 18 to 35. If you are self taught, you have to provide us a portfolio and you have to want to become independent and you have to also want to showcase techniques, could be manufacture or finishing that you want to highlight in your creations. So if you win, what do you win? Money? Not money. You win machines.
- [07:44]
A
Win machines. Two machines.
- [07:46]
B
Two machines, yes. You know your brief. So basically you win two machines that are very useful. If you start your workshop, that's a Chevelin 78 and Jig Bauer Hauser type. Basically you do pretty much everything with those two machines. But not only you will have to. You will spend two weeks at Luc Monet's workshop.
- [08:14]
A
Luc Monet, the watchmaker and dean.
- [08:17]
B
It's a watchmaker, a very good, a very, very good teacher and a very talented watchmaker. He worked for branches such as Grebble Forsey, but help also Simon Brett on his project. He's also what we call in France, Mayor Ovary et France. So he's a top of the top in the watchmaking field in France. So you will be able to spend two weeks at his workshop working on those machines in order to make sure that you know how to properly, properly, properly use them. And also you will have access to two mentors, one for the technical and the other one for the business sides of your project. And those people are Jean Francois Mougon from Kronode, he worked with Maxime and Busse and other big names. And Pietro Tomaje from the Limited Edition, who is very into independence. And if you win, if you have any questions, you can reach out to them. And also what is interesting for the collectors who supported the collaboration, they will have a privileged access to those two winners. So if you win, you have machine to start your workshop training on those machines. You are surrounded by the best mentors in town. And also you will have access to collectors that maybe could be your first customers.
- [09:47]
A
Right.
- [09:49]
B
That with those conditions you can start properly your business.
- [09:53]
A
Interesting. Yeah. So I mean, basically you've identified what the two most important sort of tools are. These machines that anybody who wants to, you know, independently create a watch and what they are, it's very specialized. And then. So how much do these machines cost? How much Are they worth. And then how are you going to. How are you going to. How is a nonprofit organization going to. Going to finance that?
- [10:19]
B
So first question, which is how do we finance it? So we will finance it through the collaborations. Basically, the benefits of the collaboration go to the organization and pay for the machines and the communication, et cetera, to make sure that the organization is properly running and those machines. So basically, I asked Luc Monet, so he's the one looking for the machine for us, and he told me, you have to spend around 10,000 Swiss franc per machine.
- [10:53]
A
Wow.
- [10:53]
B
So basically, per year we have to spend 40,000.
- [10:59]
A
Right.
- [10:59]
B
A pretty nice watch indeed.
- [11:01]
A
Yeah, you can get a pretty nice watch for 40,000. So let's talk about those collaborations or the limited editions that will be available. How will that work? And you'll work with brands to do that? And what kind of watches will we see?
- [11:17]
B
Beautiful watches, I hope. So we will reveal two limited editions per year. And what is really interesting in those limited editions. So we challenge brands on Mety Dark that they never used before, and they choose a metedar and then we find a craft person, and the craft person arrive with designs, creative ideas on. Okay, if I understood properly who you were as a brand and regarding the techniques I'm mastering, I think that's the design that challenged me and you. And so we really replace the craftsman at the very center of the collaboration.
- [12:02]
A
Interesting, interesting. And so can you tell us at this point what brands we might see, or will it be a surprise?
- [12:10]
B
Independent brands. And the first, I would not say the first brand, but the first collaboration will be revealed before the summer, around end of May, beginning of June. And it will showcase micro mosaic. I've seen the design quite stunning. I'm quite impressed also, because what is so cool with such a project, we are nobody in the industry. We are just the people asking questions to the people who basically do things right. And with that, because I'm in the position where I say, okay, be free, do crazy shit, and let's have fun. And all the brands that embark in the product say yes to it. Let's be crazy. Do not think about the price at the end. Let's create crazy pieces. And they all said yes. And also the artisan said, thank you. We had a cocktail last week when we revealed the project, and some artisans were there, say, thanks a lot for having us. For us, it's a chance because we are free to express who we are and our craftsmanship. So we are very lucky to be in that position. So first collab Micro Mosaic around end of May, June. The piece has two balance wheel, I can't say more. And the second one will be during Geneva watch days and it will be with cloisonnet enamel and the craftsman behind it learn enamel alongside Anita Porche. So we are quite big names. Yeah, big names. And the third one you will see if you go on tatkos.com, you will see the three. The three first collaboration on the three different. Different mater.
- [14:13]
A
You know, why does the industry. I mean, you've been around the industry with Tourbillon Watch, which is basically, you know, French language podcast and then a lot of video content and on your website. You've been around the industry for quite a while now. You know, why did you decide that this is, you know, the way that, you know, a project and an initiative you wanted to do.
- [14:37]
B
So for that I have to tell you two stories. The first one is how we've been in touch with some collectors. And the second one is about our relationship with Indies. So at the very it was during COVID lockdown I had the opportunity to interview Benoit Mintien, so founder of Renaissance. I interview him and I wrote an article about innovations they have and post the article and had few feedbacks about those innovations. People don't really understand what makes a difference. I gather all the feedbacks reach out to Benoit said, okay, I have those feedbacks. Maybe it could be interesting for you or for your communication, because it could be points say, okay, they didn't understand that or that let's do something about it. But what kindly responding, you have to reach out to my communication director. He's the one in charge of that. I do the creation and everything, but I'm not in charge of the communication. Reach out to the director and he coldly answer who they are, where do they come from, how much do they worth? Are they recent customer?
- [16:01]
A
Right.
- [16:01]
B
So at that moment I understood, okay, it's very important to have a targeted audience and you have to know your audience very well. So at Tourbillon Watch we said, okay, let's be in touch with collectors in order to know them, try to understand what they are looking for. So we can create content for them, but also we can provide feedbacks to the brand, saying, we know 50 of you of your customers. Here are their feedbacks. So you have to listen to them. And maybe it could be interesting to do that or that because we are the man in the middle. So we have no stake with the brands and no stake with the collectors. It explains you the relationship we have with some collectors. And we on daily basis we chat with them. So we knew that they had something, they wanted to have something interesting for their collection. The second question is how we ended up speaking about most of the Indies. So it was around 2017. It was early in my horological journey. Normally you go to Patek, Audemore, Rolex, you name them and after you deep dive, you find maybe Blancpain and other some brands. It's not my path. I discovered glc, iwc and then I met Jean Baptiste De Ville, which was at the time maybe the only one independent watchmaker in Paris at the time. Theo Aufret was his student, basically, okay. And I met him during an event and I was impressed by who he is without understanding the level of his know how, because I'm not a technical guy, but I understood that there is someone. So Jean Baptiste introduced me to Theo, Theo introduced me to Julien Tixier, and then I met David Kando, Philippe Dufour, Ludovic Balwar Van Andersen. So I really deep dive into the world of independent very quickly. And when you are in touch with independent, you are also in touch with craft person.
- [18:22]
A
Exactly. Who do the metier d', art, who do the specialized skills.
- [18:25]
B
And when you speak to them, they say, okay, we love our work, it's our life, but it's tough. We are depending on the bon voul of some brands. So we have to survive, we have to be creative. So we say, okay, what can we do for the collectors? What can we do for the craft person? What can we challenge brands? And we ended up with that idea of, okay, let's do something with brands about metadata. Let's help young watchmaker become independent.
- [19:04]
A
And so this brings it all together, gives that sort of platform or forum or challenge for brands to incorporate and utilize these very specialized metier d'. Art. And it also provides a pathway for young independent watchmakers to learn those specialized skills, those special materials.
- [19:29]
B
The watchmakers could for sure do something with the craft person. They do whatever they want, but they have to express in their project what are the techniques and all the things that they want to do and showcase in order to make sure that on our side, okay, those techniques are preserved because they are used. And if we come back to the project, the project, the project is not new. We were lucky to have some people who went on that path before us. And one of them is the one and only Maximilian Busser with the Opus, where you do a collab with a watchmaker. And he has done the same with MB and f. And by being into that industry, by knowing Max, you want to do something similar but different. So he's aware of the project. We would love to do something with MB and F. It would be great to have involved them in a way, but it's not a question.
- [20:34]
A
So there will be applicants that will be 18 to 35 years old, young watchmakers who either have a diploma, have learned the skill of watchmaking, or are self taught and have a portfolio. And then you have a jury who will decide who your winners are, who will get the lathe and the jig bore to start creating their own pieces. So tell us who's on the jury? Yeah.
- [20:58]
B
So we were. We are very lucky to have them first on board because they are key figures in the industry. And we wanted to have two different profiles in the jury. One more about the business, the other one more about the technical side of a project. So the president of the jury is Marc Andre de Chou. So he's the founder of Watches tv, but also Oropedia. He's very into preserving horological know how with Oropedia. And he's about to create a museum specialized in watchmaking, which is quite impressive.
- [21:37]
A
Yes.
- [21:38]
B
And we have also Alex Godby. Alexandre Godby from Philips Watch Expert. Also we have Roy Davidoff, so he's a vintage dealer. And we have also Guillaume Tetu involved. So Guillaume Tetu, for the people who don't know him, he's one who founded Outlaws and then he worked for big names and now he's back as an independent because he has different projects. That's for the business side. For the technical side, we are surrounded by Luc Monet, Herve Schuster and Emilien Reversion. So three big names in the industry.
- [22:18]
A
And for those who don't know, maybe tell a bit about them and why
- [22:21]
B
they're so Luc Monet, by being also the one who will find the machine for us, he's a mayor of Rigue France, he worked for brands such as Grebble, Forsey and he's very talented. But also what is very interesting, he's a pretty good teacher, which is quite interesting.
- [22:46]
A
Not everyone who's a great artist can pass along those skills.
- [22:49]
B
And so he's a lot into pedagogy. And we have Herve Schuster, who spent most of his career at Pove being the director of the manufacturer. And also when he wanted to become independent, he knocked on the door of the one only Philippe before. And Philippe accepted to have him in his workshop to show him the techniques, etc. So very talented. Very chill. It's always great to have him alongside us. And Emilien Roverschon, he's. How to sum up Emilia in few words. That's quite tough. So he's an angler, so he do subparties for big names. And he's crazy, gentle, interesting and very talented in what he's doing. So those people are maybe the most talented people to have a proper look to the candidature.
- [23:52]
A
Right, Exactly. And last thing. So yeah, I mean, you know, this is a sort of labor of love for you. You've been around for the industry for a while. The project is named Tad Coe is the term for grandfather and Britney. And talk about the situation with your grandfather, who this is named after. As this was coming together.
- [24:14]
B
Yeah. So as I said, we named the project because it means grandfather. And we love the image of a grandfather who is here to pass on. Know how gently but surely. I grew up in the Parisian suburbs, so I grew up in the flats and at my parents place in Brittany. We were in the countryside so I could do everything I want with my brothers. So when we were looking for a name for the project, my grandfather had a small heart attack. And when I heard about it, I said, okay. I learned so many things alongside them. They brought me so many things. So I want to keep his memory alive and who he is by creating a project. So I will decide it with my wife. Okay, let's use a word, tactical.
- [25:12]
A
Yes.
- [25:13]
B
And what is really also beautiful. So we launched a project on March 4 and maybe six days before March 4, I called my grandmother because it was my my birthday and she tried to call me and then I called her. And normally when you call your grandmother, it's always very happy because she's speaking with one of her grandchildren. So I call her and the voice was not here. It was quite strange. And she just replied, okay, your grandfather just died an hour ago. I was okay, quite shocked, but she is an old lady, so you have to pay attention to everything. The firefighter, because they have to make sure that everything is fine, et cetera. So after I have to make sure that my mother is aware of that and called my brother, et cetera. So a few days after that we revealed the word the project Tatkos. So for us it's a vivid memory of who he is. The day after the cocktails is the day we revealed the project. I was at my grandparents house for his buried with my family. So for me it was very beautiful. Yes, it's not something easy to speak about, but for us it add More meaning to the project. And that's what we love and say, okay, let's go even crazier, let's go far where we thought it was possible and let's challenge everyone.
- [26:57]
A
Well, Baudoin Vaness, thank you for telling us the story and thank you for sharing the details of this exciting new project in watchmaking, which will celebrate and enhance and continue those skills. And I guess for people who want to learn more about it, they can
- [27:17]
B
go to Tadcos, to the website tadcos.com, everything is explained. If they have any questions, they can wrote us an article or reach out to us on Instagram. It's tatcos official, so feel free to reach out if you have any questions. If you are a collector and you love the project, feel free to reach out because we have a subscription program where the people who will be part of the subscription program have access to the design of the collaboration before it goes public and have a special relationship with the winners of the Tatko's New Talent Award. So feel free to reach out.
- [27:55]
A
Excellent. Baudoin Vaness, thank you for joining us on the business of watches. Thank you.
- [28:00]
B
Yeah, see you very soon.
- [28:02]
A
And now here's our conversation with Jean Claude, the CEO of La Joux Paris. So, Jean Claude Egan, we are in La Chaux de Fonds with the CEO of La Joux Perret, the movement manufacturer. We looked around this morning at your facilities here and it's quite an operation. Thank you for inviting us here.
- [28:31]
C
Thank you, Andy. It's great to have you here.
- [28:33]
A
So let's talk about La Joux Par, what you do here and what role that you play in the Swiss watch industry. You make movements?
- [28:44]
C
Yes, we make movements. It was quite a hard start in 2020 because La Jouperre was really down. It was really the question with which strategy we should attack this movement market.
- [28:58]
A
And this is when you joined La Joupire. You had a career elsewhere before that, but you joined as CEO in around 2020.
- [29:05]
C
That was 2020 first, May 2020. We started here, of course, with the definition of a clear strategy for the next years.
- [29:18]
A
So La Joux Pare is one of the several Swiss watch assets owned by the Citizen Group at that time. Talk about what the business was, approximately how many movements they made per year and then what you've done and how the business has evolved since then.
- [29:39]
C
The situation was really complicated at La Joupere, not due only to Covid, because 2019, they produce approximately 7,500 movements in one year.
- [29:53]
A
7,500?
- [29:54]
C
Yeah.
- [29:54]
A
How many are you doing today?
- [29:56]
C
We are nearly 200,000 now. It's quite a big operation today. Mostly the growth came from mechanical movement, but we had also the opportunity to jump in in the solar quartz movement. Because of my past work I have done in the quartz and we took this opportunity and there also we have quite a good growth rate.
- [30:22]
A
So let's talk about what role now that La Joux Perret plays. There are several well established, well known movement manufacturers. But Le Joux Paris has been around for a long time as well. But now you are serving with your G100 movement and you'll soon have an upgrade on that. But you are serving as a movement manufacturer for any and all brands willing. I mean, you are a competitor to Sellita and others.
- [30:57]
C
Yeah, we want to be independent, of course. We are a part of a big group, as you told, but must say citizen. Let us the flexibility and the liberty to do our own strategy. We have today more than 80 customers on the jihad.
- [31:16]
A
The G100 is basically your three hand and other various complications movement.
- [31:22]
C
Exactly. And we want not to do politics. We have the same price for every customer. Because I think our position, we are a supplier of the brands and this position is very good. But we have not to go further and influence the politics of our customers.
- [31:44]
A
Well, that's interesting because obviously when we think about movements and movement manufacturers and suppliers to the watch industry, we think about the traditional movement supplier, which was eta, ETA Swatch Group. And obviously things changed with that movement manufacturer and supplying others. So what did that do to the the market and industry for movement suppliers? And where is La Joux Pourre trying to fit in? You talked about not playing politics, but it's a political business.
- [32:21]
C
You have seen that ETA has stopped 2019. The deliveries to third parties, of course announced 10 years before then we have now Sellita has a big growth because of this. But one thing was for me also clear. The Sellita as the ETA movements are the same. So we should really develop something new. If you look, the 2824 was put on the market 71, 1971.
- [32:56]
A
Right.
- [32:57]
C
So Swiss industry saying we are the world best. But the motors most of the watches had the motor 2824 developed and put on the market 71 more than 50 years ago. Yeah, so I think it's not very innovative. Of course we had some Updates on the 28 24, but not really big. So our goal was clear. We want to be better. So we started with power reserve. That was the first step. Second step will be precision paramagnetic and then it's the last step.
- [33:39]
A
So what can you tell us about where you are with those metrics, with some of your movements now? And then we'll talk about who some of your customers are as well. The ones that you can talk about.
- [33:51]
C
Yeah. Okay. The power reserve is done this year. We will come out with the 3200 paramagnetic and a high precision.
- [34:00]
A
High precision. What kind of parameters are we talking about?
- [34:03]
C
We want the new cost regulation, which is called excellent cost.
- [34:08]
A
Yes, excellence indeed is what it's called. And so that is, I believe, plus or minus six seconds, plus four, minus two. And so you intend to achieve that mark with your.
- [34:23]
C
We try. We try.
- [34:25]
A
And so what have you done then to build this business and to become a viable competitor? As you say, you've created these movements, you that, that hit those parameters. Power reserve, precision, antimagnetic. Yeah. What has it been like building this business in the time then since you've been here?
- [34:47]
C
First, of course you need the vision where you want to go. And this vision and strategy has to be clear and you have not to change it every four weeks. If you are sure that the strategy is right, then you need a good team, the right players to work with you. That's the second important step. Then it's the third step is the most difficult. You have to work very hard during years. That means early in the morning, until late in the evening. There's no other way. And we did it like this.
- [35:28]
A
Indeed. And so you have about 130 people working here and you're producing over 200,000 movements. So you know, what kind of growth have you been able to experience and where is that growth coming from? Because we're seeing the industry as a whole not necessarily growing in terms of volume at the moment. So are you taking market share at some point?
- [35:57]
C
I'm taking market share. But of course the start was very hard. To give you an example, the first sales of the G Hunted, because watchmakers are always a little bit, let's say how you call that. They do not jump on a new movement very fast.
- [36:15]
A
They're skeptical.
- [36:17]
C
I made a journey to Paris because there was a customer interested in Gandhi. And during one day I sold hundreds that movements. Okay, that was the first sales. Then you make the second, the third and so on. But we started like this, as I told you. You see, you can also say why the hell to drive to Paris to sell a Honda movement. Today this customer is taking 6,000 pieces a year. He started to test the movement and so step by step, customer by customer, came the growth rate.
- [37:01]
A
And do you compete also with your competitors on price? And then as you say, no politics, but we see your movements show up now, the G100, in a lot of what we'd call micro brands or startup brands. Do you treat people, your customers, any differently?
- [37:24]
C
Yeah, no, for us, all the customers are the same. That can be a small customer or a big one. He needs the same service. Yeah.
- [37:34]
A
And so is it a different price for If I order 6,000 movements or 600?
- [37:41]
C
Yes. We have a different price on the quantities, but for the same quantity, the same execution, everybody is paying the same price, no difference on the clients.
- [37:52]
A
And that's really not like how everybody else does it, I think.
- [37:55]
C
No, I don't think so.
- [37:58]
A
And so, you know, over the years I've talked to a lot of people who wanted to start up a watch brand and you know, they called up Etta or other competitors and there was some significant minimum requirements in terms of acquiring movements or ordering movements. So what's your position on that? If I'm a startup watch brand.
- [38:24]
C
Okay. We have introduced for startup a minimum quantity of 20 pieces, but for the price for 100 pieces, what is the reason? All these new brands, they have a problem of cash. If I ask them to buy 300 movements, I'm eating up their cash. And so we decided to go for 20. And we have a good experience with this because we have quite a lot of startups now as customers and then of course they stay loyal if you help them during the start, Right?
- [39:04]
A
Yeah, exactly. Not all of them will survive.
- [39:06]
C
Yeah, a big pleasure to see how they grow. Okay. It's not in all the cases that all the startup are successful, but the guys who really have success, it's really a pleasure to see them step by step, they're growing.
- [39:26]
A
And how have you done on reliability and QC and those kinds of things? I mean, how do you measure that and what kind of feedback have you got from your customers at this point?
- [39:43]
C
That's a very important point in the watch industry that you have really a good quality on the movement. And we try to be better than our competitors. I think at the moment, if I look to my return rate on the G100, I'm a little bit below 1% in the valency period. I know the numbers from ETA, but we don't care that we don't put the number, but they are higher. And I know also that other competitors are higher, but we are not happy with one. Because on the quartz solar business I'm nearly at zero own. That's the goal. That's now the standard we want to reach.
- [40:28]
A
Well, you brought up the solar quartz business. So what we know about your Solar Quartz, I mean, we first saw these movements in TAG Heuer products. Now we're starting to see them with some other brands. Talk about the development of the Solar Quartz here and obviously we recently saw lvmh, the owner of TAG Heuer, acquire an equity interest, a minority equity interest in Lejoux Pourre. First of all, let's talk about the Solar Quartz and how that came about.
- [41:02]
C
Okay. That was LVMH who contacted us late in 2020 to ask us if we could develop a Solar Quartz movement. And as I told you, that was not in the strategy. But of course I did quartz development during 12 years. So I thought, okay, that's an opportunity. We made a concept for this LVMH demand and we presented this and we were really surprised that LVMH was jumping in because La Jupere was not at all known as a quartz development.
- [41:44]
A
Right. This was a new line of business for you. Quickly though, did Citizen, your parent company, I mean, they've been manufacturing quartz movements for a very long time, Solar Quartz as well. What role or aid or help did they give at all in the development of this movement?
- [42:03]
C
Yeah, that's also very interesting because to start the project, we sit together with the development of Citizen and we put all what we know know about Solar Quartz on the table and Citizen also, and we pick the best solution to make a better solar movement. So at the end in the movement is today also no ho of Citizen or proposals and proposals from our side.
- [42:31]
A
Interesting. So it's an amalgam, a mixture of that know how that savoir faire from both companies. And so talk about then, you know, where we're seeing your Solar Quartz movement and then where we're going to see it in the future because yeah, first it was exclusively with TAG Heuer products and now we're starting to see it elsewhere.
- [42:54]
C
Yeah, you have seen Tiffany is on the market. We have also our brand Alpina, we will see in the future Alpina, which
- [43:03]
A
is, you know, part of Citizen as well. A approachably priced brand, a Swiss brand, lots of history there. Yeah.
- [43:10]
C
And in Frederico, Boston and other luxury brands I cannot name. Sorry for that. But you will see it soon on the market.
- [43:19]
A
It's interesting. Talk to me about what role you see as a movement manufacturer you see Solar Quartz playing in the future. I mean, the sort of movement for Lack of a better word or. The trajectory of the Swiss watch industry has been emphasizing mechanical movements, that kind of side of the business, and they've been giving up volume in doing so. How is the solar quartz? Is solar quartz the solution the way for the Swiss industry to bring back more volume and be a player in quartz?
- [44:01]
C
The solar quartz movement has the big advantage that you have not to change the battery during 15 to 20 years. That's a clear advantage for all these luxury brands to see that the total quantity is going up. It is, I'm not sure for the Swiss watch industry. I think we are eating away a little bit the standard quartz. And then we have. If you look now, we have another tendency that people are starting to develop very small mechanical movements for ladies. That's very interesting. Also in the future, actually we are also also developing a new mechanical lady movement, very small to jump in there
- [44:48]
A
also, because that's traditionally, I guess, part of where we've seen quartz in the Swiss industry. So in terms of your development, it sounds like we're going to see a smaller movement from you. Is this in quartz or this is mechanical? You're saying both?
- [45:04]
C
Both, yes. Because you see the lady watches with the standard mechanical movements, they have one problem. The movement is sickness is too high. You have from the top quite a good image of the watch, but from the side is quite ugly. So that's the reason why you can sell solar or normal quartz to lady watches. But I see Bulgari is developing quite small now also mechanical movement, as we had already in the 60s in Switzerland.
- [45:41]
A
Yes.
- [45:42]
C
So it's coming back also. So let's see.
- [45:45]
A
We mentioned Bulgari, we talked about TAG Heuer. Obviously LVMH owned brands. So LVMH took a minority equity stake in La Joux Pare last year. What can you tell us about why they did that? And can you give us any details of how much they own and how. How we might see this relationship develop in the future?
- [46:12]
C
Okay. They took a minority. So we have really still the liberty to make our own strategy. That was clear from the beginning and it was also very interesting. LVMH had also this idea not to manage this company, to let it run like we did. And why did they bought a minority? One point is clear. We were single source on the solar quartz movements and probably they see the potential that we are also developing quite nice mechanical movements. Let's see in the future.
- [46:52]
A
Right. Because you know, obviously TAG Heuer is not a movement manufacturer. They're buying from other suppliers. And so at this point, I don't think we see any La Joux Perret mechanical movements in TAG Heuer watches at the moment.
- [47:09]
C
Not TAG Heuer has one own movement, that's the Chrono.
- [47:14]
A
Yes.
- [47:14]
C
But the three hand movements are coming from other movement manufacturers. But I don't know the whole strategy of lvmh. But of course this could be an opportunity also for us.
- [47:28]
A
Indeed. And so it was initially as you. I think, I think what you're saying is that initially it was the fact that you are the sole supplier of their solar quartz movement. And so to have sort of an interest and an ability in that. But also I think, you know, they are a buyer of plenty of other mechanical movements from suppliers and so we may see this expand.
- [47:54]
C
Yeah. And you see in the past La Joupere was the big movement suppliers of at the beginning of this brand.
- [48:02]
A
I didn't know that. Okay, interesting. Which is another LVMH that's today.
- [48:07]
C
It's also lvmh, so could also be there.
- [48:10]
A
Interesting. And so you talked a bit about some initiatives and some new movements. You have the G200 coming out. I mean. Yeah. How do you intend to continue to grow and at a time when the industry itself isn't growing, growing that much, what are we going to see from you to continue that growth?
- [48:33]
C
We continue to develop. I think that's one of the important points. You need new products, you need innovation, then you get new customers. And we will follow this way. We develop with partners new technologies on the mechanical movement. We do the same thing on the Quartz movements. You will see we are developing now a new Quartz movement which will put on the market 2020. That's really new functionality.
- [49:05]
A
What does that mean? New functionality in Swiss Quartz?
- [49:08]
C
That will be the surprise for you, Andy.
- [49:13]
A
Very good. But it's interesting that you see opportunity on the Quartz side.
- [49:18]
C
I see it on both sides. That's why we are developing the Quartz and the mechanical. I see we can do a lot more on mechanical but also we can do huge developments on the Quartz side.
- [49:32]
A
And we talked about Frederic Constant Alpina, obviously Arnold and Son and Angelus Angelis are part of the Citizen Group and the Swiss owned brands that are here as well. How do. And you're right here in the same building as Angelos and Arnold and Son. How do those clients related brands get treated and are part of this facility and manufacture as opposed to to your other customers. What's different at the end?
- [50:08]
C
We have quite a special relationship with Arnold and Angelos because it's the same management today. So we are developing movements specially and exclusive for these two brands because they are part of La Jouperre. The other brands you mentioned, Alpina, Frederic Costa, we can also mention Boulevard or they have the liberty to choose the movements and to buy where they want. There's no obligation in the group that you have to buy internally. And I think it's a good decision because we cannot influence the strategy of the brand that they say, okay, you have to buy there, you have to buy that. That's not the strategy, that's something else.
- [50:57]
A
Indeed, I guess it is. So those brands, yeah, they operate as separate businesses, obviously with the same parent company, but indeed they are free. You compete in the free market with other movement manufacturers to be a supplier. A couple other things. I mean, you're very open about your prices and your price list, which is not always the way of your competitors. I mean, talk about basically some of the prices that you, you charge brands for, say a, you know, a G100 movement. I mean, this is a price that we know that the market knows and knows what it costs.
- [51:38]
C
No, the standard version G103 hands is 112 Swiss francs.
- [51:44]
A
112 Swiss francs, right. And I mean, talk about, you know, how complicated or intricate or hand finished and you know, more expensive your move movements can get. What, you know, I mean, you make tourbillon at the end, you see with
- [52:04]
C
the decoration we have still the segment of tourbillon manufactured movements we go up. I think the most expensive movements we have at the moment is nearly 30,000 Swiss francs per movement. But a lot of manual decoration, very complicated movements.
- [52:25]
A
So is that part of your, you know, is that part of the business growing? Is there more demand for that high end? Or are you. Or is it on the volume side, on the entry level side and then
- [52:37]
C
the quartz side, quite a good growth rate until early 25. And then really a big stop on the luxury side. On the high end, on the luxury side, I think our customer had a little bit too much stock. And now next, the next business here, which we start the 1st of April, we have again a grocer rate.
- [53:01]
B
Hmm, yeah.
- [53:03]
C
But due to new developments.
- [53:05]
A
Yes. Which means new products, new innovations on your side, last things. I mean, you know, obviously the industry for quite a while there was. Everyone was talking about in house movements. It seemed like, you know, customers, you know, were sort of demanding that every watch brand was making its own calibers. I mean, where are we, do you think, in that cycle, do you think that the market is mature, matured enough to understand the role that movement manufacturers
- [53:36]
C
play, we have seen a lot of chrono movements and chrono developments done by all these brands. The problem of the three hand development is the following. If you look today 28, 24 SW200 is roughly 80 Swiss francs. I heard the new version go up to 100 but you need quantities to have this price level. And we took quite the risk when we put the G100 on the market. Because I calculated with more than 100,000 pieces a year.
- [54:14]
A
That's quite a goal at the time.
- [54:16]
C
But the problem is if I calculate with 10,000 pieces, I put half a sales price of probably 180 or 200. Swiss franchise Franc is too expensive. Then you get not the quantities. So we took this risk and you
- [54:30]
A
know the entire industry. We're here in Switzerland. I'm pretty sure everybody here gets paid in Swiss francs. Your costs are in Swiss francs. We're seeing commodities prices increase at the moment due to global conflicts. What are you doing to manage costs and is this a high priority for you? And are you able to and have you raise prices?
- [54:58]
C
We have not really had a big price increase. The starting price of the G100 in 2021 was 110. Now we are 112 for this version.
- [55:12]
A
That's reasonable.
- [55:12]
C
Yeah, I hope, I hope. We are trying to cut costs. We are working now 24 hours with most expensive machines. Machines that helps a lot. Then we automated a lot of operation today the ebosch fabrication is automated, the decoration is automated. The whole carnisage. We invested a huge amount to have a fully automated carnisage. Next step will be a semi automated assembly line for the gholder.
- [55:46]
A
Interesting. Automation, more automation. So that's one way to certainly keep costs down. Last thing. You are someone who speaks to almost the entire industry. We're here in March, a little before watches and wonders in 2026. What is your out, you know? And you're hearing from customers who are placing orders with you. What's your outlook for the industry? The Swiss watch industry in the short and medium term?
- [56:14]
C
Okay, short term it will be quite a difficult year. We still have the problem with the taxes. They are not so clear at the moment. We stay now at 15 the US tariffs with the US then we have these conflicts in the world. Russia, Ukraine, Iran against the United States. So we have really every two, three months a new surprise. It will continue. The world is changing quite fast at moment. But I'm confident we had the same last year. And if I look the brand is over the budget. Congratulation Pascal, who is sitting next to me, but I think you can't see him. So you have really to study the situation and to look where you can attack other markets. But it's difficult, I'm sure. Difficult, difficult year. And also the Swiss francs is quite strong at the moment. Too strong for making more business.
- [57:23]
A
Indeed. But medium term, longer term. How do you see the industry evolving?
- [57:30]
C
Yeah, you see since 15 years the quantities are going back in Switzerland and I think this trend unfortunately will continue. So that means we have today the problem in Switzerland that a lot of suppliers have too much capacity and we are going up and they are coming down. So we have also to be careful not to overshoot with our quantities and make the same mistake and to install too much capacity because. Because to come down and cut the cost is quite harder than to grow. So our problem will see what is the maximum we will install. Is it 500,000 or 1 million or more?
- [58:23]
A
Excellent. So that is your goal though, to get to those kind of numbers eventually. Clearly, if the market can absorb it. Very good, sir. Anything else we should think about La Joux per this year, what you're most excited about, what we should be watching for?
- [58:43]
C
Yeah, G200 I think will be a surprise on the market. Quite a very good three hand movement, 72 hour power reserve, high precision paramagnetic. Then what else? Yeah, probably a non solar quartz. We have a lot of demand from our customer to also put the version without solar because you see we can do quite good solar dials but sometimes in the luxury segment it's not possible if you have too many diamonds on the dial and all these special, other special stones and they push us now at the moment to make a non solar version and could be possible that we do it.
- [59:34]
A
Excellent. Jean Claude, again it was a pleasure to speak speak to you. Thank you for welcoming us here and we'll see you again soon.
- [59:43]
C
Thank you Andy, it was a pleasure to speak with you. Thank you.
- [59:51]
A
And that's the business of watches for this episode. We hope you enjoyed. Please head on over to Hodinky.com where you can join the discussion and leave any comments or questions about this episode. Episode or the business of watches in general. Who knows, we might even answer your question on a future episode. Thanks for listening and see you next time.
- [60:29]
C
Sam.