Watches in USA.

Despite the fact that there is an awful lot of woe-is-me in the air in America right now, the fact is that as far as the rest of the world is concerned we’re still a nation of Scrooge McDucks. China, my China, you’re still a tiger, but things are slowing down a little (in the second quarter of 2012 China showed its slowest growth in three years, albeit a lot of countries would give their eyeteeth for what passes for slow growth in China) and the US GDP as of mid 2012 is still nearly double China’s, though if the curves keep trending the way they’re trending, God knows what will happen. The CEO of the Richemont Group, Johann Rupert, whose conservative, this-is-a-marathon-not-a-sprint style has earned him the moniker “Rupert the Bear,” had this to say in his FY 2012 report.

According to the Federation of the Swiss Watch Industry, between Hong Kong and China there was in fiscal 2012 just shy of 4 billion CHF in exports, compared to an (apparently) anemic 1.4 billion CHF in the USA. The interesting thing about all this is that while all eyes are on the East as the boom market for luxury, including watches, the USA still has (at least for now) a GDP roughly double that of China’s (though in four or five years, that might be a different story) and, tellingly for the boys and girls in France, Italy, Germany, and Switzerland who earn their bread and cheese from the sale of luxury goods, the USA has an awful lot more one per-centers who should be buying luxury watches. To illustrate, there are according to a recent report around a quarter million or so millionaires in Hong Kong (which sits at ninth place in total number of millionaires globally) vs. China, with 1.432 million millionaires, and at the top –why I do believe it isthe good old US of A, with 5.134 million millionaire households. Yes, yes, absolute numbers don’t show trends, and you want to be where the sun’s rising, not where it’s setting, but, you know, still.

The question, then, that has hands scratching heads in tastefully minimalist offices across the sky scraping Alpine ramparts of Switzerland, is this: why aren’t Americans buying more watches? To a certain kind of business mentality the Asian boom and the subsequent hunger for luxury (which, by the way, as Dana Thomas pointed out in How Luxury Lost Its Luster, the Chinese can arguably have been said to have invented) makes sense; it’s something a pragmatic businessperson can understand. (Johann Rupert makes the excellent point that the Chinese market is not discovering luxury, merely remembering something it had forgotten: ”The Chinese consumers are sophisticated. They were civilised, inventing gunpowder, steel, when our forefathers ran around with loincloths in caves.”)

The equation is not complicated: new wealth, a desire to display social status and a new fiscal and social hierarchy after decades of leveling to at least the appearance of a single, monotonous status quo, naturally creates a market for the good stuff –or, at the very least, the stuff that says that if you can make it in Chengdu, you can make it anywhere.

Portable sundial, Pierre LeMaire, Paris, early 18th c.

The economic crisis of 1848 had put the European economy into a death spiral and if there was hope, it must be sought abroad, went the logic. It wasn’t easy for Patek; the company has preserved his letters home and they make entertaining reading, at least from a distance of a century and a half.

“Life in New York,is very expensive. I need at least 24 to 25 Swiss francs a day since, for security reasons, I always stay at first class hotels.” (I feel you, brother.) “A room and meals cost $2.50 a day; a small bottle of wine $1, the cheapest cigar 4 cents. Cabs are truly exorbitant . . . ”

Having seen what cabs in Geneva cost I can’t help but feel that somewhere in a purely horological heaven, Mr. Patek is enjoying seeing the shoe, these days, on the other foot –but back then, it was far from a foregone conclusion they’d be able to sell watches in America at all. Barnstorming likely cities around the country, he quickly caught on to the biggest problem his company would face: Americans didn’t think of watches as prestigious ornaments that advertised affluence, cemented social position, and afforded a frisson of pleasure at the intimate presence of a nearly living mechanical work of art. They thought of them as . . . well, watches.

The problem was simply that America already had a watch industry, and one that threatened to bury the Swiss. The first high precision assembly lines for watchmaking were inherited from the military; the armories in Springfield and Harper’s Ferry, in the 1820s, developed and used the first true milling machines –the ancestors of the five axis CNC machines used today in virtually every watch factory in the world –to make firearms with interchangeable parts, and the US watch industry, which rapidly adopted those methods, could crank out accurate, inexpensive watches with an ease that unnerved the Swiss so badly that at the 1876 World’s Fair, a Swiss delegation reported that even a cheap Waltham watch chosen at random could out-perform a hand-made Swiss watch.

That heritage is still making itself felt today, and it’s part of the bigger picture of what is and is not luxury in the minds of many Americans. It’s a bizarre fact, and easy for those of us in the hermetic world of American watch enthusiasts to forget, but for an awful lot of otherwise sartorially tuned in Americans, the eye for style seems to somehow slide from the mitered cuff of an elegant bespoke dress shirt to the carefully manicured hand at the end of the arm without noticing that, a lot of the time, there is something on the wrist so pedestrian (especially in the context of how elegantly the rest of the gent in question may be turned out) as to defy belief.

Ref: www.forbes.com