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Richemont Group and Watchmakers

  1. dsio Ash @ ΩF Staff Member Mar 26, 2012

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    This is quoted verbatim from an email written by an Australian watchmaker and dealer, Nick Hacko ([email protected]), I'm posting it here because frankly it should be relevant to everyone with an interest in watches and collecting:

    Richemont owns several of the world's leading companies in the field of luxury goods,
    including some of the most prestigious watch brands, namely
    Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC, Panerai and Montblanc.

    In other words, Richemont are good guys who sell fine watches,
    which we buy because we appreciate fine Swiss stuff.
    Yes, we are happy to pay top dollar for top workmanship,
    design, brand reputation and the quality associated with luxury products.

    So there is nothing wrong with that. If you look after your watch,
    you have nothing to worry about for 5 or 6 years
    when the watch is due for an overhaul.

    Let's suppose that you are not so fortunate or not so careful and
    so you incidentally scratch the crystal on your JLC or Panerai.
    A minor repair, really. You take the watch to your local watchmaker
    who you've known for years - the guy who 'fixed' all your watches
    since you've been able to tell the time.

    Unfortunately you're told that your poor watchmaker
    no longer has access to brands which are part of the Richemont group.
    "Take it to Richemont, they will fix it".

    And there is nothing wrong with that either -
    after all, who can take better care of your watch than its manufacturer?

    Obviously, your local watchmaker is not really happy -
    thanks to Richemont's monopoly on supply of spare parts,
    he lost the opportunity to provide you with service
    and make a few dollars.

    But most watchmakers are grumpy and old, and at the end of the day,
    if they go out of business, it would not matter to you anyway.

    So there is nothing wrong with the monopoly on supply of spare parts and dying watchmakers.
    As long as Richemont provides repair services to watch owners,
    we have nothing to worry about.

    However, there is one small problem with the monopoly: it only works great
    for monopolists. Once it kills competition (independent watchmakers)
    monopolists start to raise repair prices way above marginal costs
    and lower its customer service. If you are not happy - tough luck!

    Monopoly leaves you without a second option, second opinion, second quote and robs you off ability
    to inquire and ask questions.

    Can you imagine living in a world with one bank, a single freight company and
    one internet provider? We have learnt that demand and supply - basic laws of capitalism -
    do not work unless there is a sufficient number of players on the field.

    And this is precisely why we have regulators like ACCC who
    do their best to keep the monopolists on their leash.

    A couple of week ago, I've sent a fine lady's JLC to Richemont Australia
    for glass replacement. No, I had no choice - I knew so well that
    Richemont would not supply glass alone.
    I had no choice but to have that watch repaired under their terms
    and for the amount of money they find fit and appropriate to charge.

    And there is nothing wrong with that.

    Except for one detail:

    while I was "happy" to pay $195 for a new glass,
    I was less than happy to pay an additional $790 for a complete overhaul.
    And quite frankly I was blue in the face when I found that
    my watch needed a "balance" for extra $520 and a "complete barrel" for another $270.
    The total (mandatory) repair cost: $1,775.00.

    I've picked the phone and rang Richemont Australia.
    Service manager Anne Marie was equally unhappy to hear my voice:

    "Oh, it's you. Listen, I have no time to waste on you."

    "Anne Marie, I would like to ask a couple of questions -
    have you actually disassembled the watch before providing a quote?
    Both balance (balance wheel) and barrel are perfect and
    I don't understand why am I required to pay for parts which do not need replacement?"

    "I am going to hang up on you right now. We don't want to deal with you.
    The watch was submitted to us under different name.
    Don't call us ever again".

    For the record, the watch was *not* submitted under a 'different'
    name. And just because I am a watchmaker by trade who
    knows what 'balance' and 'barrel' means, I at least deserve to be treated
    as any ordinary customer, not worse.

    While I do "appreciate" monopoly, I cannot stand arrogance
    and ignorance. $270 for a main spring barrel is not a rip-off,
    but criminal rip-off for a part which only costs $5.

    Description "balance" means nothing! Are you going to replace the balance wheel,
    balance assembly or just to balance my watch for time keeping?
    $520 would indicate component replacement, but then again,
    who knows?

    -5s/day and 278 degrees amplitude indicate to me that
    my watch does not need a new balance wheel,
    and $520 charge can only be interpreted as completely unnecessary.

    Unfortunately 'friendly' Anne-Marie refused to discuss my options.
    As she promised, she hung up on me with a final curse:
    "Do publish or quote online, we don't care".

    Make no mistake - small, independent, grumpy, old watchmakers
    have no time to waste either. They are struggling to survive
    doing repair jobs which are way below their skills like battery replacement,
    bracelet adjustments and case polishing.

    But watchmakers are not fools. You can't take them for a ride,
    you can't lie to them, you can't hang up on them
    and threaten them with a lawyer.

    And yes, watchmakers DO CARE.

    For further reading:
    BRUSSELS/ZURICH (Reuters) - European Union antitrust regulators are to investigate an allegation that several luxury watchmakers breached EU rules by refusing to supply spare parts to independent repairers.
    ...The CEAHR complains that owners of expensive watches are increasingly forced to send their timepiece for repair to the manufacturer or through an official agent who, in turn, may charge for work which was not requested or charge very high prices.
    "Either the work is carried out under terms over which you have no control or choice, or the watch becomes irreparable," the CEAHR says on its website.

    http://www.reuters.com/article/2011/08/05/us-eu-watches-probe-idUSTRE77441J20110805


    Have your say: should Swiss manufactures allow supply of spare parts to
    independent, trained and experienced watchmakers?
    Do you feel that in-house repair costs are fair?
    Are you happy with customer service provided by big brands?
     
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  2. ulackfocus Mar 27, 2012

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    Sadly, this is not news. Even worse, the Swiss will NOT be told how to run their business in foreign countries (like the US) who have laws protecting their consumers against monopolies. Wait for Steve (N2FHL) to come along and tell you a few stories about the games these brands played when the courts ruled against them and forced them to offer parts accounts. It'll make you think they're related to politicians.
     
  3. N2FHL Omega Qualified Watchmaker Mar 27, 2012

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    I'm exhausted. I've been chirping about the same policies here in the US for years. This is one of the reasons that I don't recommend this trade to young people when I'm asked for advice. The American watchmaker is dying, the Swiss are making plenty of money and I see no changes on the horizon. Imagine if your local mechanic couldn't put brakes or even tires on your car. He wouldn't be in business long either.

    Steve
     
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  4. dsio Ash @ ΩF Staff Member Mar 29, 2012

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    Nick asked to link the whole article which is here and includes a petition, given how much time watch makers spend scouring the internet for information on their brands I have no doubt they'll find it eventually. Whether or not they take notice and realise that brands like JLC had fans decades before they started pulling this or not is another question.

    http://www.clockmaker.com.au/watch_petition.html
     
  5. N2FHL Omega Qualified Watchmaker Mar 29, 2012

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    Here in the States, we have been fighting the big watch companies since the 1960's. We recently just lost another case against Richemont.

    These issues will be won either with plenty of money or public pressure. Richemont and all the big watch and watch equipment companies have bought their way into the only professional watchmaker's organization. When legal action is taken it is met with million dollar legal teams and well-paid (or maybe bribed?) professional witnesses who testify that the withholding of parts is really in the best interest of the watchmaker and the consumer.

    As to public pressure, forget it. The general public couldn't care less about expensive watches and even a forum like this one, full of watch nuts, has barely coughed out a comment or question.

    Steve
     
  6. Matty01 Port Adelaide's No.1 Fan Mar 31, 2012

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    I subscribe to Nicks blog too amd will definately be sending my fax on Mon morning... it disappointing, but ill have to put my money where my mouth is ... neven though Id dearly love a Pam at some stage, I cant in good conscience buy one while this current scenario exists
     
  7. Nick Hacko Mar 31, 2012

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    Hi Steve -

    thank you for your comment.

    I appreciate all your effort and many years of good work.
    Would you be able to assist us with our petition
    by providing some details re court case in US?
    Please email me directly. Than you.

    I believe that battle for free trade in Australia cold have serious consequences to
    global outcome re Swiss monopoly.
    However Australian public is more agile than US or European.
    We are amongst top users of internet and social media,
    and we can tell when things are wrong, even when we don't fully understand details.

    It took us less than 3 days to gather 580 signed petitions.
    Our first goal is 1000 which will happen by Wednesday.
    At that point we will start lobbying Australia politicians, prominent people,
    big Australian business owners.
    We already have media willing to jump on it but we are not ready yet.

    Our next step then is to collect 10,000 signed petition.
    The new website and Facebook page will be on line shortly
    see www.Save-The-Time.org

    Also we are producing 3 minute documentary which will explain in simple way
    what we really want to achieve. This is really exciting project!

    Unlike European and US attempts to make difference, we will
    make difference first, then take the case to regulators.
    Ads in papers, online media, and video campaign will
    assure that regulators know what is going one before we even lodge formal complaint.

    This form of activism was not possible until recently.
    We are ready to take full advantage.

    Our petition to Australian Government is already supported by
    many watch enthusiasts overseas and this is really encouraging -
    the struggle is still global issue.

    Let me finish with an article which I've just written (Omega Forum exclusive :)
    which shows how we intend to present our case.

    I would appreciate if you can personally sign our Petition and
    help us getting the word out. Thank you and 73 ! Nick Hacko
    ------------------------------------------------------------------------------


    So how was your day?

    He runs a small watch repair shop located inside the smallest mall of the smallest country town, north of Bundaberg. He gets home late because that chiming clock is still missing its last quarter chime and he’s just too tired to watch the footy.

    "How was your day?" she asks.

    "It was good. Eight Seiko and Casio batteries, three watchbands, and Mrs. Smith collected that pocket watch I finished in October. She was too busy to collect it earlier, but it's all good.
    It was a good day of trading."

    But he knew perfectly well that the trade was not even close to 'good'. With $217 dollars in the cash register he could barely afford to pay their bills and the rent. The only reason why it was good was because most of the other business were doing far worse after yet another flood, or was it a drought?

    The business had not been good for years, actually since the cheap battery operated watches replaced mechanical timepieces. The change of technology meant that his skills were no longer required; cheap battery operated watches were too cheap to service and even cheaper to replace. He tried to 'diversify' into the clock trade, apparently everyone else was doing well in clocks. He invested in a bushing tool, main spring winder and even a second-hand Myford lathe which cost a fortune.
    Yet deep down in his heart he knew that fixing clocks was not really what he was trained to do, what he wanted to do.

    When clock collecting collapsed in early 1990’s (by then he had repaired all 17 clocks in 75 km radius, including that Church clock which went silent after the War, free of charge of course), he was told that "money is in vintage watches". Apparently everyone was trading on eBay.
    But he was not a trader. He did not have the money to invest in stock, was not sure how that eBay thing really worked, and was too honest to sell a broken watch to someone half way around the globe.

    "It was a good day" he kept telling her every night.

    Of course, some of his friends were doing OK in the watch business. Every now and then one of them would stop by that small shop to show him one of their latest acquisitions: a vintage Rolex, a nice Longines, and then there was that fancy 1980s two-tone Cartier.

    "Is it genuine?" The visitor would ask.
    "Yes, it is."
    "So if I need a battery replacement, can I bring it to you?"
    "No, I’m sorry, I can’t replace the battery in a Cartier because I don't have a case seal for it".

    But he would love to do be able to do so. A battery replacement for that fancy Swiss watch is something he could easily charge $35 dollars for. A couple of those per week would mean an extra $280 per month, or exactly $3,640 per year - enough to buy a "new" Ute.

    That was all he needed to make a breakthrough - two fancy Swiss watch batteries per week.
    And if he could perhaps get a new winding crown or a plexiglass for that vintage Rolex, he could make a small fortune; that would be an easy $450 repair too!

    Unfortunately he knew all too well that he would never get access to Swiss spare parts.
    He knew the phone call to Richemont will be answered with "Sorry no parts.
    We don't sell to independent watchmakers. Actually we don't supply parts to anyone anymore, we do all of our repairs in-house. And please, stop calling us."

    No parts. All he needed is a $2 rubber seal so he could seal the case after the battery replacement.
    No parts. Not a screw. Not a seal.
    No parts.

    For some time he kept dreaming; a $2 dollar rubber seal from Cartier could make all the difference for his small business.
    A $25 steel crown for that vintage Rolex would mean he could earn a small fortune. With access to Swiss parts he could even take in an apprentice! Maybe he could expand, advertise online?

    He was not interested in competing with the Swiss monopolist. All he wanted to do is what he was trained to - make an honest living repairing watches that Rolex had already rendered as "too old to be repaired".
    That really would be a good day!

    Unfortunately, his services were no longer needed. No parts meant a slow and steady decline for both his business and his pride.
    The closure of the last small watch repair shop located inside the smallest mall of the smallest country town, north of Bundaberg, was not even news for the smallest local papers.

    So how was your day, Rolex? And how was yours, Richemont? Have you had a good one?

    ----------------------------------------------------

    The monopoly on the supply of spare parts for brand-name Swiss watches will mean the death of Australian independent watchmakers.
    When you sign our petition, you are voicing your concern to the Australian Government and Fair Trade Regulators.
    You are helping us to preserve our skills to practice our trade, and to make an honest living.

    Can you really afford not to sign? http://www.clockmaker.com.au/watch_petition.doc
    http://www.clockmaker.com.au/watch_petition.pdf

    *** Please sign forward to your friends. Thank you ***
     
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  8. Trev The Architect Staff Member Mar 31, 2012

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    Hi Nick. Welcome to ΩF. Glad you found us.

    Cheers :thumbsup:
     
  9. ulackfocus Mar 31, 2012

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    Hi Nick. From one free enterprise loving watch fan to another: I hope you kick their ass. ;)
     
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  10. N2FHL Omega Qualified Watchmaker Apr 1, 2012

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    Nick,

    I presume that your petitions will be used to enlist Australian officials in your cause. Will non-Australian signatures really make a difference? Your site doesn't seem to be online yet. Can we email our support or do we need to fax an actual signed petition?

    Steve
     
  11. Donut Apr 1, 2012

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    I wish parts were available to skilled watch makers, from all watch lines and in every country.

    What if you were actually able to win in court. What is preventing the watch companies from taking their ball and going home. Closing up shop in Australia.
     
  12. N2FHL Omega Qualified Watchmaker Apr 1, 2012

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    Money. and plenty of it. They make buckets of it just selling their watches and wouldn't give that up regardless. This fight is about their attempt to monopolize the repair market also.

    Steve
     
  13. Donut Apr 2, 2012

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    Money would be the reason why they'd leave. To open up parts accounts to independent watch makers in Australia would be making parts available to watch makers world wide. Even if they only sold to Australia, watchmakers from around the globe would be sourcing parts through Australia.

    I would think that the sale of watches by Richemont in Australia, compared to world wide sales by percent, would be in the low single digits and I would be willing to bet that many of the potential sales in Australia would be realized by Aussies purchasing the pieces abroad. I am just a small collector in Canada, but I have sourced watches directly from several different provinces here at home, the USA, The Caribbean, Italy, France, directly from Switzerland and Ireland. With the internet we can easily shop the globe.