Danger Close: The threats facing the watch industry

Watches have never been as cool as they are now. Once the domain of reference-loving movement nerds, watch culture in 2023 is mainstream. Quality timepieces are everywhere. We're spotting increasingly sophisticated and obscure watches on celebrity wrists, and the Moonswatch phenomenon has brought in countless new fans.

Based on this sudden influx of new interest, you'd think that people in charge of making and selling watches would be taking a moment to soak in the success, without a care in the world, as the world has a seemingly endless appetite for finely crafted timekeepers. Unfortunately, to paraphrase the late, great Biggie Smalls, more money equals more problems, and for the Swiss, this rapid spike in popularity highlights some unprecedented, and potentially critical issues.

One of the most pressing issues, and one that underpins many consumer frustrations with the difficulties of getting those in-demand references, is one of staffing. Watch brand's production is limited, in a very real way, by people. There are a lot of people involved in the production of a watch, from fully trained watchmakers to machinists and engineers, specialist polishers and finishers, as well as a whole host of other skilled positions. And there's not enough to go around. The Swiss Watch Industry Employers Convention estimates that by 2026, the industry will need 4000 new trainees and staff, not just to meet the increasing demand but to compensate for significant numbers of current skilled workers who will be retiring in the coming years. At the moment, it is estimated that 400-500 watchmaking graduates enter the workforce every year from seven government-sponsored schools. You don't need to be a mathematical genius to realise that there is a significant labour shortfall on the horizon. This labour gap is especially apparent at the higher, more skilled end of the spectrum, which is even more concerning, as many brands are increasingly focusing their commercial efforts on higher price points.

Of course, this demand isn't a total surprise, and many brands have been planning on scaling up production for a long time. Rolex is working on a new, billion-dollar facility in Bulle that is set to create 2000 new jobs, but it's a few years off, slated to open in 2029. To cover the gap, they have three planned 'temporary' facilities to ease supply issues and to get a head start on training. A few years ago, Patek Philippe opened the doors on a new Plan-les-Outes facility, called PP6, which houses 2000 employees and encompasses everything from cases and bracelets to high complications.Rolex and Patek Philippe are two of the biggest manufacturers in the industry, with deep chests to allow them to plan and prepare, but even these two giants have felt the pain when it comes to production. Consider, then, the plight of smaller, independent makers who have experienced a sudden surge in popularity. Many hyped-up indies have 5-year-plus waiting lists, and cannot hope to sustainably meet demand. Take, for example, Kikuchi Nakagawa, the Japanese maker who closed his order books shortly after being featured on Hodinkee's Talking Watches with Ed Sheeran and John Mayer.

These are just some of the challenges facing the watch industry around brand-new watches. What happens when those watches need to be serviced? Servicing is an important and often overlooked part of the lifecycle of a watch, and a lack of staffing here means higher wait times for consumers. This is especially pertinent for people unfamiliar with the vagaries of high-end watch servicing. Imagine, if you're used to a routine car servicing taking a day or two and costing hundreds of dollars, how it feels to be without your watch for weeks or months, and out of pocket a significant chunk of change. Having your watch serviced is an important customer experience moment; unpleasant surprises or hidden costs can have a significant impact on customer loyalty, and after-sales service needs to be taken seriously by brands, especially as increasing sales will mean more watches than ever being serviced in years to come.

The problems of supply are just the start of a long and complicated chain of issues that can, if unaddressed, impact brand perception, customer loyalty and overall perceptions of value. It's for these reasons that issues of production capacity are a serious concern for watch brands, even though watches themselves are more popular than ever.

To learn more about the plights in the watch industry, Dubai Watch Week’s Horology Forum is hosting a panel to tackle this very subject, called Spare Me: Is aftersales an afterthought? Register now to attend the panel or watch it when it livestreams on our Youtube channel.