We were recently fortunate enough to sit down for an interview with Mr. Nydegger, Head of Engineering at Horage. Mr. Nydegger proclaims himself to be a member of a new guard of watchmakers that emerged at the beginning of the century. He and others are once again embracing and cultivating the engineering and development knowledge that was paramount prior to the quartz crisis. After a watchmaking apprenticeship and a few years at Eterna (where he had a hand in developing its modular 39xx caliber), he became involved in the company that is today known as Horage.
In Part I of the interview, we discussed the new K2 movement, Horage’s work with Bremont, the sluggish and secretive nature of the “big brands,” and how young players in the industry are changing things for the better.
Tempus Fugit: Tell me a little bit about you. What was your first watch?
Jonas Nydegger: I’m horrible with wearing watches. I’m really a technical person that likes to produce stuff, but I’m completely not into watches. If you ask me stuff about brands, all I know is technical questions, but I’m mostly not informed about what’s going on in the industry. I did an apprenticeship 2000-2004 as a watchmaker, then I worked for Eterna—there I bought my first watches.
I started at Eterna in 2005, and that was exactly the point when they started to develop their own movements. I was involved from the very beginning with the 3030 caliber—Eterna did the first movements of the 2892 line before it was integrated into the Swatch Group. At some point, Stephan Kussmaul brought this modular idea with him to Eterna, and he started developing a completely new line, at that point called 38xx. The main thing was one size, and all the modules can be integrated. Then we got another person from ETA who brought in more ideas, and he said, “Let’s make the 39xx as the follow-up project.” I was involved with the industrialization. Samir Merdonovic—he’s the CTO of Carl F. Bucherer today—he did the construction. That was an amazing team.
I left Eterna when the Chinese took over. Eterna was under the guidance of Porsche. They burned a lot of money—maybe CHF 170 million in 15 years, and the Chinese burned another CHF 50 million in the next 5 years. Eterna had an organizational and cultural problem. It was too big and not experienced, they made a lot of mistakes in the beginning of developing products.
The point is, we were a young team and we learned a lot of things. We all left at some stage and we know how not to do things. I left when the Chinese took over, because I saw in the first 8 months, nothing changed, they stopped paying the bills, they weren’t willing to invest.
So, then I went to the company where Stephan Kussmaul changed to, Momoplus. I started developing the K1 with Stephan. He left for ETA, then I developed it by myself.
TF: And here we are, but that was just the beginning of Horage.
JN: Four years ago, we started the K2, but it was s side project; we were investing our energy into the K1. But on the base of the modules, on the same components as K1, we started developing the K2. And two years ago, under the lockdown, we developed tourbillon, too.
At some point, I was all alone doing the technical stuff for Momoplus, then we became CM Microtech, and then we became THE+. Today everything is Horage. The team is growing: we have 10 people on the technical side, and the brand side has the same amount of people.
TF: The technical side handles every piece of design and development, where the brand sidehandles marketing, coordination, etc.?
JN: Simply explained, we had the OEM technical part with the different companies, and we always had, in parallel, Horage. Horage was founded 12 years ago, it was always a side project, more a hobby when we started.
Up until 2019, there were always two strings: we had the OEM business for the cases, bracelets, dials and hands, and on the other hand, we had the movement developing and production side—that was my part—and we had the brand. Horage was reactivated in 2015 when we started the first Kickstarter. We started doing small projects and Horage became bigger and bigger. Since Landon [Stirling, Marketing Director] joined, we have a marketing side and he’s doing communication.
Today we have the strength to finance our self. We bought out our old investors, we took all the other business and put them under Horage. It’s simple to have one company, but it will always be an option to separate them again if there’s a need to have a technical project on its own, it can be more efficient…but for the moment it’s all Horage.
TF: With the movements, you initially had the idea for creating a modular movement, the K1, that you could sell to other brands—and that speaks to Horage being a side project.
JN: Until let’s say 2020, that was still the idea. Tzuyu [Huang, CEO] and Andi [Felsl, Founder] started developing a movement for their brand, for Horage. But if you want to reach a certain price for a movement, you need to have certain size, to produce a few thousand or ten thousand movements per year to get the price lower than CHF 500 per movement. At this point, between 2005 and 2015, that was a time when the whole industry was looking for movements. All the brands had the same problem, they only had two suppliers, ETA and Sellita. That was the big problem with the project: nobody trusted us and we didn’t have the money to invest by ourselves to get to the size where people trust you.
It’s a problem of the watch industry. The brand owners don’t have the technical view on products, they have a marketing view. They can’t imagine how much time and money it takes to develop a movement. Then you start talking with them and everyone has their own ideas. You have to say, “No, lets focus on one product and one modular system, and let’s produce this in quantity that we can reach the right price.”
It’s incredibly difficult to build a company that produces movements for others. At some point, though, Tzuyu realized that Horage was going to work, the brand started to grow. When we realized that, we found a deal with our investor, and we bought them out. So, no more focus on OEM.
TF: Is that something that will remain an option as Horage grows—to sell your movements to other brands if there’s enough demand?
JN: No. We are not going to do it. But there are definitely possibilities to have partnerships. So…what is our strength? We are strong and flexible with developing movements quickly, we are strong with the brand, and we are super strong in small production batches, say a few thousand. Tzuyu’s big picture is always “Horage needs to sell 3000 watches a year, limited to six batches of 500.” I tell her that’s the perfect size to have enough money to invest into new products. Our network is able to produce it, we have a very strong network with personal relationships.
There are others in the industry that do not have the capability of developing products but are capable of producing by themselves. So, if we are going to do something, it would be the development, they can do production.
TF: The K1 and K2 are for you, but you’ve worked with Bremont.
JN: The focus for Horage is no longer on K1. Our focus is on K2 and the following movements. We have a few hundred K1 left; we will use those and then stop K1 for Horage. The IP for K1 belongs to our former investor, and Bremont has access to K1 IP and we are helping them to develop the supply chain, production and assembly in England.
The big point of producing movements for brands is you take a lot of risk and need to invest a lot of money, but don’t get the margins you need to have a good business. The good business is in the brand. So, we won’t take that risk for others, but if others want to invest in the process themselves, we can help them with the knowledge they will need.
TF: Let’s talk about the wider industry: what’s is it doing wrong?
JN: Let’s have a historical view. Up until the watch crisis in the 70s, we had a massive amount of movement suppliers—a few hundred maybe—and a lot of watchmakers. A lot of people with a lot of know-how. With the quartz crisis, everything collapsed. 80% of people lost their jobs, 60,000 people. 80% of suppliers and brands disappeared. There’s a massive gap of knowledge, which was lost then.
I was one of the first of a new generation of watchmakers which really got back into engineering. Before 2000, there was nobody developing new movements, just ETA and Sellita doing their copies. We had to learn everything ourselves. We haven’t had old engineers with their knowledge to tell us what not to do when you develop a product. This engineering gap, these are people that are still missing from the watch industry. The industry isn’t that big anymore. In Switzerland, you maybe have 10 teams for movement development, that are able to develop an industrial movement. I’m not sure if the Swiss watch industry is able to grow the engineering know-how anymore.
TF: They don’t have an interest in growing it.
JN: It’s my feeling that you only have managers left in the large watch groups. And they are not capable or willing to develop or gain new knowledge. It’s really on the independent brands to start this new generation of watchmakers. The good thing is it’s possible for these brands to sell products direct to a customer that really wants an in-house movement. This gives us the opportunity to invest time and money to gain knowledge. Thats a good thing.
The customer is informed today, you can’t sell them bullshit anymore.
I have the feeling that the big groups really need to start investing more into their products and investing more into know-how. The marketing bullshit is over. The customer is informed today, you can’t sell them bullshit anymore. The Swiss watch industry is producing 2% of the watches and generating 50% of the value. We need to deliver new, modern, good products that are worth the price. And that’s where the big companies really need to start making big steps forward.
For the small brands like us, like Christopher Ward, like Titoni, that’s something that makes me happy, at least there’s investment, things are moving forward.
TF: You do see development and innovation with the bigger group brands.
JN: But the small brands are not innovative. They are at a maximum independent, we don’t have the budget to be innovative.
TF: ETA isn’t interested in creating a new workhorse movement, because the one it has is successful. Their development is incremental. The higher end brands owned by those groups are doing interesting things, but they make 20 of the movements and are done. People aren’t making industrial movements,
JN: But the small brands are not innovative. They are at a maximum independent, they don’t have the budget to be innovative. They use technology which is 20 years old, 25 years old. The big groups are the same. Swatch Group is selling “innovations” which are 20 years old. The small brands need to catch up. The innovation with small brands will be in the next few years, when there is some stability to go further—the exciting times are coming. The big brands really need to start getting ahead of the small brands. The big groups are too slow, they aren’t reactive enough.
TF: So then what is working—what’s good in watches?
JN: [long pause] Let’s say it like this: you can criticize the big groups, that’s easy. But it’s also good to have them because they bring stability. Today it’s possible to have a stable supplier network able to produce good quality and innovate on machining and educate young mechanics and engineers to continue producing. The industry on that side is healthy. 15 years ago, though, we had five suppliers and they were controlled by the big groups. Now they are a lot of smaller independent suppliers.
It makes my life easier when I can choose from three different suppliers instead of having to use one where I’ll never be a priority. That was a big part of the past ten years, we built up a small, independent supplier network.
TF: Any brand smaller than the group brands has been enabled by that supplier proliferation.
JN: That’s another interesting point. I already said I was part of a new generation of engineers and watchmakers. That’s something I see today: the young generation is working together much more. The watch industry was always a very closed down, quiet, secretive. We at Horage are different, with the brand and with suppliers,. We show people things and help others go further. I think it’s important. The young generation developing movements, they are connected. All these small brands work together and share knowledge.
The whole industry is changing. But the big groups remain secretive, they don’t share or collaborate. I go to my supplier and ask how they may solve it for other brands and they share that. It’s more open, more modern.
That’s all for this part of our interview with Joans Nydegger. Check out Part Two, where we discuss the K2 movement and what’s next for Horage.