Project ARC - new headquarters and increased production

[Nav01L]

Came upon this interesting post of a Swiss construction firm. It is building AP’s new industrial park in Le Brassus, which started last week. That’s old news, but interestingly, the page says “capacity for up to 60k watches per year”. Is the stern limitation of 40k watches falling under the pressure of overheating demand? And are we looking at even more CNC mass production, with the dreaded machines from le Sentier moving all the way into the heart of the brand’s manufacturing?

https://www.steiner.ch/en/projects/o...w/Project.html

[Reign]

Before COVID, they were targeting 44k watches for 2020.

My understanding is they want to hit higher numbers but are limited by the number of watch makers. I’m sure they can hit 60k but to the detriment of less complicated models made each year


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[Nav01L]

Looks like increasingly, the people are becoming the limiting factor in the watch industry.

[VogelPhoenix]

Interesting find, thanks! Maybe they could make one of the extra 16k watches a 15407 for me

[Nav01L]

Haha, I’d take one of those as well :)

[macrowatch]

Originally Posted by Nav01L

Looks like increasingly, the people are becoming the limiting factor in the watch industry.

Isn’t that the truth on almost everything!

[Nav01L]

Originally Posted by macrowatch

Isn’t that the truth on almost everything!

Indeed, though if the press and the Mercedes waitlists are to be believed, our ability to form silicon into chips seems to be just as rarefied these days.

[Nav01L]

Heard François say 50k watches in 2022 at Dubai WW, 44k in 2021, a massive increase over the 40k they used to make each year.

[GreenLantern]

They have the capacity to produce 60k, if I'm not mistaken, based on insider info I heard a year+ ago.

They love to leave money on the table, it would appear.

[GB-man]

Originally Posted by GreenLantern

They have the capacity to produce 60k, if I'm not mistaken, based on insider info I heard a year+ ago.

They love to leave money on the table, it would appear.

I’m guessing like a lot of high end manufacturers they are producing more high end stuff as that’s where the margins are fat. As such lower units than capacity bottlenecked by # of watchmakers.

[joa]

woa, RLX, PP, AP... their ways are hard to follow for me:)

- So, Rolex is flooding the market with all kinds of redundant models (cf. GMT) and even destroys the appeal of black dial white gold Pepsis

- Patek feels the need to micro manage the Nautilus line, drops the understatement dials for John Meyer style green ones, with or without repulsive gemstone bezels

- and now i read here that AP plans to increase production of their watches by 50%

it may all make sense in the end and work out well, but i also value continuity..

[911AP]

Originally Posted by GreenLantern

They have the capacity to produce 60k, if I'm not mistaken, based on insider info I heard a year+ ago.

They love to leave money on the table, it would appear.

I remember Francois or someone else saying at AP the reason they don't increase capacity is because they see this hype as temporary. They don't want to make decisions that change the brand structure long term because of temporary hype. I'm not sure if 3-4 years from now the demand will be what it is today. If that happens, them producing over 40k watches will begin to dilute the value in their eyes of APs being rare.

They don't want their watch to become as common as a Rolex where you see it on everyone's wrist. Though that seems to be happening to a degree already at least around where I live.

[mykii]

Originally Posted by 911AP

I remember Francois or someone else saying at AP the reason they don't increase capacity is because they see this hype as temporary. They don't want to make decisions that change the brand structure long term because of temporary hype. I'm not sure if 3-4 years from now the demand will be what it is today. If that happens, them producing over 40k watches will begin to dilute the value in their eyes of APs being rare.

They don't want their watch to become as common as a Rolex where you see it on everyone's wrist. Though that seems to be happening to a degree already at least around where I live.

I see tons of AP in NYC but that isn't anything new, but I will say this. Capacity to produce watches is different from actually producing that many, and according to my AP Boutique there isn't any plan to increase capacity substantially (for the reasons laid out here).

[Nav01L]

Originally Posted by mykii

I see tons of AP in NYC but that isn't anything new, but I will say this. Capacity to produce watches is different from actually producing that many, and according to my AP Boutique there isn't any plan to increase capacity substantially (for the reasons laid out here).

But the capacity is increasing by 50%, while the number of watches produced will increase by 25%. And neither is a rumor.

[mykii]

Originally Posted by Nav01L

But the capacity is increasing by 50%, while the number of watches produced will increase by 25%. And neither is a rumor.

The fact that you didn't cite AP directly and there is so many different takes on this is what tells me its a rumor (bar perhaps current 21 production numbers, which can fluctuate anyway). It makes sense to me to have a larger capacity on-hand and on-line if needed; it doesn't mean it will increase to that level necessarily.

Also some of the numbers mentioned in this thread do not match what my boutique has told me, so again, hardly facts. We rely on good will on that part.

[VogelPhoenix]

Originally Posted by mykii

The fact that you didn't cite AP directly and there is so many different takes on this is what tells me its a rumor (bar perhaps current 21 production numbers, which can fluctuate anyway). It makes sense to me to have a larger capacity on-hand and on-line if needed; it doesn't mean it will increase to that level necessarily.

That AP is constructing a new manufacturing HQ is a fact. It's unlikely that Steiner SA just made up the planned capacity of 60000.

As for a quote from AP, how about this: "The inventory is short everywhere and we've reached a point where it went too far - when we've had to say 'no' to a customer eight out of ten times - that is not what we want," explained Mr Bennahmias, who adds that the goal is to reach 50,000 by 2022. (from Nov 2019).

[Nav01L]

Originally Posted by mykii

The fact that you didn't cite AP directly and there is so many different takes on this is what tells me its a rumor (bar perhaps current 21 production numbers, which can fluctuate anyway). It makes sense to me to have a larger capacity on-hand and on-line if needed; it doesn't mean it will increase to that level necessarily.

Also some of the numbers mentioned in this thread do not match what my boutique has told me, so again, hardly facts. We rely on good will on that part.

Sorry, I should have clarified (thought I already did). The numbers for this (44k) and next year (50k) are directly from François Bennahmias, the brand‘s CEO. Not sure how well informed he is, but I‘d guess he’d know these things?

[Nav01L]

Originally Posted by VogelPhoenix

(from Nov 2019).

Thanks for the quote. He also reiterated this last week in a panel discussion in Dubai. It’s on DWW‘s official YouTube challenge for anyone interested to watch.

[GreenLantern]

Originally Posted by VogelPhoenix

That AP is constructing a new manufacturing HQ is a fact. It's unlikely that Steiner SA just made up the planned capacity of 60000.

As for a quote from AP, how about this: "The inventory is short everywhere and we've reached a point where it went too far - when we've had to say 'no' to a customer eight out of ten times - that is not what we want," explained Mr Bennahmias, who adds that the goal is to reach 50,000 by 2022. (from Nov 2019).

They're saying "No" 11 out of 10 times these days.

[Nav01L]

Originally Posted by GreenLantern

They're saying "No" 11 out of 10 times these days.

As per my newest thread, there is method to the madness

[GreenLantern]

Originally Posted by Nav01L

As per my newest thread, there is method to the madness

Yes, but he is overdoing it.

Enzo Ferrari had the right idea: "Build one less than demand."

Obviously the implication is that you try to keep up with demand without actually meeting it.

F-HB is failing at this.

[GB-man]

I’d respect any brand that increases production to help meet demand. All of these brands are trying to hold pre social media production levels and it’s a different market today. There are double or triple the customers.

I would happily buy a watch where resale wasn’t a 20k + homerun if the watches were available in ~3 months. This is where AP was 2018-2019 and I think that was a perfect place to be in terms of supply/demand. During that period I bought 3-4 APs because they had it figured out relative to Rolex and Patek.

[VogelPhoenix]

Originally Posted by GB-man

I’d respect any brand that increases production to help meet demand. All of these brands are trying to hold pre social media production levels.

The whole thread started with a link demonstrating that this is not true - AP is increasing production capacity by 50%.

I would happily buy a watch where resale wasn’t a 20k + homerun if the watches were available in ~3 months. This is where AP was 2018-2019 and I think that was a perfect place to be in terms of supply/demand. During that period I bought 3-4 APs because they had it figured out relative to Rolex and Patek.

I don't think they had it "figured out" - that was just a lucky, but transient, coincidence between slowly rising production and exploding demand.

At the moment demand is ~infinite - as one would expect for (somewhat) liquid goods sold at huge discounts to their market value. Trying to predict what the required production would be to get back to the "~ 3months wait" equilibrium is near-impossible, IMO, and betting your 150 year old private company on getting that prediction right would be insane. So they do the obvious and raise production (slowly) and prices (not so slowly) to approach that equilibrium adiabatically.

[911AP]

Originally Posted by VogelPhoenix

That AP is constructing a new manufacturing HQ is a fact. It's unlikely that Steiner SA just made up the planned capacity of 60000.

As for a quote from AP, how about this: "The inventory is short everywhere and we've reached a point where it went too far - when we've had to say 'no' to a customer eight out of ten times - that is not what we want," explained Mr Bennahmias, who adds that the goal is to reach 50,000 by 2022. (from Nov 2019).

Originally Posted by Nav01L

Thanks for the quote. He also reiterated this last week in a panel discussion in Dubai. It’s on DWW‘s official YouTube challenge for anyone interested to watch.

The quote from the CEO, where was this said? Can someone post the link?> Same thing for that panel discussion in Dubai.

[Nav01L]

Originally Posted by 911AP

The quote from the CEO, where was this said? Can someone post the link?> Same thing for that panel discussion in Dubai.

It’s really just as simple as putting Dubai Watch Week into YouTube’s search window…

But he, since we’re here to help:
https://m.youtube.com/watch?v=JY7JwyG1V0Y

[NYG1121]

I do worry they may go the way of panerai. I sure hope not but you never know. They have raised prices way too fast IMO and now increasing production. Sounds like a bad recipe

[VogelPhoenix]

Originally Posted by 911AP

The quote from the CEO, where was this said? Can someone post the link?> Same thing for that panel discussion in Dubai.

DWW panel with FHB: https://www.youtube.com/watch?v=JY7JwyG1V0Y

Copy of article with quotes from 2019 event in Tokyo: https://condosingapore.com/showthrea...atches-in-2020

[911AP]

Originally Posted by VogelPhoenix

DWW panel with FHB: https://www.youtube.com/watch?v=JY7JwyG1V0Y

Copy of article with quotes from 2019 event in Tokyo: https://condosingapore.com/showthrea...atches-in-2020

Thank you. So I see yea they say they will increase to 50k by 2022. I don't think a 20+% increase in supply will even scratch the surface to solve their problem. Plus they are doubling the code production. That means less royal oaks.

Even going into 2022 it's going to be near impossible to get hype watches. Also the interview says they stopped making watches for dedicated markets because that was a bad business strategy. How is this the case? They released so many Asia only watches this year and last.

[Nav01L]

Originally Posted by 911AP

Thank you. So I see yea they say they will increase to 50k by 2022. I don't think a 20+% increase in supply will even scratch the surface to solve their problem. Plus they are doubling the code production. That means less royal oaks.

Even going into 2022 it's going to be near impossible to get hype watches. Also the interview says they stopped making watches for dedicated markets because that was a bad business strategy. How is this the case? They released so many Asia only watches this year and last.

I think they mean they stopped serving specific markets altogether, like certain countries in the South East of Europe, and even Austria for that matter. No more ADs there, and no AP houses or boutiques.

[Nav01L]

Originally Posted by NYG1121

I do worry they may go the way of panerai. I sure hope not but you never know. They have raised prices way too fast IMO and now increasing production. Sounds like a bad recipe

Every trend has an arc (which ironically is the name of their new building), but there were so many things fundamentally wrong with Panerai’s (and IWC’s and JLC’s) distribution models, I don’t think you can equate that 1:1. Nevertheless, there is a distinct feeling that we are on the tail end of things with regard to the 70ies style Genta watches. If you look at the auction results, you can see quite clearly that the big gains were closer to the independent sphere, with so many Nautili and Royal Oaks listed that a certain perception of boredom was unavoidable. And consequently, values were stagnant on the sky high levels they’ve climbed to, but no new records were achieved, not even close. If anything, the auctions must have been a bit of a disappointment for many of those who put these watches up for sale, in great contrast to those who had a total field day with their Journes and, to a lesser extent, Langes.

The in the know crowd has been moving to that sphere for a while now, with even folks like Ben Clymer saying that he can no longer respect the Genta fad. It’s only a matter of time before the masses follow and we all want a round golden watch with a story to tell. If you’re smart, you buy your DeBethune/Akrivia/Romain Gauthier/Voutilainen now, could be impossible to come by a year from now (or if you want something truly undervalued before it’s tide comes in, get a Lange chronograph). I think AP are acutely aware of this and are trying to get the Code up to speed to have a horse on this field. And the way things are looking, it’s not exactly void of success.