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The CEO who rides a Harley - In Conversation with Philippe Merk of Maurice Lacroix
In conversation with
Philippe Merk, CEO, Maurice Lacroix S.A.
By Su JiaXian
© October 2007
Maurice Lacroix was founded slightly over 30 years ago, as the watch production arm of Desco (originally Desco von Schulthess & Co), a Swiss trading house. Today Maurice Lacroix has come a long way since its humble beginnings as an entry-level watchmaker. Its ambitions culminated this year with the unveiling of the Memoire 1, a remarkable mechanical timepiece which not only records elapsed time, but remembers it as well. (For more on the Memoire 1, click here, here and here)
Here we speak with Philippe Merk, who has spearheaded the evolution at Maurice Lacroix. Amongst other things, he shares with us his vision for Maurice Lacroix as well as the company’s strategy in its move upmarket.
This interview was conducted in September during Tempus in Singapore. Many thanks to Caz Lee of S. A. Desco Singapore and Shirley Sng of Mplify Communications for arranging the interview.
Su JiaXian (SJX): Can you tell us a bit about yourself? How did you end up as head of Maurice Lacroix?
Philippe Merk (PM): I came out of a totally different industry, I was from fast-moving consumer goods. I always liked watches. My father was a watch collector; he was a medical doctor, he had a good understanding of engineering, and also of the manual arts that is behind watchmaking because he was a surgeon. So very often when he came home he studied watch books, studied the movements, maybe something came over to me from my father! (laughs)
I always liked watches so that’s why I ended up in this industry; that was for me almost a logical thing and I like the product a lot. I like it because I myself I am an engineer, with an MBA; come from the marketing-distribution side so you marry two things. I have an understanding for what a technically sophisticated product is and I understand the emotions of the end consumer. He may not appreciate all the technicalities of a brake of a Porsche, special brakes, ceramic brakes of a Porsche, but somehow you need to communicate that to this person. So I need to marry these two sides. So I think, maybe I can do it.
SJX: So how long have you been in the watch industry?
PM: Six years.
SJX: And all of it at Maurice Lacroix?
PM: Yes.
SJX: Let me ask a question that many people are curious about - is there actually a Mr Maurice Lacroix?
PM: There was once. He’s not alive anymore.
SJX: He founded the company?
PM: No, he was the one who gave the name to the company. He never worked in this company.
SJX: But he was a watchmaker?
PM: Not even, he worked in Desco, that’s all.
SJX: Maurice Lacroix started out as a lower-end brand, affordable, entry level. But you are now moving upwards very quickly towards the high-end. Can you tell us more about your strategy and direction for Maurice Lacroix?
PM: It’s exactly that movement, exactly this path that we want to take, that we need to take. I think it has been really motivated by the fact [that it was successful], especially the Masterpiece collection, although in style it was a little bit old. But I think what we did in complications, with the retrogrades in particular, that encouraged us to go all the way. So we also added the Pontos collection, which is more basic in terms of design, style and everything; very well received by other people.
I think these two facts really motivated us to say, ‘there is more to it’. There are also consumers and customers, also journalists I must say, who said, ‘come on, why don’t you go all the way?’ And we decided at one point, when everything was right for us, to go all the way.
Pontos Décentrique GMT
SJX: With the watch industry doing as well as it is today, don’t you think the top end of the market is very crowded? Too crowded?
PM: It is. That’s why we have chosen the Memoire. For us it was certainly not a solution to say ‘let’s just move up’, and do tourbillon, minute repeater with perpetual. You would be (makes yawning gesture); another one who put something in the mixer and says, ‘here is a grandes complication, look I’m a manufacture’.
We said what we also need besides capability of producing movement components is creative ideas. So manufacture for me is more than just somebody who is capable of doing components and movements, but it’s somebody who has exceptional ideas. Our aim - we are not yet there - is to do much more exceptional, outstanding stuff.
Philippe Merk (right) with Sandro Reginelli, Product Manager, Classic Collections
SJX: In your 6 years at Maurice Lacroix, what do you see as your greatest achievements?
PM: Well I think this whole change process, that we are able to really inject new blood in this company in all senses. New people, new capabilities like manufacturing; the case producer is a totally new company today, they are doing very sophisticated stuff. We have a very strong development team. We have new teams in the markets, we have expanded our geographic base. Many, many positive developments. This is still a journey.
It is a very steep change for us; the good thing is it’s not just one little button that we turn, we turn all the ones. At the end it all comes together.
SJX: Then what do you see as the greatest challenges for your company? And for the industry as a whole?
PM: For us, it’s to go all the way, the way we have embarked in. Second, that we can communicate all these good news to our customers, to journalists, to our end consumers. This will take time; it’s not going to happen like this. (snaps fingers)
And in a more general sense, in the industry, that’s the industrial side. In my view the industrial side is on the limits. It’s crazy, absolutely crazy. When you are in Switzerland you talk with suppliers of dials and other things - it’s a war. It’s a war for the strategic components. And obviously we are all not sure we are somewhere in the development like this (traces the outline of a rising curve that is trailing off). Underneath it goes up, but you superimpose a curve like this, so this could mean you could have again a year like this (the trough of the curve). The line underneath goes like this (traces a fluctuating line), but it’s never like this (traces a straight line). So the cycles make it very difficult. The cyclical aspect of the industry makes it difficult.
Maybe, maybe there’s too much capacity now; maybe there’s too many watches in the system, honestly speaking. For the real demand, we don’t know. So these are concerns.
Then you see certain economic signs in the US, it can go quickly like this. (makes downward motion)
SJX: You think it’s possible…
PM: It’s not going to stop us from doing the right thing.
SJX: But what do you think will happen if the watch industry is affected? Do you think that some of the brands that have sprung up recently will disappear?
PM: I hope not. This is what I always say, I hope the people, the consumers out there, not only see the big boys and the established brands, which are doing a great job, but for them it is really no motivation to change anything - what can I do to make a Rolex better? Tell me. Do I need to change the look? Do I need to change the engine behind it? It’s perfect. So who brings innovation to this industry? It must be the small ones. Small guys are the challenger in this industry; we are the guys who want to create something new. New haute horlogerie - this is our mission we have to fulfil.
SJX: Other brands have said the same thing, difficulty obtaining components like you said. It’s a war…
PM: There is a war.
SJX: So Maurice Lacroix has built a new factory; do you think that’s the way to go? Vertically integrate in order to survive the war, to compete better?
PM: Well frankly speaking in our view, it is an important step. It’s not going to be the answer to all these questions. You see, for us it’s not possible to be present everywhere. And I think not even these boys there in the back (gestures towards Georges-Henri Meylan, Giulio Papi and Olivero Bottinelli of Audemars Piguet who were sitting a short distance away from us), Mr Meylan, can be in all aspects, areas. Impossible.
So you have to make intelligent choices - where do you want to be integrated? For us we said we want to be integrated in all the movements and complications which make sense for us in the long run. So of course we want to do, maybe not everything in this movement, we don’t need to make every screw, doesn’t make sense because there are people who can make screws much better than we can. But of course we have all interests, if we get shortages in supply, that the critical things we can do ourselves.
L’Atelier de Maurice Lacroix in Saignelégier
SJX: A lot of components come from the Swatch Group, many important parts. Do you feel any pressure given that your supplier is also your competitor?
PM: I must say they play the game in a very fair way. Maybe also because they must. You probably know that the Swiss competitive authorities have actually investigated the case, so there are clear rules, but the problem is the same. They have such a huge demand that they are not able to fulfil supply any more. There is limitations on what you get from them also, not because they don’t want or because they don’t like your face or they say you are a competitor to our Omega. No - because they cannot, they don’t find the people. I heard that they bought a lot of new machines and they don’t find the people who can operate, in ETA. It’s crazy, it’s absolutely crazy. And it’s probably true.
SJX: Maurice Lacroix is owned by S. A. Desco…
PM: Yes.
SJX: So you are neither part of a big luxury or watch group - Richemont, Swatch, LVMH - but neither are you a true independent, a small company. You are somewhere in between. What are the pros and cons of being in this unique position?
PM: This is a philosophical question - what is an independent? For me, it means you are independent up here (points to head), you can really do what is right for your strategy. In that sense I understand the word independent, you are not part of a big multi-group, where you have to play [a fixed role]. That’s another definition for me of independent, when you are in a portfolio of brands, you need to play a certain role - with our brand, we never had to. This obligation to say, your watch can only be a sports watch, or your watch can only be a ladies’ watch, or your watch can only be complicated watches. We are free to do what we need to do, what is right for us - this is a privilege.
On the other hand it is not a privilege that we don’t have any ETA. (laughs) We have to do everything ourselves. Omega has the privilege to have the strongest manufacturer in the industry next to it, as a “brother”, so it’s also good. Advantages and disadvantages. For what we need to do, I believe the current set-up is ideal.
Cal. ML106-2 chronograph movement developed in conjunction with Andreas Strehler, made in-house at Saignelégier
SJX: And Desco is giving Maurice Lacroix its full support, with investment, capital?
PM: It gives what we need; sometimes we think it could be more, obviously. (laughs) That’s always the case. (laughs) That’s what it is.
It’s also good that we have to create something else you know, there’s a certain pressure, positive pressure, in the company.
Memoire 1 movement
SJX: Maurice Lacroix is clearly moving upwards with the Memoire 1, what comes next after that?
PM: Memoire 2! (smiles)
SJX: Memoire 2?
PM: (laughs) I can understand you’re focused on this watch that is exciting in the short term. At the same time you remember we told you we have created this little group, this atelier [L’Atelier de Maurice Lacroix in Saignelégier]. The atelier really has the mission to create unusual watches, unusual ideas and concepts that nobody else ever has invented - that’s the objective of this group.
Of course we are working on a number of concepts and ideas, and they are already pretty concrete. So these are projects in development, obviously there is a Memoire 2, there is other amazing things which will be coming, but this will be over a certain time period, over the long term. So I think in the next 10 years what we are trying to do is to amaze people like you, people out in the street who love watches with amazing watches.
Another view of the Memoire 1 movement
SJX: Over the next 10 years?
PM: Yes, at least for the next 10 years. We have ammunition for the next 10 years.
SJX: Can you provide any hints as to what’s next after the Memoire 2?
PM: (shakes head and smiles)
SJX: Will it be shown at Basel?
PM: Not immediately. The Memoire 2 is foreseen for 2011, and we have another grandes complication which will come 2010, something like that, totally new thing as well.
SJX: So your focus will not be on traditional grandes complications - tourbillons, grande sonnerie, minute repeaters?
PM: We will have it, but when we do tourbillon, it’s going to be a good tourbillon. Retrograde [Masterpiece Tourbillon Rétrograde, unveiled in 2005] for instance, looking at the retrograde we have, we continue with that. And the design will be just absolutely gorgeous. We have inputted a lot into this watch with La Joux-Perret, together with them we did this project. So this is still a nice tourbillon, we sold all the pieces in 2 days. This is not bad at all.
And this tourbillons are still popular with the consumer. If you go to Russia - not here anymore, here it’s over a little bit with the tourbillon - if you go to Russia, if you go to America, for them it’s still one of the biggest.
Masterpiece Tourbillon Rétrograde, limited edition of 30 pieces in platinum with black or silver dial
SJX: Really?
PM: Yes. And it is very difficult to do. A tourbillon is, pardon my English, it’s a sucker to produce a reliable tourbillon. It’s very difficult to make a good one. Ask him (points to Georges-Henri Meylan and smiles); ask him, he knows very well.
SJX: Now on to you, personally. You said you like watches; do you still collect watches yourself?
PM: No. (smiles)
SJX: Only Maurice Lacroix watches?
PM: (laughs) For the movement I change a lot my watches within Maurice Lacroix, because I started to like the models that we do a lot.
SJX: Which of the other brands, maybe competing brands, do you like the most? Who do you think is your strongest competitor?
PM: Well I think what these guys are doing is amazing (points to Messrs Meylan, Papi and Bottinelli of Audemars Piguet). Still full of admiration for what they do and how they do it.
Of course for us we have to look at people like IWC, Zenith; these are real competitors. For us, price-wise, also Omega, which are in my view, also improving the product, for the first time in my view, by quite a bit. I should not comment on others (laughs), but I think really, what they do is really much better than 5 years ago, in terms of design, in terms of sophistication, in terms of case, which is open as you know; it’s much better.
So the whole industry is really moving quite a bit. These are the key brands for us to be focused on, but I admire also what Richard Mille is doing. I like the brands we are distributing a lot. What Eric Loth is doing with the British Masters - fabulous. Also, Parmigiani, its Kalpagraph, I think it’s a smart move. This is also, if I was an end consumer, these are brands I would buy myself.
SJX: Buy yourself?
PM: Yes. If I am going to walk by and say what would I buy for me to have something unusual? I would easily buy a [Graham] Chronofighter and ride my Harley with it. (laughs)
SJX: So what other hobbies do you have other than watches, Maurice Lacroix?
PM: Not many! (laughs) I ride from time to time my bike, Harley; I play a little bit golf. So all the boring things in life. (laughs) But very little. The few minutes which I have I try to spend with my wife, and my kids who grow older and don’t want to see my anymore! (laughs) Two dogs also, which I have, I also like a lot. One is big and one is small. I like them, because you know, when you walk in the forest, I always go to walk in the forest on the weekend and I have to take them, this gives me a lot of ideas and inspiration.
SJX: Thank you for your time. Is there anything else you’d like to say to the forums, the website ThePuristS?
PM: Thanks for what you in covering your interest in Memoire. I think it’s great that there is people who give new ideas, who believe that innovation, people like you who believe that innovation is still possible in this industry. People who think everything is invented - they are wrong.
SJX: Thank you once again and we look forward to seeing the Memoire 1 in November!
Copyright Oct 2007 - Su JiaXian and ThePuristS.com - all rights reserved
The CEO who rides a Harley - In Conversation with Philippe Merk of Maurice Lacroix
