As our smartphones get Leica cameras, better optics, faster processors and biometric security sensors, you’d think they’d be getting more expensive. But they aren’t, in fact they’re getting cheaper. In 1960, a young computing engineer from the University of Pennsylvania introduced us to the concept of “scaling”. Douglas Engelbart hypothesised that as electronic circuits were made smaller, the components would not only become faster and need less power but they would become cheaper as well.

Gordon Moore, founder of the Intel Corporation would prove Engelbart right and Moore’s Law, his namesake economic theory also confirmed that technology would double in efficiency while dropping in price as production methodology improved and from computers to cars, it has held true except for one industry – watches. Therein lies the paradox of watchmaking: shouldn’t watches be getting cheaper as watchmaking technology improves?

When Abraham-Louis Breguet started us on the path of Breguet overcoils, Breguet numerals, tourbillons and functional decoration in the 1800s, watches were about as hand-made as they could get. There were no machines. You only had tools and you used them. Material sciences were so primitive, all manner of decoration had to be applied to ensure your watches weren’t rusting out a year later; components were so crudely cut and drilled that you finished screw sink holes and edges to make sure things fit right and ran correctly and efficiently with as little energy loss as possible.

When Jean-Richard arrived on the scene and improved efficiency of production, the methods were still tediously by hand, only better organised with armies of part-time watchmakers working cooperatively. The Industrial Revolution was when things really changed. The Railroad watch from Hamilton is literally an emblem for the age, invented in the time of railway networks, the steam engine necessitated precision on an unprecedented scale; once, it was unnecessary to keep uniform time because it was rare to cross timezones in a single day on foot or by horseback. With trains, changing timezones between towns and cities made the commercial enterprise of the transportation business a customer service nightmare – with missed trains, late connections, business necessity encouraged the Railroad watch and the growth spurt of functional chronometry.

The Paradox of Watchmaking: Shouldn’t Watches be Getting Cheaper with Improved Technology?

Fast forward 400 years later and the bulk of watches today aren’t hand-made but the answer isn’t as obvious or intuitive as it should be. Let’s consider two ends of the industrial spectrum – Rolex and Seiko.

There’s going to be little argument that at 770,000 watches produced annually (extrapolated from indie business reports) or close to 1,000,000 (according to numbers of Rolex watches submitted for COSC grading), that Rolex is simply one of the biggest and arguably the best producers of serially made, moderately to expensive mechanical watches on the market today. While the Rolex manufacture in Bienne is highly automated and producing numbers of watches which far outstrip many other Swiss watchmakers, Rolex continues to be priced at values above what Joe Street can afford and that’s for one simple reason – Rolex tends to stay at the forefront of technology.

For starters, Rolex watches are more complicated to machine (as Jeff Parke will attest to) simply because their grade of 904L steel just makes it more complicated to cut and shape than regular 316L steel. Parke, the Rolex engraving specialist we recently covered uses special carbide tools to cut into 904L, extrapolate that to the hundreds of thousands of watches and you’d be wondering why Rolex watches aren’t more expensive.

When you compare the scale of what Rolex does and how Rolex does it, their watches start looking competitively priced in comparison. Rolex watches aren’t just chronometers because COSC says so, they’re Superlative Chronometers because they’re tested a second time to a precision of -2/+2 seconds a day, beating COSC standards of -4/+6 seconds per day. We haven’t even begun to talk about material R&D, movement R&D, in-house manufacturing and smelting and then hand assembly.

What about Seiko and their vaunted Seiko 5? They’re a great example of technological improvements in manufacturing making production cheaper. For those unfamiliar, Seiko 5 is named for 5 attributes:

Automatic Movement Water Resistant Shock Resistant Day Function Date Function

While there are exceptions to this rule like the new Seiko 5s driven by 7s25 movements without date functions, the concept was introduced in the 70s when a mechanical watch with all those attributes was pricey. “5” became a cool marketing tool to communicate the superiority of a Seiko. Today, the cost of a Seiko 5 rarely exceeds $150 but at that price, there are drawbacks, chiefly you can’t manually wind most of them. The power reserve is not ideal and the default bracelet that comes with it is rather flimsy. Thus, while Rolex and Seiko are representative of what can be done industrially at differing spectrums of quality, they don’t quite explain the gravity defying paradox of luxury watchmaking.

Though many production have reached a mechanised epitome since the days of Longines, Omega and Zenith, there’s still an incredible complexity in conceptualising the watch, architecture of the movement and then putting it together. At higher levels of watchmaking, the greater the automation, the more important it is to invest in the brains in designing the process to run it, just ask Hans Wilsdorf. More importantly, increasing automation has led to another opposing fall in the availability of skill sets to do the work necessary in the execution of haute horlogerie.

Machines serve to make “Hand Made” even more expensive due to rarity of labour

When mechanisation is the norm, hand-made becomes rarer because the jobs that were available, just aren’t there anymore; so, while watchmaking has picked up over the last 20 years, the labour force which used to serve the industry pre-Quartz crisis just isn’t there anymore. In that sense, the atelier style of watchmaking like what Breguet practiced centuries ago becomes expensive with the confluence of rarity and cost of labour. To wit, Roger Smith and his namesake brand produces 12 watches a year, finished to the highest standards.

Mechanisation also serves to feed appreciation for hand-crafts and the artisans who practice it still. Thus a watchmaker like Kari Voutilainen becomes an artist on the level of Michaelangelo rather than a simple “producer of watches” – than change of status is crucial in that Voutilainen is no longer a maker, he is an artist. Thus, while the base materials like brass and steel components might not be expensive, the slavish application of skill and technique transforms and elevates simple material and construction into something undeniably evolved.

That’s not to say that industrial improvements and automation haven’t filtered down at all. At its most basic level, a company like Seiko (being thoroughly Japanese) can expect to trial and adopt new levels of automation in the execution of their watchmaking crafts. Grand Feu Enamel dials, a metiers d’art once the purview of only the highest practitioners of high horology are now available in machine made forms and now widely available in Seiko’s mid-tier Pressage line of watches. That said, it’s a proprietary process which is still very much secret, leaving brands like Vacheron Constantin and Patek Philippe to practice the age-old hand-made process, relatively unchanged from how the original enamel dials were made.

That is not to say that the enamel dials in the Seiko Pressage range are bad or poor. Seiko enamel dials are made by a master craftsman like Mitsuru Yokozawa and his team and they are quality controlled and made to the highest details; the only thing which differs is the production methodology and given our psychological preference for history and provenance, most consumers give these qualities greater weight in value and deference.

Yet, for all their mastery of industrial production and techniques, Seiko is Japan’s premier practitioner of high horology as evident in their Credor Eichi line. A pair of mortal hands has built and finished a watch to standards which approach and at times, exceed the capacity of a machine or robot.

The existence of mechanised automation only stands in reflection of the stark contrast of the value of work done by hand, a Seiko Credor Eichi II will sell for high five figures much in the same way a Monet auctions for millions over a reproduction at Ikea. At technology (and at times the genius of certain watchmakers) might reduce the costs of constructing a tourbillon, it is only logical sense based on pure fundamental economics that the rarity of superlative hand-finishing will only be possible by a handful of talented and skilled artisans. In that sense, the laws of supply (or lack thereof) and demand will ultimately tilt the cost of these productions into the higher end of the spectrum.