Since 2009, Patek Philippe President Thierry Stern has been the guardian to one of the few remaining family-owned independent watchmaking brands in Switzerland. While his family name is Stern, the foundational philosophies of Antoine Norbert de Patek and Adrien Philippe have been protected and developed since the Stern family’s acquisition in 1932 – an epic takeover in the history of reverse takeovers.
Once more, we find ourselves in the midst of turbulent economic conditions where the record CHF23 billion sales levels of 2013 are unlikely to be seen again and yet Patek Philippe’s Stern remains positive and more importantly, aware that his is one of the few brands that having not over-extended themselves during the Chinese gold-rush, will be better positioned to decide on whether production numbers can comfortably increase to the demands of a rapidly growing number of younger Patek Philippe aficionados.
Thierry Stern on Patek Philippe and its Legacy of Watchmaking
In 2016, Patek Philippe produced close to 60,000 pieces. 10,000, primarily ladies models, using a quartz movements with the rest of the production numbers populated with mechanical and automatic calibres. There’s much to say about Patek Philippe complications but yet, given the Stern family’s history of dial-making, Deployant decided to shed some light on what is arguably the most important component of any timepiece – its face.
Right now, dials are not given a place of prominence like complications, yet the Stern family with a background of dial-making, pulled off the biggest reverse takeover in the history of reverse takeovers, can you tell me how your family came to acquire Patek Philippe?
Dial-making was our core business and we had been supplying for generations. At the time, the good business was in the dial factory, there were two brothers who decided to propose a takeover when a major crisis arose and Patek was not in a really good shape.
Of the two, one would run Patek Philippe and the other would continue running the dial factory. An upcoming biography on the manufacture will highlight a series of interesting letters back and forth about how Patek was the poor business and how the dial factory was the really strong business.
After a few years after the acquisition, the Stern family pushed Patek Philippe to start making new movements and new cases; eventually the tide began to turn, the dial business was becoming weaker as Patek Philippe grew stronger and the family eventually decided to focus on Patek Philippe as the core business and sold the dial factory. I don’t know when exactly the family sold the business but I do know that I’m very happy for sure [Laughs].
We should also remember that the dial provides the identity of the watch, that’s the first thing we should have because it’s not easy. We have always been strong creatively and without that, it’s pointless to have the best dial factory because without creativity, you cannot express beauty. – Thierry Stern on the importance of the watch dial
Just how vital are dials in a watch?
The dial is the face of the watch and it provides a watch its unique identity which is why a few years ago, we acquired a famous dial maker. The dial is such an important element because it sets the tone for the watch; for me it’s also a full circle because for years it bothered me that Richemont Group had once owned the Stern dial factory.
Did you rename the recently acquired dial factory Stern Cadran?
No, that was previous moment in history, I would much rather focus on the Patek Philippe brand while keeping the Stern name for myself.
What would you say was the turning point where Patek Philippe became a good business for the family?
I think it was when we began experimenting with new cases but I believe you also need a bit of luck to be successful. I wasn’t there but I think at the time, what made Patek Philippe strong again was internal development of new movements. It was a big challenge and it cost a lot of money.
Was making the movements a natural progression from making the faces of the watches?
I would say yes, the family was making enamel and engraved dials for Patek Philippe at the time. If you’re already so deep into watches, getting even more intimate with other components was natural and I believe at one point, they were working together in the same building so I’m sure the relationship was close.
Honestly, the defects are not visible to the naked eye, but when I know that they’re there, I have to make the difficult decision to destroy it because the person making them has spent weeks of his life working on just that. – Thierry Stern on the levels of perfection sought by Patek Philippe
What separates a good dial from a truly great one?
Take a look at our Pilot’s dial- Patek Philippe 5524G (Calatrava Pilot Travel Time) recessed indexes filled with luminescent coating. All the skills of the manufacture can be found in the way the dial has been finished and a good showcase of our expertise. We should also remember that the dial provides the identity of the watch, that’s the first thing we should have because it’s not easy. We have always been strong creatively and without that, it’s pointless to have the best dial factory because without creativity, you cannot express beauty.
It’s also a mix of trying to understand what you want and how to demonstrate it. Second, to have a really fine dial, you have to understand how it is made because without knowing that, you cannot go very far. You might have a good idea but you aren’t able to describe how it can be done. This goes beyond simple design. Third, you need to have the people able to do it because it’s all about the details.
Today, you can make dials for CHF20, CHF100 and CHF1000. If you want something of really excellent quality, you can’t have it for CHF20 because a lot of money has to be invested in the tooling, the people and the research to be able to develop new indexes or marquetry or enamel or even to print something on the dial. Perfection is not easy [snaps his fingers], even if you have the money, without the right ingredients, it’s not possible. Even if you have the knowledge, it’s not enough without the money. You also need the will to invest. I prefer to re-invest whatever we earn into Patek Philippe rather than just earn the dividend, this is the best asset in my family and we should feed it and get the best technology and techniques for it.
We have a very high level of execution even for things like the cloisonné dial but even then, i have to reject some of them because even though they look just fine, they’re not perfect. Honestly, the defects are not visible to the naked eye, but when I know that they’re there, I have to make the difficult decision to destroy it because the person making them has spent weeks of his life working on just that.
I don’t imagine it happens very often?
It does, it’s not uncommon. As soon as you’re willing to reach perfection, you have to accept that there will be defects. It’s a decision even if it is a costly one to throw perfectly good dials in the garbage but the credibility of the company is at stake. But this is not about my principles only, everyone at Patek Philippe believes in the same thing.
A gimmick would be a watchmaker making an iWatch, it’s not an evolution of watchmaking, it’s a computer on the wrist, it’s an evolution for Apple but not for Patek Philippe. – Thierry Stern on the importance of innovation and not gimmickry
It’s amazing that you talk about heritage while you are pushing the limits of that heritage with innovation…
But that’s part of my heritage. We grew up like this. The tradition of innovation is part of our DNA, how can you be a good watchmaker if you’re not willing to evolve and discover new things? For me it’s not logical when a watchmaker says he does not like change and technology. It just means that at one level of your life, you decided that you were good enough and you stopped. This is fine for others but not Patek Philippe. I wasn’t raised like this and neither of my father or my grandfather.
The founders had already decided that “we should always develop the new” and always find new ideas and new technologies, this should be the dream of every watchmaker and not to keep things as they were over 100 years ago. If that were true, you can stick a piece of wood in the sand and tell the time but that’s not what people will accept.
We have to evolve but the hardest part is about avoiding gimmicks and focusing only on what is useful for the watch in terms of accuracy, aesthetic and fabrication- sometimes you can have a great idea on paper with no method for fabricating because the components are too small. Sometimes I have to wait 5 to 10 years for technology to catch up and allowing to fabricate what I had envisioned. A gimmick would be a watchmaker making an iWatch, it’s not an evolution of watchmaking, it’s a computer on the wrist, it’s an evolution for Apple but not for Patek Philippe.
You can fix a mechanical watch, you can’t fix an iWatch, you buy a new one.
Speaking of evolution, with so many watchmakers moving away from the etablisseur model to the integrated manufacture model; You were already at the top using calibres from other watchmakers and it didn’t bother anyone, , do you feel something was lost in translation? Is it really a necessary step to go in-house?
We were always in-house considering the quality we had. When it came to vertical integration, it was a matter of quality control as it was very hard to control the consistency of suppliers and we were never very successful.
I believe some companies can work with external people without any issues and some verticalise more for the money than for the knowledge, with Patek Philippe it was always like this; so when i decided to acquire the dial factory, one of the objectives was also a defensive strategy because the conglomerates have been aggressively acquiring a lot of suppliers. The other objectives was that Patek Philippe required the right quality level and in order to that, they need to work only on Patek Philippe. How can I seek perfection from someone who has other customers willing to accept a certain level when I cannot? It doesn’t work.
Now, when business is slower, that strategy has hurt them because even when sales don’t come, they still have to pay those people.
Business in 2016 has been particularly challenging, how has the year been for Patek?
It’s been challenging and Patek Philippe has to adjust to the conditions of the market. Our focus is to develop the business locally wherever we are – US, Europe and Asia. It may be more intense in terms of events and local investments but it pays off. We can’t say it was a good year but I can safely say we did better than 99% of the market because we have been focused on growing local for the last 10 years. When people were opening 20-30 points of sales in China, we were more cautious, we opened 2 points but we kept growing our presence in US and Europe rather than join the China gold-rush. Yes, we lost some sales but today, our strategy has paid off.
When you say that the strategy has paid off, are you saying that other brands have over-extended themselves?
Yes, look at the reports, some of the official figures are at negative 40%. Obviously we are not in that kind of siutation. We also cannot forget that we have to adjust our expectations on what is considered “normal situation”. The industry has been on steroids for many years and now we’re getting back to reality. We have to get ready for a more realistic amount of production, for me, it’s not a big deal. It’s not a major crisis at Patek but the slower pace gives me a little more time to settle issues that I might not otherwise have had time to look at. I can pay more attention to the details and the details are making the difference, for once we have time to sit and think about the future and to execute ideas that we never had time to do initially.
Too many brands started over-producing in China in 2009, it’s terrible. When everything goes well, no one cares but my father, Philippe Stern, cautioned against that direction because he had seen the crash in the past before. We will focus on the quality and maintain it. 2017, there will be no increase in production from the 60,000 pieces. With a new building, we can prepare for Patek’s future.
Because of current conditions, some brands have aggressively pursued commercialism and now the term “collectors” has become taboo, is there a middle ground to walk between commercial pieces and watches for collectors? Is there such a thing of being too commercial?
It’s a difficult question [Laughs]. When it comes to watch collecting, there is a pattern. You start with a certain hierarchy of brands where Patek sits at the top of the pyramid. This is a pattern we’ve seen worldwide, at one stage you will eventually focus on one brand, usually it’s Patek because you have reached the top. It’s not commercial, it goes beyond the simple fact of purchasing something; because our watches are intended to be handed to your children, it takes on a whole new definition.
Deepa Chatrah, Managing Director of Patek Philippe Singapore adds: When it comes to allocation, it’s always a struggle at Patek because we have become a generational item where you are very lucky to receive it as a first watch. And in all honestly, Patek usually begins that tradition of collecting and if you look at our allocation, width of collection and points of sales, what you get is a brand which is actually small.
Our challenge is that the consumers are getting younger and the industry heavily markets to them while we are very conservative in our approach. When something is too good, headquarters always alerts us to pull back because we look for a consistency in what the consumers want and what the brand can deliver. So there’s a consistency of quality to look for.
Stern continues: Take the Calatrava Pilot Travel Time for example, when we started design on it, we could have just produced a few and that was it but when we found that so many young people wanting it, we had to ask ourselves, do we keep production small when so many of the younger collectors want it? Should I miss this opportunity of getting a new generation interested in Patek or do I let it go and they might buy an older model? It’s difficult and for me, it was possible that i underestimated the demand. That said, even with calls to produce more, I say no because Patek is not going to be a mass producer.
Compared to 20 years ago, we have more people willing to buy Patek but we didn’t change the quantity of production, maybe we should have adapted to the greater demand a little but Patek will never be a Rolex.
Throughout history, many brands rise to the top and then they lose that position. So my question is, can Patek Philippe defend this position indefinitely? Or if you can’t, what is the legacy do you wish to leave behind?
I will defend it for sure. I don’t want to think about the latter and I believe we can do it, we have the expertise in commercial, watchmaking and artistic fields; it would be difficult for another brand to catch up as we will have a 20-30 year lead. As long as we have the passion and we are well organised with good people, I don’t imagine we can fall. Patek Philippe is a never ending story of creation and renewal, we will always be there with fine products and I can’t imagine a day where I will run out of ideas. Movements may be getting more complicated but they’re always useful and not gimmicks, the evolution of technology is also helping us bring new ideas to fruition. Barring some catastrophic mistake, it’s unlikely Patek will fall but there will never be a time for us to sit and relax.
This interview has been edited for clarity.