If it’s perfect then we don’t want it.

A few years ago I've attended Geneva Watch manufacturing fair - an annual event known as "the largest international trade show dedicated to high precision". Even back then, when times were 'normal', this largest fair of it's kind attracted no more than a few hundred exhibitors and a few thousand visitors. Independent horology is a rather modest affair - there are hardly any Swiss makers or artisans that have not been already bought into big brands. A small stand that really grabbed my attention was a porcelain and enamel dial maker. The whole business is one man show- a Swiss craftsman in his late 70s with an amazing display of hand made, one-off dials. We struck conversation quickly - he was interested in Australian watch brand story and was very keen to make a small batch of rebelde enamel dials. There was however one small problem: at around $400 per dial, we simply could not afford his craftsmanship - at that time, at least. Enamel dials are next level in dial manufacturing, and only top Swiss makers offer with such unique, hand crafted dials. The Japanese tradition of enamel work has a long history. With its unique sheen and warm feel, enamel creates a captivating watch dial with beautiful colour fidelity that can last more than a hundred years. And thanks to Seiko’s venture into the field of enamel and it’s collaboration with Japanese masters like Mitsuro Yokosawa, enamel dial Seiko watches are now the pride and joy of watch enthusiasts worldwide. At the price anyone can afford. “For almost half a century, Mitsuru Yokosawa has been expanding the boundaries of enamel, mastering time-honoured techniques and gradually creating new ones. As his experience broadened, the layers of enamel he was able to apply became thinner and thinner. He is now able to apply a flawless enamel coat just 0.1mm thin. Such precision requires not only exceptional visual acuity, but also the seemingly magical ability to make minute adjustments to the enamel composition based on fluctuations in humidity and weather conditions. Aptly, it would take the skills of a magician to create the face of the new Seiko Presage.” On today’s offer we have a Seiko SPB047J- made in Japan. This is the most affordable enamel dial watch in the Presage range and probably my favourite. Why? Because I get a real kick looking for “imperfections” in the enamel layer. The more I find, the more I like it! Because those small imperfections are what gives enamel watches their own, unique, unmistaken character; the masters touch of humanity. On this particular example, there is a tiny line which goes along the edge of the calendar window. Of course, it so not visible by naked eye- only under high magnification. But if you know where to look for it, you’ll find it. And because of it, your SEIKO Presage is truly your watch – a unique piece you can tell apart from every other Presage out there. (Is your new Rolex different or special in any way than any other Rolex?)

I couldn’t resist but to take the mechanism out of the case. And there it was – a whole world of “imperfections”. Hidden from the eye, the dial edge is left in it’s raw state, visible only for watchmakers to admire.

Should you invest in Seiko? Yes, but only if you feel special.

Seiko Presage Special Edition SPB047J 40.5mm case size. Stainless steel case and black leather crocodile strap. White enamel dial. Sapphire crystal. Automatic movement - calibre 6R15. Water resistance 100M.  Price: $1,800

"Always one step ahead of the rest"

SEIKO New range launch 2021/22 - W O W !!

Survey results first: it's fair to say that no modern watch could compete with the 1973 Seiko gold Chronometer which won you over in an avalanche. Over 1,000 subscribers casted their votes, and here is the result:

The Seiko event - the new watch range launch for a handful of premium authorised dealers - was a blast. It started with a dinner at 6:30pm last night - that finished at 11pm! It was a fairly informal event where attendees were given an opportunity to mingle, get to know each other, and chat with the Seiko staff. Dare I say, It almost felt like a family gathering. Despite COVID, Seiko Australia had yet another prosperous year.  Seiko took the risk - early on, the decision was made to retain every single employee, keep going strong, and keep investing in marketing and relationship building. That strategy paid off handsomely.    This morning, at 9:00 sharp, we gathered once again at Hilton for an official 'unveiling' of the new watches. Unfortunately, I am not at liberty to disclose any photos (yet!) but let me assure you that you will be impressed by a number of new models. Let me just say that the new 'vintage inspired' line will be a killer.  To my surprise, Mr Yukiaki Suganuma, the Managing Director of Seiko Australia, presented yours truly with a very special gift. Mr Suganuma - who insisted that we all call him Yuki - was very curious to learn more about YOU - our supporters and newsletter subscribers; and the way we interact and promote Seiko, to what has been described as the 'top echelon of Australian horological enthusiasts'. It didn't need much to explain the obvious: Australians love Seiko watches because Seiko is an honest product with a proven record for reliability, priced rightly and fairly. It was a pleasure to accept the present on yours and our behalf.

Of course, I could not resist but to ask Mr Yuki for a quick wrist check - he was wearing the Novak Djokovic SPB143J !!

For a small Australian watchmaker, as well as for all watch enthusiasts, the words of Mr Shinji Hattori- CEO and Chairman of Seiko - are both inspirational and visionary: "Dear Friend of Grand Seiko and Seiko, This year, we celebrate the 140th anniversary of the founding of Seiko by my great-grandfather, Kintaro Hattori. I see this as an opportunity to reflect on our long history, to take stock of what he and my predecessors have achieved and to look ahead to the future. Kintaro directed the company until his death in 1934. He became known as the "King of Watches in the East". He created a company that could produce timepieces of high quality and remarkable precision, and he guided Seiko through good times and bad to become the leading watch company in Japan. I know he would be proud of our vertically integrated production system, which covers everything from initial design to parts manufacturing and even materials development. Yet his greatest legacy was something longer lasting and more valuable than our manufacturing methods or our business model. It was his vision of the kind of company he wanted Seiko to be - one that cherishes its customers and all its stakeholders and is truly trusted by society. Kintaro's spirit is clear in his words that Seiko should be "Always one step ahead of the rest" and in the lesson he repeated to his colleagues as they went about their duties: "Don't run but always keep going". His words still resonate and continue to inspire all of us as we face the challenges of these demanding times and aim for a brighter future. I like to think that Kintaro would be proud of what we have achieved in recent times and of our ambitious program for 2021, which we have developed in line with his vision and spirit. I am confident that the collections we are going to show you will live up to Kintaro's ideals, and that the coming year will mark the start of an exciting new era for both Grand Seiko and Seiko." It will, indeed.

An amazing find: 1996. Omega 3572.50

 

Straight to the point: over the past 27 years I have sold more than 300 Omega Moon watches, and had repaired at least another 300. For all those years I have not come across a more beautiful example than this 1996 Ref 3572.50 with a tritium dial, see through case back and gold 863 movement. In particular: the colour of tritium luminous markers is simply stunning. Of course, every now an then I do bump into a tritium Rolex with the similar colour dial, but all those Rolexes are from the 1960s and 70s which have had over 50 years to 'develop' this most sought after coloration. I am not sure what is the cause of such dial tone. Perhaps a unique mix of tritium phosphorus, or perhaps the unique lacquer applied over the hour markers, radioactivity, x-rays, or some other completely unknown source it has been (or has been not) exposed to.  If you are a serious Moon watch collector then this is a Moon watch that is going to change the way you see and appreciate vintage watches. It will set the bar so high, that any other tritium dial Moon watch will be simply a grade lower or a fraction of this dial. This is the punch line: Omega can remake gold 863 movements if it ever decide to do so, but even Omega can not go back in time and recreate the same tritium dials as they did in 1996. And even if they could, there is absolutely no way to predict when a dial like this one - if ever - will mature to such unique colour.  Price: $12,800 for arguably the best dial Moon watch you'll ever see. I say you snatch it- or I'll keep it for myself. Watch code: K7590.

"Hey, what is the best way to support the NH project?"

 

It's easy: there is one watch that is incredibly important to us - and if you really want to support us, then this is the one you should buy: NH Mark 1. 1. Why? Because this is the only watch that brings in generous profit. We make more money on Mark 1 than on any other watch we sell. The reason is simple: it is a mature project where the initial investment in development and design has been long paid off. The Soprod (Swiss) movement is issue free. No under-guarantee returns and plenty of happy customers. Perfect 40mm size. 2. When you invest in Mark 1, you are DIRECTLY investing in the future of Australian manufacturing. All the profit stays here and all the taxes - from GST to company tax, to individual tax - stay in Australia. Mark 1 enables us to employ and train apprentices, to invest in machinery, and to grow.  We are very proud that we can offer you this unique opportunity: to be a proud owner of an Australian watch. Mark 1 is designed and assembled in Australia by watchmaker(s) who also make watches - in Australia. Generations of accumulated watchmaking skills and expertise are built into the Mark 1 and unlike almost all other watches, YOUR Mark 1 is assembled by an actual watchmaker you know; one who cares about you as much he cares about your watch. Can you assign a dollar value to that? Price - unchanged since very first release, still the same: $2,800. In stock, ready for immediate delivery.

Power reserve, in plain English

"Yesterday, Rolex has released a few more models with the new "72 hours power reserve movement". Why is this such a big news when Panerai, JLC, Omega, and IWC already offer 8 days going mechanical watches?" This is a very good question. Before we go further: add to that list Seiko Prospex models with 6R35 movements with 70 hours power reserve which could be had for just $799. In other words, 70 hours power reserve itself is not a big deal. However, like with anything in physics, larger power reserve always come with some kind of unwanted trade-off. Power reserve is simply an amount of energy on disposal to run a system. Here is an example: in theory, a small car battery (60Ah)would power up a 50 Watts LED light for 12 hours. Put two car batteries in parallel, and you'll get 24 hours of light. In watches, the energy to run the watch is stored in the mainspring. There are number of 'consuming devices' in the system, but one of them, directly responsible for timekeeping, is the balance wheel (oscillator). More mainsprings (barrels) is one way to provide more energy, but this solution comes at the cost of increased watch size (both diameter and thickness). The other solution is to lower the consumption and increase the efficiency of the oscillator. There are two 'powers' in the balance wheel system. The first one is the balance power, which is the amount of power presented in the oscillator, calculated as a product of balance inertia, amplitude squared and frequency cubed. For the Rolex calibre 3135, the balance power is 372 micro Watts. The second power is the oscillator maintaining power - the power required to keep the oscillator running. Again, for the Rolex 3135 that is 1.24 micro Watts. Fine tuning the ratio between the two is an engineering challenge because extending the power reserve by reducing the energy consumption of the balance wheel will come with a trade-off: degraded performance and poor timekeeping. The simple question is this: what do we really want- more power reserve (watch running longer) , or more power allocated to maintain the performance of the balance wheel, and better accuracy? For the past few years Swiss watchmakers have been trying hard to increase the power reserve while maintaining good timekeeping. The goal is to reduce consumption by making the balance wheel oscillating system as friction free as possible. Increasing the beat (frequency) is one of the ways forward, but there are number of solutions available: changes in escapement geometry, low friction materials, magnetic bearings - or completely new innovations such as the silicon oscillator by Zenith. Back to the new Rolex: my understanding is that the 72 hours power reserve is largely result of  improvements to geometry of the standard Swiss lever escapement increasing efficiency by 15%.. Rolex calls it "The Chronergy Escapement". It has been around since 2015, but until recently, it was reserved only for and Day-Date model. However, Omega Calibres 8500 and above already benefit from Daniel's coaxial escapement which is even more energy-transfer efficient. In reality, Rolex is once again simply catching up with Omega.

 

No signs of slowing down: our latest recruitment video is already generating interest!

 

Recorded in Brookvale, three minutes long, down to the point, refreshing, loaded with optimism for our Manufactured in Australia project. Target audience: smart school leavers. https://youtu.be/TolUvxieJdw

Can you stop this Gladys?

Small business Diary, 7 April 2021.

"Dear Nick,  Thank you for your time last week where we reviewed the attached Policies for  the 2021-2022 Insurance period. I confirm that all policies are in force for the next 12 months. Invoice 1426 relates to the Brookvale cover. This policy has increased by $2,200.00 over last year. The Insurers increased the premium $1,136.00 due to the general cost of claims experienced by Insurers over the past twelve months. However, the NSW Government charges added an extra $1,000.00 to the premium which increased the cost as shown..." Stewart, our insurance broker, is a decent man. We see each other once per year to shake hands over Insurance cover. Stewart loves us: we keep the records straight and honest, we make no claims and we pay our premium in one go. Yes, we take insurance seriously. Our small business is covered by four policies: public liability, stock, shipping and one which covers the Brookvale manufacturing workshop. The first three premiums are unchanged from the last year, but ironically, it was the manufacturing policy which covers tools and equipment that was hit hard by both sides: the Insurer and NSW Government.   NSW Emergency Services levy went up by 35% from last year. NSW Stamp duty went up by 20% and combined with base premium increase of 17%, the GST component went up by 20%.

Last year, National Insurance Brokers Association (NIBA)  wrote to the NSW Premier and the NSW Treasurer calling on the Government to complete the reform of the Emergency Services Levy. “We made it very clear that we do not need to wait for another Royal Commission to recommend the reform of this unfair and unjust revenue stream”.  It was extremely disappointing to read the Treasurer’s comments. The Government has indicated it intends to collect $1.1 billion from policyholders in the 2020/2021 financial year. This is a massive impost, and will be 45 per cent higher than the amount raised in 2018/2019. “NIBA will work with the Insurance Council of Australia to keep up the pressure on the NSW Government to follow the lead of the other States and Territories, follow the recommendations of any number of Royal Commissions, reviews and inquiries, and abolish this unfair and unjust levy.” According to Reserve Bank of Australia (https://www.rba.gov.au/inflation/measures-cpi.html) the average inflation rate sits around 0.7%. Actually, in the June quarter for 2020, for the first time in decades, we had negative inflation (deflation) of 0.3%! Yet the NSW Government has put their greasy hands in manufacturers pockets mercilessly, hitting us with a 35% increase on Emergency service and 20% on stamp duty.   To Gladys Berejikian: Darling, you are choking us to death. Please have a mercy on small manufacturers before it’s too late.  But then again, the more pressure Gladys puts on me, the more determined I remain to keep going on.

Albo vs. Scomo vs. Australian Manufacturing

 

Last week, Labor Party leader Anthony Albanese promised $A15 billion dollars toward advanced manufacturing. Assuming, of course, that Labor wins the next election, who would be entitled to grants and loans? Medical science, low emission technologies, engineering and space. Car, train and ship manufacturers. Food and beverage processing and transport. Lithium battery manufacturers, rare earth miners and even resources and agricultural businesses. Albanese's plan to reinvent Australian manufacturing is remarkably ambitious. And while Labor's $15 billion over 5 years may sound like a lot of money, let's put things in perspective: this year, China will spend more than $A500 billion on R&D alone. On the other side, as announced in October, "Scott Morrison has selected six priority areas for support in a $A1.5 billion manufacturing plan: resources technology and critical minerals processing, food and beverage, medical products, recycling and clean energy, defence, and space." Ironically, Albo's $15 billion is 10 times more than Morrison's pitiful $1.5 billion. (And while we're talking money, Australian gambling 'industry' revenue last year was $55 billion!)  For a small, Australian, advanced manufacturing start up business like ours, voting Labor may sound like a good strategy. Yet, I am still to be convinced that throwing money at manufacturers will make any significant difference. Advanced manufacturing is a tricky business. While substantial investment in equipment is a prerequisite, investment in skilled people is far more important. If the government is serious about restarting and revitalising Australian manufacturing, then their priority should be creating a healthy environment where each and every business has an equal opportunity to grow and succeed. Here is my shortlist of suggestions that would make a difference quickly: 1. Slash corporate tax rates to zero for the first 10 years. With no tax burden, manufacturing businesses would reinvest every dollar back into their plants and equipment. For the same reason a parent cannot charge boarding to their 7 year old child, the government should not tax an advanced manufacturing start up. 2. Wage subsidies. Turning an apprentice into a highly-skilled machinist takes time and money. Why should a business bear the full cost of training, when it is the government who eventually benefits from this highly skilled worker? It is the business that employs, trains and pays employee's wages. It is the government that collects tax on wages. If the government's desire is to advance manufacturing and grow employment, then it is only logical that there should be a wage subsidy. Let's partner together— how about a 50 per cent wage subsidy for the first 5 years for each employee? 3. Government guarantees. One more time: we are happy to partner with the government. If our business wants to import a cutting-edge piece of equipment worth $A1 million, then how about splitting the investment equally? If I am to mortgage my house for $500K then the government should provide a guarantee on an interest free loan for the same amount. I mortgage my house, you mortgage yours. I trust you, you trust me. I work hard for Australia, Australia works hard for manufacturers. Win-win. 4. We make, you buy. If a pig farmer in a developing country can negotiate a Government’s buy back guarantee on pork bellies, then it is only reasonable that an advanced Australian manufacturer (who is prepared to risk it all!) should expect a preferential deal with their government. We are shocked by how casually and commonly Australian institutions do business with Chinese manufacturers. Lured by "cheap prices", they are happy to outsource the last screw and last PCB board. Australian businesses cannot compete with China. The government needs to make up its mind: either it starts supporting Australian made and pays the price, or it continues to buy from China. We can't have both national sufficiency and domestic production AND low prices. If the Japanese Prime Minister wears Seiko, why do Australian politicians wear Apple watches made in China? And once again, emotions aside, the reality check: here is the actual amount of money that Morrison’s government granted to Advanced Manufacturing for states of Victoria and South Australia last year: 0.046 billion dollars. https://www.business.gov.au/grants-and-programs/advanced-manufacturing-growth-fund/grant-recipients Forty six million- the amount of money the Australian gambling industry collects in just 7 hours. We are at the fork. As a country, we can either get serious about investing in domestic manufacturing, or we can remain a dirt-exporting colony. We have a choice to make: to train and employ Australians, or to export jobs to China; to work hard, plan carefully, prioritise and hope to succeed, or simply give up and invest in other industries that require less investment and unskilled labor.  As always, only time will tell . . . 2021    China’s research and development spending:  $A 500 billion 2020    Australian gambling revenue:  $A 55 billion 2022?  Labor investment in Advanced manufacturing:  $A 15 billion 2020?  Liberal investment in Advanced manufacturing:  $A 1.5 billion 2020    Actual Liberal government  investment in Advanced manufacturing for Vic and SA:  $A 0.046 billion

From the House of Handley

 

Today a Watchmaker's Magazine arrived in my inbox. On the cover: the reprint of the very first issue published in July 1953. What grabbed my attention was the advert by Handly: Australia's largest watch case manufacturer. The story goes back to the 1920s when Mr Handley and Mr Tilley got into the watch case manufacturing business. Originally established in Victoria St Abbotsford, they moved from the corner of Church St to 655 Victoria St in 1929 into a new purpose built factory - the modern art deco building featured in the advertisement. What fuelled the business growth was a need for locally made watch cases: after the first world war  Australia imposed high import duties on complete watches so many Swiss movement manufacturers exported bare movements to be cased up in Australia. Handley made cases for Rolex, Tudor, Unicorn, Cyma, Movado, Tissot and Omega. In 1928 Mr Tilley went to Switzerland to source "the most modern" machinery for watch case manufacturing. From press reports of the day his visit was far from well regarded by the Swiss watchmakers and they threatened anyone who supplied him with machinery with sanctions. They even approached police to have this "undesirable trader" deported ( which had previously happened to two Canadians). The machinery was subsequently purchased and contracts obtained to produce cases for Swiss brands. In 1929 one hundred staff were engaged in watch case manufacture. For whatever reason Handley and Tilley parted ways in 1934, with Tilley signing an agreement not to work in the industry for a given time. In December of the same year all the assets of Handley & Tilley were sold to J W Handley P/L. Up to this point the trademark had been an open hand with the text HANTILY.

After the split, the logo was changed to HANDLEY.

(the Handley and Tilley company was officially deregistered on 11/4/1935) In 1935 Handley launched legal action against Tilley for breach of the 1934 covenant when Tilley set up a company in his wife’s name and starting making cases and trying to poach customers from J W Handley P/L. Handley won the case and received 1000 Pounds in damages. J W Handley went on until the 1960’s and made a great variety of products- during WWII they produced such things as compass cases and gun sights for the military. Handley eventually ceased production in the 1960’s.  The story of a once successful Australian manufacturing business which failed to extend it’s life past the owners life is a good lesson for us. Would Handley be still around if he was able to expand from manufacturing to retail? Why was he unable to grow the partnership with Rolex and Omega? Why was no one on his team interested in taking the business over and taking it to next level? Whatever is the case, it is clear that keeping the business alive and relevant beyond one generation is difficult. As we are setting ourselves up for ‘manufacturing in Australia’, planning for the future is clearly the most important step. (To be continued...)