Franck Muller Group Adds New Facility

The Franck Muller Group, the Swiss luxury watchmaker, is significantly expanding its operations with a new watch production park in Les Bois, in northwest Switzerland’s Jura region, a longtime center of Swiss watchmaking.

It will invest $27 million to $30 million in the next two years to develop a complex of facilities specializing in parts and movements for its five brands, JCK was told by Didier Decker, Franck Muller’s chief operating officer.

The Group, headquartered in Genthod, Switzerland, outside Geneva, owns the luxury watch brands Franck Muller Geneve, Alexis Barthelay, European Company Watch, Pierre Kunz, and Rodolphe, plus Franck Muller and Rodolphe jewelry. It produces some 50,000 watches annually and saw estimated revenues of about $305 million in 2005.

The new site—two-thirds the size of its 38,000-square-meter headquarters estate— was necessitated by the company’s rapid growth into a luxury-watch miniconglomerate, coupled with lack of space to expand in Genthod.

Purchase of the 22,000-square-meter site, and the watchmaker’s plans for it, were approved in February by the citizens of Les Bois, a town seven miles north of La Chaux-de-Fonds, near the French border. Two-thirds will be an “industrial zone,” with facilities to produce watch and movement parts for all five Franck Muller Group watch brands. Some watches also will be assembled there, but Franck Muller and Pierre Kunz watches will continue to be done in Genthod, said Decker. The Group will occupy 60 percent of the site and lease two buildings to other companies, not necessarily watch companies.

An interesting feature is a 7,150-square-meter “mixed zone,” with apartments and houses for employees. While common in China, for example, where workers’ dormitories are routinely part of new watchmaking facilities, this is apparently the first time a Swiss watchmaker has built employee housing with its new workshops. (Half will be for Franck Muller workers and families, the other half for employees of firms leasing space at the business park.)

Expansion to Les Bois doesn’t mean the Group is leaving Genthod, said Decker. “All facilities and activities in Les Bois are new developments of the Group, and all jobs created are new jobs,” he said.

Construction will start within a year, with the first buildings (50 percent of the project) to be ready by October 2008. Up to 200 new jobs will be created there within five years, said Decker. Franck Muller now employs about 650 people, most at its Genthod headquarters.

The Franck Muller Group’s investment in the Jura region began last year, with acquisition of Pignons Juracie, a producer of watch microcomponents in Lajoux, and of dial maker Les Fils d’A. Linder and Rodolphe Watches & Jewelry in Les Bois.

Those acquisitions and this year’s purchase in Les Bois, said a Group statement, challenge what it called “the current trend of outsourcing watch manufacturing operations to China. The Jura has substantially contributed to creation of the Swiss watchmaking industry, and manufacturing watch components is the major industrial activity of the region. The Franck Muller Group wants to take advantage of … the skilled and experienced human resources of the region, while sustaining the Jura watchmaking tradition.”

Founded in 1992 by Geneva master watchmaker Franck Muller and businessman Vartan Sirmakes, the company quickly made a name among watch connoisseurs for innovative luxury watches, especially watches with complications. In 1994, it bought a small 19th-century estate in Genthod, on Lake Geneva’s shores, which it converted to its headquarters. Dubbed “Watchland,” it included state-of-the-art watchmaking facilities. It’s also the site of the company’s annual luxury watch show, where new lines are unveiled to clients and the press, and which always ends with a black-tie gala for clients, celebrities, dignitaries, and the elite of the watchmaking world.

In 2001 the company launched its own jewelry line (followed in 2003 with its own diamond cut) and bought two suppliers of dials and mechanical parts as well as its first non-Muller brand, Italian-designed European Company Watch. In 2003, it acquired the Pierre Kunz luxury brand.

Growth plans hit a snag in early 2003 when a dispute between Muller and Sirmakes led to Muller’s leaving the company. In late 2004, the two announced a pact ending the feud, designating Sirmakes as chief executive officer, assisted by Decker and chief financial officer Miguel Payrò, and retaining Franck Muller as consultant.

The company recovered quickly, and in 2004, as part of a multibrand strategy, it bought Rodolphe Watches & Jewelry. It gained majority control of French luxury brand Alexis Barthelay S.A. in 2005, and company officials say it could acquire one or two more watch brands by the end of 2007.

In 2005, the Group began making its own automatic and hand-wound movements for its watches. Also in 2005, Sirmakes’s son launched a new luxury watch called Cvstos. Though not part of the Franck Muller Group, it’s distributed in America by Franck Muller USA.