Interview With Guenter Blumlein,
Head of LMH (IWC, Jaeger, Lange)
After last month’s interview with Michael Sarp, the new head of IWC, a talk with Guenther Bluemlein, the man who used to hold that same job and is now boss of LMH, the parent company of IWC, Jaeger LeCoultre and Lange. This article is from the Austrian magazine Uhren 2/97. As quite a few of you wrote me that they enjoyed the translation of the last interview, I’ll be including another, very special one done with Nicolas Hayek of SMH recently on my next News & Gossip page which should be updated in the coming weeks. For now, all I can say is that it will be very different…
Guenter Blumlein (54) is the German head of LMH (Les Manufactures Horlogeres). He’s an engineer by profession specializing in fine mechanics and started his career in the watch-business as chief of quality control at Junghans. In 1981, he was employed as a consultant by IWC, who at that time were in the pits, to say the least. The rest is modern watch-industry history…
Some introducing information: LMH is held by VDO who again are hold by the giant multinational company Mannesmann. VDO are specialized in manufacturing instruments like speedometers and other measuring devices, especially for the automobile industry.
Uhren: Mr. Blumlein, for a short time you’ve been residing in what’s probably the nicest and biggest office IWC have to offer. You have a great view over Schaffhausen but at the same time hardly have anything more to do with the brand.
Blumlein(GB): I wouldn’t formulate it that way. But you’re right. The operative business of IWC is now in the hands of others.
Uhren: Does that mean that the brand isn’t steered by remote-control by the prolific president Guenther
GB: No, not at all. I admit, that I’ll stay involved in product-design and -innovation and that I have a lot to say in regard to marketing and that I overview the complementary (meaning, all 3 brands make products that complement but don’t stand in competition with each other) direction of the houses. But basically, all three brands are run as individual
profit centers. By Swiss law, the board of each company is responsible for the results. But for the time being, I’ll be the third man in management at Lange and will be responsible for marketing. All in all, all three brands stand in complementary competition with each other.
Uhren: What advantages does Mannesmann expect from this constellation?
GB: To understand the advantages and needs, you have to look back in history a bit.
The “chronometric” activities of VDO, our direct mother firm, reach back far further than is generally known. 1978 was a crisis year for the automobile industry and VDO, who are an important furnisher for that industry, had the idea to use their know-how in the quartz-watch sector for the consumer market. A European watch-alliance was to be formed to be in a better position against the Japanese competition. That way, companies from Germany, France and Switzerland, amongst others, the badly hurting IWC and in form of a stock-majority, also Jaeger LeCoultre, landed under the roof of VDO. In 1980, I was appointed to coordinate this engagement.
Uhren: Did you at that time already have an promising recipes?
GB: Not really, the healing of IWC and JLC was a real bare bones job. We had to break with fixated, Swiss traditions. In Schaffhausen and the the Vallee de Joux hold on to old values still ruled and flexibility wasn’t a strength of the industry. But in 1980, a new spirit – through the Porsche Design line – came to IWC. To that, the increased research in complicated watch-making was added which brought its first results with the introduction of the Da Vinci in 1985. Cutting off old traditions and turning away from the traditional solutions helped. The Da Vinci as a successful mixture of traditional watch-making and modern, engineer-type solutions for old problems. This was the only way we were able to offer it at a price that was more than once called “cannibalistic” by our competitors. But we really didn’t do anything else than cleanly calculate our list-prices.
Uhren: The rest of IWC’s success story is well known, but what happened at Jaeger LeCoultre at that time, they weren’t to that well either.
GB: The grand old brand from the Vallee de Joux was for years operating on the virge of death. What I found in Le Sentier was a mixture of all possible things imaginable. They were making luxury products like pens and lighters for Christian Dior, they were making board- and measuring instruments, medical machinery, movements and traditionally of course, finished watches. The problem was, not a single department was profitable. So, first we had to get rid of the useless diversification products. Back to the roots of their original business was ordered. In 1986, Monsieur Belmont came aboard as a technical director. In the same year, it became apparent that 12 million francs (then around 6 million US-$) were needed to survive. With that, the minority share-holders, a bank with 20 % and the family Ketterer of Vacheron-Constantin (25 %) couldn’t go along. In light of the difficult situation, VDO were happy to sell Audemars-Piguet a 40 % share in JLC. I reckon that was the best thing AP could do at that time. Just think of the enormous rise in value up until today.
Uhren: What part did you play in the fantastic reemergence of Jaeger LeCoultre?
GB: In 1984, I took over the strategic and in 1986 the operative leadership of the manufacture. The incredible success of the Reverso and other models assured JLC one of the front-row seats in the small orchestra of top brands. The general manager, Mister Belmont, with whom I’ve been working together well in the last 10 years will lead the brand in to the next century. And there’s no doubt, that he can count on a promising line of watches. Certainly, the new Reverso jewelry range will bring another boost. And, sportier lines will be introduced but I’d prefe not to discuss that at the moment.
Hans: Come on Guenthi, tell us more about the sports-watches, ….pleaaaaaaaaaaaaase…
Uhren: So, third in the round is probably your favorite pet, sitting in Glashutte. How did that happen?
GB: This connection reaches back much further than to the German reunion. Walter and Ferdinand Lange were already looking for a possibility in the West to start a revival during the 60’s. They dreamed of manufacturing pocket-watches in the usual Lange style. They even had a Lange pocket-watch with a decorated and signed IWC calibre. But the dream didn’t last, there wasn’t a market for the watches they were imagining. But still, the idea was kept alive in their heads and after the fall of the wall it reawakened. Albert Keck, a manager at VDO and watchmaker was interested in the idea. So, in 1989, first contacts were made which were continued in Spring 1990. There were excellently trained people in Glasshutte and we could really use this potential when starting up production of our “Made in Germany” watches.
Uhren: Weren’t you interested in the Glashutte watch-manufacturing plant?
GB: Yes, of course. We first had thought about a joint-venture, we were having intensive talks. But within the old structures, things didn’t go forward. And then the reunion on October 3, 1990 came to help. Suddenly, we didn’t need the Treuhand (sort of Chamber of Commerce in the GDR) anymore, Lange & Sohne could do it alone. At that time, I reckoned with a financial involvement of around 500’000 DM (300’000 US-$), we were baking small cakes back then.
Uhren: Quite a misinterpretation of the situation…
GB: I admit ! But at that time, we were lacking the knowledge, how Lange & Sohne would make an impact in the lonely heights of the top segment of watch-making. When we were in, we quickly realized that we wouldn’t get around manufacturing our own calibres and the enormous development costs they require. When “Lange 2”, the new plant starts production next year, we’ll have invested about 30 million DM (18 million US-$) in Glasshutte – an amount that is well worth it for us and for the whole region. Our new catalog shows 10 different Lange watches including the new, revolutionary automatic with double-date, the rectangular Cabaret and the understated 1815 with power-reserve. That little indication at 8 o’clock needs around 100 additional parts and doesn’t make the 1815 calibre a millimeter thicker !
Uhren: How about Glasshutte Original, wouldn’t they fit well in to your portfolio?
GB: At the moment, there’s absolutely no need to even lose a word about it. But who knows what kind of changes will confront the very lively watch-business
Uhren: Let’s talk about the market and the markets. How do you see the future of watchmaking?
GB: In my view, it’s now the turn of the honest concepts with long-term planning. Honesty and believability are important prerequisites for a positive business, even in difficult times. The people who can afford expensive watches and want to will always have money. But the customers are getting more critical with time, and they’re also becoming more enlightened (thanks to Timezone). That’s why they’re looking for a healthy and somehow understandable price/performance ratio. The rip-off mentality you often find in newcomers is being seen-through more and more. A standard Lemania
chronograph calibre in a 18 K gold case is fine with me. But when the whole thing costs 40’000 DM I have to ask myself … Booming business in Asia shouldn’t close ones eyes for the European market. Short-term success in a strong-phase of the economy revenges itself as soon as the customers realize, that they somehow were pulled over the table (German expression for getting ripped off). Of course, every buyer of a watch is at the same time paying for taxes, margins and profits. But at the end of the day, you still have to have the positive feeling of haven gotten something of realistic and keeping value. (I have no doubt in my mind that above refers to Frank Muller)
Uhren: What’s in the future?
GB: It’s no secret that the market for great complications is in a phase of saturation, useful innovations will be ahead in the future. But, a luxury watch can still be a useable watch. The big, easily readable wrist-watch will be successful on the market as will be the watch with a sporty touch.
A masculine look is in demand but without being macho. And, the fine “banker’s watch” with small second-hand has a future. Apart from that, not in our group though, the overdone styling will still be around, many people need that. I can tell you, in my view they’re isn’t another field which produces so many hideous products as watch-making. Long live the small difference!
Uhren: What do you think about reissues?
GB: Basically, I’m against reissues. First of all, they turn against the owners of the originals and somehow diminish their treasures, additionaly, they put a break on innovation. But I admit, it’s very difficult to come up with new things all the time in our field. Everything has been around at one time before. For some time now, retro models have been gaining in popularity. If they please, they’re bought. For that reason, we have to differentiate between authentic models that have a place in a brands history or if they’re from a newcomer who looked in old catalogs of traditional brands and copied them without shame.
Uhren: Do you see another crisis in the future of Swiss watch-making?
GB: No. For example, I estimate the top-level, to which Lange belongs, manufactures 60’000-70’000 watches per year worth about 1.8 billion DM (1 billion US-$) at retail. The potential customers are there, so is money. And, the people are prepared to spend their money if they, as I’ve already said, get something of realistic value for it. That’s also a reason that it’s very important to me that all our products, regardless if from IWC, Jaeger or Lange, have the highest possible technical or design individuality. That’s what makes them desirable. “Me too” products can be manufactured by others. Something else the industry should take to heart: the word here is “self-control”. If the market is, for example, flooded with tourbillons and brands that never before produced complicated watches suddenly offer such models, that lessens their value, lessens their desirability. Suddenly, the merchandise remains heavy as lead in the shop-windows. Rarity and reduced availability increase the desire and stabilize the prices. There are enough examples. Copyright by Uhren Austria 1997, All rights reserved
TimeZone wishes to thank Hans Zbinden for his translation of this interview to English.