Acrotec Objective : independence and complementarity
Our editor-in-chief spoke with the CEO of the Acrotec group about its recent significant acquisition and his plans for the future.
When I suggested in a side note to my article on the challenges that the watch industry faces in 2018 that the Acrotec group might be one to watch over the coming years, I didn’t expect to be contacted by the group itself with an offer to meet its CEO, François Billig. As it turned out, he shared my analysis that the industry’s suppliers and sub-contractors are the ones to watch, but he was also keen to play down any suggestions that the Acrotec group has designs above its station. The fact that the group acquired four companies in 2017 that supply the watch industry is more a result of opportunities that were too good to refuse rather than an aggressive acquisition strategy.
Covering industry suppliers is not the main focus of WorldTempus as a consumer-oriented website, but a glimpse into the world of the Acrotec group is interesting for two reasons. Firstly, it sheds some light on who really makes what in your watch movement. Secondly, it shows how suppliers work and how they think, and thus highlights the differences with watch brands.
Acrotec’s history started in 2001, when Mr Billig bought the Vardeco profile-turning company in Develier with a group of investors. Here too, it was a question of opportunity. “It was a coincidence,” he says. “I’m not from the region and I didn’t know anything about profile turning, but thanks to personal contacts and happenstance I found myself running a profile-turning company with 40 employees.”
Vardeco, in Develier, canton Jura (Switzerland)
At the time Vardeco was working mainly for the electronics industry, but Mr Billig noticed that his competitors in the region were also working for watch industry. “They seemed to be smiling more than me,” he says. “We were producing components by the billion and selling them by the thousand for the same price that our competitors were selling to the watch industry by the hundred.” The promise of juicier margins is what drew Mr Billig towards the watch industry and five years later, in 2006, the Acrotec group was established and KIF Parechoc was acquired. Three years later the group acquired Decovi and Générale Ressorts and with them the capacity to produce the key components for the mainspring barrel that provides the energy in every mechanical watch movement.
Machining is at the very heart of Acrotec’s activities © Acrotec
“We really started growing from around 2014,” says Mr Billig, “and it was mainly thanks to our customers, who were pushing us to go further so that they could have a one-stop shop. This is why we acquired STS, so that we could deliver finished, coated profile-turned components to our customers.”
Over the past two years the group has acquired eight suppliers mainly to the watch industry, including Gasser Ravussin and Pierhor, the only two independent jewel suppliers to the industry (the other two are Comadur, which belongs to the Swatch Group, and Lapierrette, which is owned by Rolex). The group now has a strong presence in the watch industry, which accounts for 55% of its business, including a one-third market share for shock absorbers and barrel springs. But although the group now has the capacity to produce balance springs, through its 50% holding in Sigatec, there are no plans to branch out into complete movement manufacturing. “We would be crazy to develop our own movement,” stresses Mr Billig, “because it would put us in direct competition with our own customers. And it would cost us a fortune!” He also dismisses suggestions that the group has a monopoly. “We are not a monopoly, we are an alternative. Our main strength is that we are independent and our product offer is complementary. Our customers know that we are unlikely to be sold to Richemont, Rolex or the LVMH group, for example.”
With this in mind, how does the group plan to develop further and achieve its ultimate objective of an initial public offering on the Swiss stock exchange? “We want to stay in the field of micromechanics, which is one of Switzerland’s main strengths,” explains Mr Billig, “and diversify into other customer segments beyond watchmaking. For example, we could use our jewels in high pressure jets that are used to cut metals.” The group also keeps ahead of its competitors by investing around 10% of its turnover in new machines. Future acquisitions are planned in the medical sector rather than the watch industry, always centred around the group’s core competence of micro-mechanics. “Our aim is for the company to remain Swiss and our centre of decision-making to remain in the Jura region,” says Mr Billig. “To do this, we need to achieve 300 million Swiss francs in annual turnover. At the moment we are approaching 200 million, but our planned acquisitions should allow us to reach this objective.”