Watchmakers Keep Up With Times

Every minute counted in the drama surrounding the Russian Navy mini-sub that became entangled in cables off Kamchatka in August with seven crew members on board. So it seemed rather fitting when Defense Minister Sergei Ivanov presented the vessel`s three British rescuers with Poljot watches as tokens of the nation`s gratitude.

Poljot chronometers have been keeping time for the military since 1930. This fall, the First Moscow Watch Factory, which makes the watches, celebrates its 75th anniversary, marking an unlikely evolution from Soviet mass producer to niche manufacturer for Russia`s emerging middle class.

The factory was initially established to produce precision timepieces for the military -- and later the Soviet space program. Poljot, which means "flight" in Russian, was the first watch in space, accompanying Yury Gagarin on his historic orbit of the Earth in 1961.

In the Soviet Union`s planned economy, the watch industry was a key component of the military-industrial complex, with armies of workers and superlative production numbers.

"Back then, every factory had 2,000 to 10,000 workers producing millions of watches annually," said Ivan Ksenofontov, general director of the First Moscow Watch Factory. Of the 10 major factories of the Soviet era, he said, only three are left: his factory; the Vostok plant in Chistopol, Tatarstan; and the Zarya factory in Penza.

In its heyday in the early 1970s, the First Moscow Watch Factory produced as many as 2.7 million mechanical wristwatches. Though durable, the watches were often clunky and conservatively styled. As a result, a foreign watch -- like a pair of blue jeans -- was a prized possession for the Soviet citizens who managed to get their hands on one.

About 50 percent of the Soviet Union`s watches were sold in other socialist countries. Today, no more than 10 percent of Russia`s watches are exported, according to Rosinex, organizer of the annual Moscow Clock and Watch Salon.

The switch to capitalism hit watchmakers hard. Like other industries, watchmakers saw generous state subsidies dry up, equipment become outdated and the work force age.

The introduction of foreign watches in the early 1990s seemed to spell the end of brands like Poljot: The wealthy thirsted for Swiss watches, while ordinary Russians went for cheap imports from Asia.

Today, it is estimated that no more than 4 million watches are produced domestically, a fraction of the 20 million watches that are sold annually in Russia.

Many factories closed -- or were forced to adapt.

"There was a complete lack of marketing plan in the early 1990s," Ksenofontov said, recalling how Poljot was at first blindsided during its plunge into free-market capitalism.

Diversifying Poljot`s designs was the first step toward shoring up the company`s competitive edge. In the past four years, Ksenofontov said, Poljot has produced 200 different models, of which 95 percent are mechanical.

Last year, Poljot was fully privatized, with the state shedding its stake in the factory completely. Ksenofontov refused to disclose the company`s ownership structure or annual revenue.

As a fully privatized company, Poljot has severely cut annual production -- from 500,000 as recently as 2004 to 60,000 in 2005.

The firm now focuses exclusively on upscale mechanical watches. Ninety percent of parts are made in Russia and 10 percent in Switzerland, Ksenofontov said.

Poljot has begun to target 24- to 35-year-old Russian men with watches showcasing the factory`s history and military past.

While the price of the best-selling Poljot watches was about $300 five years ago, Ksenofontov put today`s price range at $500 to $3,000. He considers Swiss brands like Tissot and Longines as competitors.

"The Swiss competition is healthy, it sets a standard," he said.

The factory`s location in central Moscow pushes salaries and maintenance costs up, forcing Poljot to narrow its focus. The company employs about 450 people, down from 8,000 in the Soviet era.


Moscowtimes

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