Nicholas Hacko Watchmaker became Australia’s first and only watch manufacturer in an act of defiance against big overseas corporations. But its ambitions extend far beyond that. By William Poole.

When anyone talks about advanced manufacturing, there’s a tendency to think of certain definitively modern, high-tech applications: aerospace parts, medical devices, maybe smart-phone components. But arguably one of the oldest segments in advanced manufacturing is often overlooked: watchmaking. People first started wearing portable timepieces some 500 years ago, and ever since, watchmaking has been a key driver of technological development and innovation, combining engineering challenges around accuracy and reliability, with a critical focus on aesthetic design.

Moreover, the history of watchmaking is characterised by disruption. Much has been made of the impact of smart-watches in recent years, but that battle has been going on since the ‘Quartz Crisis’ of the 1970s, when cheap, mass-produced electronic watches overturned the Swiss-led dominance of traditional mechanical watches. And yet, lots of people still recoil at the idea of wearing a miniaturised smart-phone on their wrists, and will pay a premium for something more classical. So traditional mechanical watchmaking endures, a craft sustained largely by dedicated independent practitioners.

Nicholas Hacko Watchmaker (NHW) made its first watch in 2013, but for the full story you have to go back further, to the 1950s, and the former Yugoslavia. Nicholas Hacko’s grandfather took up watchmaking in a village in what is today Croatia, focusing on servicing and repairing his customers’ watches. In time his son joined the business, and later his grandson, Nicholas. But in 1991 the Yugoslavian civil war broke out, and Nicholas was forced to flee to Australia.

“It’s the classic refugee story,” says Josh Hacko, Nicholas’s son and now NHW’s Technical Director. “My mother and my father moved over with three suitcases, and one was lost in transit. So one-third of their possessions were lost.”

In Australia Nicholas started anew, opening a shop in Sydney for the service, repair and overhaul of high-grade mechanical watches, with Josh coming onboard as the fourth generation of Hacko watchmakers. In tandem with the service and repair business, Nicholas developed a profitable sideline buying, restoring and selling high-end second-hand mechanical watches. That sideline proved vital, because in 2011 the company’s entire business model was forced to change when several luxury Swiss watch brands cut off the supply of spare parts to independent watchmakers.

“This was a huge, momentous shift in the watchmaking industry,” says Josh. “Suddenly you as the consumer could no longer go your local independent watchmaker that you’d been going to for 10 years and ask him to repair your watch. Because your independent watchmaker had no spare parts. This effectively killed the repair side of our business overnight. We had parts one day and then the next day we didn’t.”

The Swiss corporations defended the decision arguing that they merely wanted to ensure quality control and ensure their customers were treated in the best possible way. But as Josh puts it, the move was “a huge insult, for my father, myself, and everyone in the industry”. It essentially implied that independent watchmakers simply weren’t competent to service these brands.

Nicholas refused to take the decision lying down. He devised a plan: he would purchase off-the-shelf components from suppliers across the watchmaking world, and assemble nine watches. NHW had a mailing list of about 10,000 people for its email newsletter, so Nicholas wrote to them, explaining the whole story and inviting them to become custodians of these nine timepieces.

He received 140 orders.

“That first model would be called ‘Rebelde’, which is Spanish for rebellion,” says Josh. “Because it was an act of rebellion. It was saying ‘Well you’re saying I’m not good enough to fix your watch; I can make my own watch.’ And this idea of rebellion against these huge Swiss corporations was an integral part of our identity. My father still has that fighting spirit. We would have made the watches just as a statement, we didn’t care if they didn’t sell.”

Nonetheless, the unexpected interest in that first batch prompted a rethink. Nicholas and Josh realised the sheer number of orders meant it wouldn’t be enough to merely assemble a watch from off-the-shelf components. Instead, Nicholas sat down and designed a watch, then sub-contracted production of parts from 11 manufacturers around the world. Only the mechanical movement – essentially the heart of the watch – was purchased from Switzerland as a complete assembly. The parts came to Sydney, where Nicholas completed the assembly and adjustment of the watches.

Since then NHW has sold about 640 watches. It has diversified its range with several other models, at prices from around $2,500 up to $15,000, for a series produced in solid gold. Alongside Nicholas and Josh, they have brought in a watchmaker apprentice and machinist, with three further staff running the buying and selling side of the business. The company continues to do servicing and repairs, but at much-reduced capacity, primarily for existing customers. This is largely down to the continued difficulty and expense of accessing spare parts. As Josh puts it: “We don’t want to grow that side of the business because there’s no future in it.”

Instead the first glimpse of the future will appear in March, when NHW delivers its latest model. This 25-watch series marks a significant departure from its predecessors. Whereas those earlier models were assembled from parts sourced almost entirely overseas, in the new watch some 45%-50% of the components will have been manufactured in-house at NHW’s workshop in Brookvale, north Sydney.

Josh explains: “In 2015 we sat down and asked ‘Where is this heading? What are we going to do with this?’ By then we’d sold about 400-450 watches, and we could have continued doing that. It was an easy thing, extremely simple. You talk to 11 different suppliers once a month to maintain that business relationship, you send them money and they send you parts. But there are practical limitations in lead times and quality control. And there’s a far more important limitation: knowledge transfer.

“If you’re not transferring knowledge, not learning, not developing in any way, you’re stagnant. Your brand will die. It will wither away. We wanted to not do that. We wanted to stay here and make sure the next generation was in on this, and had a job and a place to learn, and a knowledge to receive. In our industry the only step forward to do that was to start making parts. So in 2015 we made that decision to head into manufacturing.”

Defying convention

As a company with the word ‘rebellion’ written into its branding, it’s no surprise that NHW tends to do things differently from most fledgling manufacturing businesses. This is probably epitomised by the fact that when they decided to start manufacturing their own parts, they had pretty much no manufacturing experience at all.

“We’d never made anything,” says Josh. “The closest thing to manufacturing was woodworking in high school, that I’d done. My father would sit behind a watchmaking lathe and refinish a part, but he never made anything from scratch. So we went through a series of very abrupt learning points.”

Some of that learning has taken place in training overseas, with machine tool builders in Germany and Switzerland. Josh also acknowledges the support they’ve received from local suppliers such as MasterCam and Headland Machinery. But the team at NHW have also had to work pretty hard on working things out for themselves.

This in turn has entailed a rather unconventional definition of research & development (R&D). For NHW, R&D was about learning the fundamentals of how to make a watch.

“There’s one method of making a watch: you buy a hand lathe, spend 10 years behind a bench, and you make a watch,” says Josh. “But what we’re doing is many orders of magnitude more difficult. We’re trying to serially manufacture a watch, so a watch we make today and a watch we make in six months are exactly the same. And no-one is going to tell you that. No-one in Switzerland is ever going to reveal their trade secret to you. Our R&D process was figuring out how to do that.”

That tendency to defy convention is also reflected in the company’s machinery investments. Over the last two to three years, NHW has progressively been kitting out its workshop, with each new acquisition bringing new capabilities, in turn enabling production of another category of components. First in was a Citizen R04 lathe, followed by a Kern Pyramid Nano five-axis mill, and then an Affolter gear-hobbing machine. The latest arrival has been a Makino U32j wire EDM machine, and the company has also invested in MasterCam CAD/CAM software.

However, while the average manufacturer might identify a specific requirement, buy the appropriate machine and set it to work immediately, this hasn’t always been the case with NHW. The Affolter machine arrived in 2017, but it still hasn’t been used.

“We found this machine kind of by accident,” says Josh. “It was a second-hand machine from IWC. It had 120 spindle hours, which is nothing. It was such a good deal and such a rare machine we just had to buy it. So the capability of gear-hobbing is in-house, even though we’ve never made a gear just yet. The knowledge required to get to that level is something that we’re not at yet, but we will.”

This unconventional approach is in part made possible by NHW’s funding model, which is – again – somewhat unusual. While each new batch of watches is largely pre-sold in advance, and the sideline in restoring and reselling second-hand watches is a valuable revenue stream for the business, the company is largely bankrolled from the Hackos’ own funds, in what seems like something of a labour of love.

“We’ve been saving for something like this over the past 15-20 years,” says Josh. “So we have no external investors, no loans, no banks on our back. It’s all self-funded; we’re not in debt. So we’re taking things slowly. And it means we’re very comfortable in spending three years in R&D. We didn’t need to have an RoI.”

These idiosyncrasies in the way NHW operates are perhaps to be expected given the unique challenges it faces. No company has manufactured watches in Australia before, so one of the biggest difficulties for NHW is the absence of any kind of relevant “industrial infrastructure” here. In a country like Switzerland, watch manufacturing is big business, and accordingly is supported by established networks and structures: suppliers understand the watch manufacturers’ requirements and can service them; training organisations turn out a steady stream of apprentices with applicable skills; and so on. In Australia, NHW enjoys none of those benefits.

“No-one in Australia has serially produced watch components ever,” says Josh. “And there’s no culture of precision manufacturing in Australia. There’s pockets of it here and there, a few companies. But if you compare it to somewhere like Switzerland or Germany, they have this culture, this idea that when you’re 16 or 17 years old, unless you go to university, you’re making something. We don’t have that. Outside of the technical challenges, this is biggest challenge.”

Watch this space

As Josh recounts the story, it’s hard not to regard the big Swiss watch manufacturers’ decision to withhold spares as a monopolistic ploy, if not downright bullying. But the move also seems shortsighted. Excluding small independent players from any marketplace tends to stifle creativity and innovation, as well as narrowing the options for talented young people keen to join the industry. Moreover, alienating small businesses who had once effectively been your partners can instead turn them into rivals. And when you deprive those partners of vital business, it can often bring the best out of them. So while NHW’s origins may have been spurred by a simple act of defiance, its ambitions for the future are centred on building a strong business with a solid brand – perhaps strong enough to rival the Swiss giants.

For the time being, however, the plan is to continue expanding capabilities. The company has purchased a block of around 1,200sqm of land in Mittagong, south of Sydney, where it plans to build a dedicated watchmaking factory. As well as allowing further expansion of the company’s machine capabilities, it would offer various features specific to the requirements of watchmaking, such as temperature-controlled rooms, and thick slabs to minimise vibration – operations at the current plant have to be confined to times when local road traffic is minimal.

But in keeping with NHW’s aversion to doing things conventionally, the timetable for the move is … flexible.

“Who knows?” Josh smiles. “It’s going to cost millions of dollars, so our short-term goal is to make enough money to finance that project. All the profit that comes from the manufacturing side is going directly into reinvestment in this factory. We want to move in within five years. But the building might be there in two.”

It’s often remarked that the future of manufacturing in Australia is in high-value-add, low-volume sectors. Most people cite medical, or defence, or aerospace. But those criteria apply equally well to the mechanical watch. NHW may be Australia’s first ever watch manufacturer, but maybe a decade or two from now, it won’t be the only one. A few decades ago, for example, Australian wine-making was widely dismissed on the international stage, but not anymore. So why not Australian watchmaking?

“Can I dream? Am I allowed to dream?” says Josh. “There’s the obvious idea of selling more, making more money, but I’d love to be in a position where we can train the next generation of Australian watchmakers to really start making something in Australia by themselves. There’s a huge fear that if you train an apprentice and they leave and start doing their own thing, that’s disastrous, that now there’s competition. For us, that’s the best-case scenario. If there’s 10 other companies like us in Australia, that would be amazing. In 10 years maybe this business would be in a position to offer other businesses that are trying to manufacture watch parts in Australia an opportunity to grow.”