One thing that no-one seems to have mentioned is the design. Parts and labor obviously come into it, as does marketing and development, but most of us love our watches for their beauty as much as their function, and Rep makers don't design anything. They just copy someone else's inspiration.
Coming from a creative industry (I work in the movie biz) I know that the few people who rise to the top are generally true geniuses, one way or another, and they don't come cheap. That beautiful bezel on an AP Royal Oak, the crown guard on a Panerai, the hypnotic dial on an IWC: those things come down to more than just materials. And even though current designers may only be creating variations on themes most of the time, that original design, and the heritage that comes with it, is what, IMO, makes the gens so valuable.
An infinite number of monkeys given an infinite amount of time might be able to come up with Shakespeare, but even given the very best materials and skilled laborers, I'm willing to bet there isn't a factory in the world that could come up with a watch we would consider half as beautiful as the watches we would gladly pay thousands for if only we had the disposable income.