Does British boat building have a future?

[MapisM]

I'm not sure I ever answered the question in your thread title. Yes, but not under the current management.

Seriously?

Before reaching your conclusion, I was already thinking to nominate your post as one of the better explained and most detailed ever seen in the forum about the reasons why the short answer to that, sadly, is a plain vanilla no...

 

[jfm]

Seriously?

Before reaching your conclusion, I was already thinking to nominate your post as one of the better explained and most detailed ever seen in the forum about the reasons why the short answer to that, sadly, is a plain vanilla no...

Yes I was serious .

The designs and brands are ok and have customer appeal, so if you radically change the production to make a positive margin in every boat, there is a future. It seems that this needs new management, because current management seem not even to recognise that they are doing things wrong, let alone have the skills to implement the changes. Hence my comment "but not under current management."

 

[henryf]

Well, yes it does. Except where someone chooses to consume their own money operating a non profitable/cash consuming business, which they are of course free to do.

But in my book its not ok to call something "successful" when what actually happens is that some managers launch a product using money belonging to a bunch of pension funds (for they are ultimate shareholders in the company), and therefore money belonging to a bunch of pensioners, perhaps 1-2 million such pensioners, and lose a bunch of those pensioners' money in the process by selling each widget at less than it cost to build. That just isn't "success" in my book and if that makes me a hard taskmaster (I don't think it does) then so be it. And I think it's ok to call this out.

I'm really curious that you asked the question though henryf. What do you think it comes down to? Is it ok to make luxury boats and sell them for 90% of what it cost to make them, year after year? Why? Is it somehow "good for the world" to do that? What element of it deserves to be called success?

So now I feel bad for all the old ladies I see pulling their tartan shopping trollies round Gosport High Street. Has my decision to buy British cost them half a pound of tongue and 2 cards at Gala Bingo?

Why did I ask the question?

It’s always struck me as strange that whilst seeing really excellent products within their field on a world stage for as long as I can remember the companies have been losing money.

You come along and try to make sense the accounts or rather put them in simple terms I can understand which sometimes means a loss isn’t actually a loss and other times means it is.

Even when money is lost I think an extra £100k per boat would have solved the problem and prices are rising at a hefty rate so surely profitability is just around the corner?

You’ve made some really insightful comments on here and I suspect you are spot on. This is your world in both the financial and specialist interest fields.

I’d love to see British boat building shine because we’re bloody good at it - from the point of producing a lovely boat, but it seems we’re crap at running the machine which builds and sells them.

My take on the answer to the question is it could have a bright future but it requires some fundamental changes which may or may not happen.

 

[Portofino]

They need Jack up production numbers in an economy of scale way to get into profit .
Sat on long waiting list ( orders into next yr ) apart from raping the customers with the deposit , using that to pay next months bills , they need to be churning out product and receiving the balance = cash flow .

This means go smaller and restrict size to a optimum number of days it takes to build it . but keep a range to catch all at every show . NOT keep chasing upwards like Prinny X95 taking months / unit only to knock out 6 ? then axeing it .Madness .


If this means more automation then so be it . Certainly innovative designs.
Out source as much as they can not just the propulsion systems .

This numbers game also means going smaller further down the pyramid of potential buyers .

I mean click around theses two manufacturers…… bet they turn a healthy profit / widget .
The time from the hull mould to del is very short ,

Imagine if one of these was Fairline and the other Princess . From a business pov .

Invictus Yacht • Home

Cantiere del Pardo

They don’t have to occupy the bottom step like the Benys and other French builders , who’s dealers carry stock such is the numbers falling off the lines in the H Ford kinda manufacturing technique.

 

[kashurst]

Business is mostly pretty simple. It doesn't matter if you are running a corner shop, selling secondhand cars or building £1million boats. The financial element is the same.
Every business buys some stuff, they then do something to it to add value, some time later they then sell it. That's it. There are VAT consderations but that's what accountants are for. Internally, at the design and build level you can mostly forget about it. (apologies to the accountants on here I am keeping this very simple)

A business that buys in materials and labour to build a £1million boat must make sure it costs considerably less than £1million. Say around £700K. So you spend £700K, process all those bits and bobs with people and machines, some months later you sell it and the happy customer gives you £1million. You can now pay back the £700k from where ever you got it, working capital, equity or bank loans and the £300K belongs to the business to be used for something else. Some part of that £300k will be used to cover factory, energy, fixed people costs like management and engineering etc.
To me a successful business must have a positive cash flow. Every business works on the premise that it is a continual process so as more boats are being built all year, in time the cash pile will grow, minus fixed overheads. Do it 200 times a year and you should be sitting on a lot of cash.

If the boat costs more than £1million to make then when the boat is sold you have spent more money than you received. That means you are now in debt to someone/something. Either you have reduced your company's cash pile, or you now owe a lender more money than you originally borrowed. If you continually reduce your cash pile you will run out of money and go bankrupt. If you continually borrow money from who ever, sooner or later the lender will want their money back. Plus borrowing money has a cost - again reducing potential profits.

Some people seem to think there are some sort of fancy tax reliefs or development funds that can be claimed back. There pretty much isn't. I used to run a manufacturing/techy business and we looked for every scheme and tax relief, you name it. If there is some significant magic pot of money we never found it.
It would appear from a simple over look of Princess's accounts they do not seem to understand what their costs are at all. I can understand a business not making a net profit from time to time. Things go wrong, events happen, markets change. But not being able to make a gross profit/EBITDA after building and selling 200 or so boats is unbelievable.

Princess could try and build more boats but until they sort out their costs etc all they will do is lose even more large amounts of money. Some US hi tech businesses like UBER seem to rely on the generosity of the shareholders that one day there will be enough profit in a vast number of transactions. That somehow create an economy of scale, to make the risk/investment worthwhile. With such a huge potential market it is kind of plausible (not to me). But selling luxury yachts is a very small market to a small number of individuals. Princess could sell a 1000 boats a year but they will still lose oodles of money.

There is potentially a good business in there, 200+ boats a year is not to be ignored, but as JFM posted it will require a massive change of direction and management.

 

[Seastoke]

So now I feel bad for all the old ladies I see pulling their tartan shopping trollies round Gosport High Street. Has my decision to buy British cost them half a pound of tongue and 2 cards at Gala Bingo?

Why did I ask the question?

It’s always struck me as strange that whilst seeing really excellent products within their field on a world stage for as long as I can remember the companies have been losing money.

You come along and try to make sense the accounts or rather put them in simple terms I can understand which sometimes means a loss isn’t actually a loss and other times means it is.

Even when money is lost I think an extra £100k per boat would have solved the problem and prices are rising at a hefty rate so surely profitability is just around the corner?

You’ve made some really insightful comments on here and I suspect you are spot on. This is your world in both the financial and specialist interest fields.

I’d love to see British boat building shine because we’re bloody good at it - from the point of producing a lovely boat, but it seems we’re crap at running the machine which builds and sells them.

My take on the answer to the question is it could have a bright future but it requires some fundamental changes which may or may not happen.

Henry you really are a pompous t——- , the way you look down on people, I wonder what peeps with super yacht think of you while looking down on your Prinny.

 

[ontheplane]

I think we can sum it up in the one number that jumped out at me from all the above - 6 boats made…

If they genuinely designed and developed a multimillion pound yacht and the sold 6 even if they made a 100% markup (which they won’t) that still wouldn’t cover the development cost.

This has surely got to be the lack of profit - if you have to develop something you surely need to spread that cost over a large number of units?

 

[henryf]

Henry you really are a pompous t——- , the way you look down on people, I wonder what peeps with super yacht think of you while looking down on your Prinny.

I don’t look down on anyone. I’m using an outdated stereotype to lighten the tone on a group forum where we all know each other. I haven’t seen tongue sold since my Nana used to shop 40 years ago and the bingo closed down in Gosport some years ago.

I hadn’t thought about pension funds being gambled away trying to revive businesses and now I know it’s quite scary. I always assumed it was fat cats trying to make a few extra quid for themselves. It never occurred to me they were gambling our money like that. I assumed pension schemes rented out sheds to Tescos.

Come on, I get that the internet doesn’t have the subtle nuances that a conversation down the pub has but credit me with some humanity and hopefully a sense of humour.

 

[volvopaul]

A great read and some very different opinions.

Princess a company that I have always admired the range for many reasons , a true British brand admired and sold around the world .
As a UK boater I can only say from humble opinions that they are better built than the other UK brands having owned a 1994 410 which was very well built in terms that items like the fuel tanks didn’t leak , the linings were still intact , the teak was very good , it never let me down . The next boat was a Fairline , 10 years newer , I owned it for just under 3 years , the linings were starting to sag , the teak was thin , it had furniture made from white faced MDF or chipboard , the engine room wasn’t as easy to access etc , so my heart is still with Princess as I’m looking for a 42 .

That was a long story as I wanted one when I bought the Fairline but I’d got back into motorsport so the bank balance was a lot thinner back then , I’ve more or less hung my racing overalls up so it’s back afloat when something nice comes along .

On the subject of Princess wasting money I can honestly say I’ve heard quite a few horror stories of new built boats in recent times, It’s a real shame they must waste thousands by not finishing them off and certain areas of very poor build , along with poor quality supplies that simply don’t last like they used to.

Let’s all hope they don’t fall foul like Fairline have .

 

[Seastoke]

I don’t look down on anyone. I’m using an outdated stereotype to lighten the tone on a group forum where we all know each other. I haven’t seen tongue sold since my Nana used to shop 40 years ago and the bingo closed down in Gosport some years ago.

I hadn’t thought about pension funds being gambled away trying to revive businesses and now I know it’s quite scary. I always assumed it was fat cats trying to make a few extra quid for themselves. It never occurred to me they were gambling our money like that. I assumed pension schemes rented out sheds to Tescos.

Come on, I get that the internet doesn’t have the subtle nuances that a conversation down the pub has but credit me with some humanity and hopefully a sense of humour.

Maybe I am Tongue, in cheek.

 

[rafiki_]

Henry you really are a pompous t——- , the way you look down on people, I wonder what peeps with super yacht think of you while looking down on your Prinny.

Actually he isn’t. Henry is great company. Fantastic sense of humour and quite humble. His wife keeps him grounded, despite his business success. He has a quite unique way of describing things which has clearly upset you, but which I, and many others enjoy.

 

[Seastoke]

Me upset ur taking the pis , I am upset when my giro don’t come.

 

[Bouba]

This is one of those subjects where everyone has opposing views but at the same time everyone could be right.
It’s a complicated situation where a British builder could survive (if not thrive) but every thing has to go their way….the profits will never allow a long period of poor sales….the Government, the looming recession, future trade war, changing public tastes, off putting marina experiences, supply line disruption, price volatility, poor design and too long from drawing board to showroom…all are going to contribute.
The conclusion : it is possible to run a boat factory….but opportunity costs say it’s just not worth the effort

 

[Seastoke]

Henry , we live, work and socialise in different worlds, I don’t believe in woke or bullshit ,in Stoke we say what we think . Your term The Great Unwashed, is by author Edward Bulwer-Lytton , but I suggest you read his book The Coming Race. This is what I base my life on.

I will get my Donkey Jacket.

 

[jfm]

This is one of those subjects where everyone has opposing views ...

I don't think it is - there is widespread agreement.

 

[jfm]

Let’s all hope they don’t fall foul like Fairline have .

They already have. Sold by previous owners to KPS for basically nothing, and KPS agreement to invest fresh funds into the business.
There's no meaningful difference between the dire straitsness of Princess and Fairline, except that Princess is much bigger.

 

[markc]

This is a really interesting thread, I've enjoyed reading all the opinions. FWIW, I sense that the continued march upwards and outwards in size by Princess is a symptom of many years avoiding dealing with the 'right now' issues, by distracting themselves, investors and bankers with 'growth plans' revolving abound new models, new customer demographic etc., all of which take time to come to fruition (and often fail), but there's always another growth opportunity to chase and distract from the core problem. I think many businesses do this to avoid the pain of dealing with complex problems.

 

[Mr Googler]

Henry , we live, work and socialise in different worlds, I don’t believe in woke or bullshit ,in Stoke we say what we think . Your term The Great Unwashed, is by author Edward Bulwer-Lytton , but I suggest you read his book The Coming Race. This is what I base my life on.

I will get my Donkey Jacket.

Come. On Seacock. We love you but you’re floating around on a lovely 40 footer and having fair flung holiday adventures. You’ve grafted for it so go enjoy it. I have no doubt that everyone on this forum has grafted just the same from whatever their starting point in life may have been.

Keep classy sweetheart….or classless. I get Henry’s humour as it’s similar to my own. Keep up the good work H

 

[henryf]

I don't think it is - there is widespread agreement.

I also thought the same and there’s not many times that happens on here.

 

[Portofino]

They already have. Sold by previous owners to KPS for basically nothing, and KPS agreement to invest fresh funds into the business.
There's no meaningful difference between the dire straitsness of Princess and Fairline, except that Princess is much bigger.

There’s a important small distinction that needs making .

Princess thus far hasn’t run out of cash , shortfalls have been injected sure but the directors have not been starring down the barrel of court appearances or / and disqualification.

The FL lads have called in the administrators probably and hopefully for them at the right time to avoid said court room and disqualification, to deal with there lack of cash to continue on there own .

Re pension risk .
There are strict rules and regulations pension providers have to obey where they invest members funds . It’s split into various risk groups .
Only a tiny % of the P fund will be invested in KPS of which a tiny % is in Prinny which will be venture capital seed money that finds its way indirectly, used for the current Priny caper .
Some others both in KPS and every fund generally will be winners , some will be duffers and eventually churned .

Prinys current cash gobbling ability will be priced into the totally of it’s tiny % of a % of the fund , by the fund managers, risk spread etc .
It it wasn’t Prinny this tiny % of a % would be in something else equally risky .

So there no need for anyone ( not you btw ) to go on a guilt trip reading about pensioners eating “ tongue “.

Those dots and there’s a lot just don’t connect up to link Princess predicament with pensions .