Fairline sever links with Peters!!!!

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From IBI News today!

[ QUOTE ]
Peters PLC loses Fairline distribution business

By IBI Magazine

The UK's Fairline Boats today announced that it is severing its distribution agreement with Peters PLC, its largest distributor in Europe, with immediate effect. As of today, all boat sales companies representing Fairline in the UK, Spain, the Balearic Islands, Portugal, the UAE, Finland and Estonia will now deal directly with Fairline Boats. The move towards single-step distribution is expected to further strengthen the company's business partnerships with both dealers and their clients.

"As the manufacturer of an international luxury product, we are committed to building close relationships with our own dealerships and their end customers alike," says Fairline CEO Derek Carter. "We have a wealth of experience with single-step distribution in other core territories and recognise the long-term benefits this distribution channel delivers to both manufacturer and dealer."

Headquartered in Oundle, Northamptonshire, Fairline builds the Targa, Phantom and Squadron range of motoryachts stretching from 10.4m-22.6m (34ft-74ft) in length. According to the company website, its total export sales are currently running at 90 per cent through a network of dealers worldwide.

Peters PLC, which is generally recognised as Europe's largest boat sales company, today gave IBI the following statement: "We acknowledge Fairline's statement of today as fact, and at this time can only add that we have a very strong working relationship with Fairline. We are still in negotiations with them regarding a new agreement for Peters, and we are working toward a successful outcome for both companies."


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http://www.ibinews.com/ibinews/newsdesk/20050718153043ibinews.html
 
In my experience the termination of such deals requires a period of notice so the statement "with immediate effect" either means that the notice was served privately and the period has expired or Fairline have got very strong reasons for doing so which will not leave them in breach of any such contract.

Its also normal for such press releases to include some bland statement of thanks and best wishes to the "severed party", noticably absent here don't you think?

Of course these are just my personal musings, they may well all be the best of friends but............
 
I hope that the vast knowledge that Peters have accumulated over the years is not lost. Fairline were subject to a management buyout recently, one can only assume that the new management want to keep the whole of the 'pie' to themselves.
 
Indeed - and SIBS coming up too. I wonder who 'owns' the slots the fairlines would be in - Fairline itself, or Peters?

Rick
 
Will be interesting to see what happens next.

Apparently to become a sub dealer of Peters you had to agree to buy at least 14 boats a year from them - this will be why there are so many new but unsold stock boats at fairline dealers, something which you very rarely see at Sunseeker or Princess.

Wonder if that rule will change, as it did seem to be a pretty onerous one.

What do others think?
 
I seem to recall reading somewhere that Peters had signed up for distribution of a new range of motoryachts and I remember at the time wondering how that sat with Fairline, could there be some connection with this decision I wonder
 
Having a number of distribution agreements myself, the theory is that there is a period of notice, the practice is that the manufacturer is usually much larger than the distributor and does what he wants in the knowledge that the distributor is not going to have the werewithal to pursue the manufacturer through the courts, especially not overseas. So, what tends to happen is that a hopefully amicable agreement is reached between the 2 parties and the contract terminated fairly quickly
 
As with all contracts there are always get out clauses. It may be that the new management/ownership team at Oundle simply want to take more control and have utilised such a clause to facilitate it.

It may also be that Peters were on a rolling contract and that can be ended by either party with say'30 days written notice'

I take it Peters will still hope to be a fairline dealer? I can not see them getting rid of them completely.

I am sure the respective lawyers are making a fortune out of this one!

Paul
 
Had heard this story 2 weeks ago, and was a little surprised not to see anything on here about it before now.

Maybe if the Peters "cut" is removed, we'll see Fairline prices becoming more competetive?
 
Though in this case, you have to wonder what happens to Fairline as I guess they have quite a cashflow hit short term. Particularly if Benny1 is right about dealers having to take a certain number of boats a year regardless. If that ripples back up the chain, and say Peters are forced to take a large number of boats a year, what does Fairline do with the boats they currently have in production, but perhaps no customers to take them?

Rick
 
I believe 3i Financed the management buyout. This is then typical of the way a venture capitalist works. They look at margin and overall profitability not total sales value. They would happily sell say 10% less boats if they increase margin by 12-15%.

In relation to the boats that Peters force other dealers to take. The question is when are they paid for? If they are not actually paid for until sold then the only benefit to oundle of this is that they do not have to store the boats. Of course this is far more complex than meets the eye and in my opinion is about control and Margin.

Paul
 
Actually, I'm guessing that this is not a correct reflection of what has happened. As I understand it, the previous arrangement with Peters was that they were the main distributor for Fairline (you could call them the wholesaler) and most if not all other Fairline dealers were sub dealers to Peters although I'm not sure this was the case in newer markets like USA and China. Either way this always seemed a rather strange arrangement to me. OK, it was good for Fairline in one way in that they only had one distributor to deal with in terms of payments and paperwork but on the other hand, Peters would have been taking a margin on each and every Fairline sold which either meant that the sub-dealers margins were reduced or the customer paid more for the boat. I'm sure that some of Fairline's other dealers would have been very unhappy about this situation and an unhappy dealer is unlikely to perform well.
I'm sure that Fairline will not be severing links with Peters altogether and Peters will retain distribution rights for the areas in which they already operate like S Coast, Majorca, Spain which will probably still make them the largest Fairline dealer by far. It would be unthinkable for Fairline to throw away that experience. Actually, I dont think Peters will be too damaged by this. My guess is that they will retain new boat sales in their existing territories and, of course, they still have their brokerage/used boat operations, marina operations and whatever else they had before
The other possible scenario is that Fairline will buy Peters' Fairline boat sales operations and manage some of their own sales territories. I've seen this before and it usually ends in tears. Manufacturers know how to manufacture but not how to sell
 
I understand that having too many boats and not enough customers was how Peters got the distribution rights in the first instance - they took a shed load of stock off Fairline to bale them out of a cashflow problem in exchange for sole distribution. It will be interesting to see how this one plays out.
 
Seems to follow the current trend of cutting out the middle man and relying more on the internet and advertising, a good idea in my book. Why did Fairline ever need an intermediary as well as the dealers?

It also raises the question of why we need boat brokers at all. I don't see the need for them any more than I see the need for insurance brokers or estate agents. You can find all available used boats on the internet, and view all the new ones at boat shows.
 
Yes Mike, my experience is similar, its the curtness of the statement rather than the action itself that intrigues me. If the parting is as you surmise there is usually a "thank you and best wishes" element to the press release which is notable by its absence in this case.

Martyn
 
Actually, in my limited experience they look for the opposite. Most venture capitalists look for companies that can achieve significant turnover growth and have a competent management and a diversified market. These factors make the company easier to sell on to some dumb-ass corporation when the venture capital company wants to bail out. Profitability can always be fiddled by using measures that nobody understands like EBITDA
 
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