Kevin Gaskell (CEO) leaves Fairline

[diligaf]

I think that Fairline's current situation stems from one primary issue and that is discounting. I know the others were also discounting during the height of the recession but the UK Fairline dealer was giving huge discounts and weren't exactly quiet about it. I was offered a T38 at 28% discount, the price dropped 10k whilst we were walking to the boat and we hadn't even stepped onboard.

I feel this has damaged the brand, possibly irreparably. This in turn caused squeezed margins at the factory, less orders as the market got twitchy, more squeezed margin, less sales etc etc. A spiral of decline. To the point where the smart money (no offence JFM) has been and still is going elsewhere (sunPrin)

Sunseeker and Princess have huge marketing budgets and a very slick operation. They can hide cost cutting very well. Unfortunately Fairline have a weak marketing presence and their cost cutting is for all to see!

My twopenneth.

 

[rubberduck]

Perhaps, if you have to build down to a price, it would be an idea to actually tell people about it, rather than quoting prices 20% higher, & giving discounts to people cos they're special Either make it cheap & shout it from the rooftops, or keep the quality up & point out the competitions lack of it, & maybe chuck in a 5% discount. People spending 100s of K's tend not to be stupid, well not that stupid anyway

 

[diligaf]

I know what you mean. But as you can get almost 30% discount off a new Fairline without trying too hard then it makes a mockery of their price list. Surely the retail is 30% under the printed figure - before you haggle?!

 

[Deleted User YDKXO]

That's probably why I will never be a CEO of volume boat builder , building down instead of up goes against the grain. On the other hand I don't see other luxury industries following suit. While one dislikes comparing the car industry to the boat industry for obvious reasons, if you take a small sector of the car industry like the mega expensive, super fast , super complex supercar business, none of these co's thought to make a cheaper version of a Ferrari F12 by stripping out the paddle shift box in favour of a cheaper manual version and thinking "there we go that will sell more of them!". When you get into the stratosphere of super cars like the P1, 918, Veyron, Zonda etc (of which collectively probably sell as many units as £1m yachts) it is about cramming as much quality and tech into the product as you can and if it jacks the price up another 10% so what. OK so the demographic and profile of a Supercar buyer is a little different and there are a lot more people interested in supercars than yachts. But, again I can't see the mentality of building something costing £1m (I'll say that again ONE MILLION POUNDS) that is no more than a toy / past time / hobby a bit cheaper or less quality than the other guy just to shave a few % off the price.

Maybe I am off base but I couldn't imagine being swayed to buy a yacht for £1m that was just Ok and average when I could have the absolute best for £1.1m or whatever, jeez I am spending a £1m +, I want what I want and I want the best, I don't want to be looking over my shoulder as I leave the dock and think , "bummer, I wish I spent the extra £100k , I only got the average'y one :-( "

The difference is that the market for supercars has not suffered during the recession like the boatbuilding industry. In fact you're both right and wrong IMHO. Its easy to say just up the quality, up the price and sell fewer boats. First it takes investment to increase the quality of any product which may not be available, second the company and it's overheads are predicated on building a certain number of boats per year and you can't just cut production massively overnight without serious and disruptive cuts in overheads and third, if you drastically cut production, the price of your components will probably go up because you're buying fewer of them which puts even more pressure on your margins. Lastly getting rid of your dealer network is not necessarily a cost saving because you would need to set up your own sales and service network; boats don't sell themselves and neither do they fix themselves either.
Having said this and IMHO, simply cutting costs is just a downward spiral to oblivion. As you say, the company has to innovate even harder than during the boom times to try to differentiate itself more from it's competitors. So it has to be a twin track approach of innovating new products to try to maintain market share and cutting costs to align the company's overheads with the new market reality. This is a very difficult trick to pull off and requires hard headed management, a loyal workforce and investment by the owners and no surprise that many companies fail trying to do this
All entirely IMHO

 

[Sandy Bottom]

I recently had cause to visit Fairline on a fairly prolonged basis. I stayed in most of the local hotels, knew many of the yard staff, and dealt with all of the directors including the SD, FD, and MD at some stage, all nice people. I was overseeing the build of their latest Squadron, their most highly spec'd to date. I then visited their new dealerships in the States (and Fairlines own office in Carolina) to look at the expansion plans.
Numerous conversations with the directors about factory limitations, motorway bridge heights, how to keep up with SunPri, staff re-locations etc. etc. All agreed that, whatever the decision, re-locate or not re-locate, it had to be made 'imminently'.


When I say 'recently' - this was 1997/8!

 

[petem]

Drumbeat, were you the previous owner of the Squaddie (names Drumbeat) that Gludy (formerly of this parish) owned for a couple of years?

 

[Sandy Bottom]

Drumbeat, were you the previous owner of the Squaddie (names Drumbeat) that Gludy (formerly of this parish) owned for a couple of years?

Nope, I know the boat, but nope, no connection.

This is our Drumbeat

 

[diligaf]

I recently had cause to visit Fairline on a fairly prolonged basis. I stayed in most of the local hotels, knew many of the yard staff, and dealt with all of the directors including the SD, FD, and MD at some stage, all nice people. I was overseeing the build of their latest Squadron, their most highly spec'd to date. I then visited their new dealerships in the States (and Fairlines own office in Carolina) to look at the expansion plans.
Numerous conversations with the directors about factory limitations, motorway bridge heights, how to keep up with SunPri, staff re-locations etc. etc. All agreed that, whatever the decision, re-locate or not re-locate, it had to be made 'imminently'.


When I say 'recently' - this was 1997/8!

The sad thing is that back then they may've had the money to buy a coastal factory. Now I fear they have been left for dead.

 

[Sandy Bottom]

The sad thing is that back then they may've had the money to buy a coastal factory. Now I fear they have been left for dead.

They need to change that's for sure. I truly wish them all the best, nice people.

 

[stelican]

+ one
Totally agree terrible shame
Can guess who was offering the usual huge discounts as said great shame
The Targa 48 looked a winner

 

[stelican]

No he was not the owner
Boat was originally owned by Mr Pop and called Pop 10
Top boat

 

[Nautical]

The difference is that the market for supercars has not suffered during the recession like the boatbuilding industry. In fact you're both right and wrong IMHO. Its easy to say just up the quality, up the price and sell fewer boats. First it takes investment to increase the quality of any product which may not be available, second the company and it's overheads are predicated on building a certain number of boats per year and you can't just cut production massively overnight without serious and disruptive cuts in overheads and third, if you drastically cut production, the price of your components will probably go up because you're buying fewer of them which puts even more pressure on your margins. Lastly getting rid of your dealer network is not necessarily a cost saving because you would need to set up your own sales and service network; boats don't sell themselves and neither do they fix themselves either.
Having said this and IMHO, simply cutting costs is just a downward spiral to oblivion. As you say, the company has to innovate even harder than during the boom times to try to differentiate itself more from it's competitors. So it has to be a twin track approach of innovating new products to try to maintain market share and cutting costs to align the company's overheads with the new market reality. This is a very difficult trick to pull off and requires hard headed management, a loyal workforce and investment by the owners and no surprise that many companies fail trying to do this
All entirely IMHO

You could be right, maybe some cost cutting might work in such times, personally though as per your last para its a road to no where. I don't think the Supercar business was immune to the global melt down, I am sure numbers slowed down considerably but the difference is they didn't engage in huge discounting or chopping corners, a Ferrari still remained a Ferrari and a Porsche was still a Porsche. What they did was cut back on supply and then start a program of investment in new product and innovation so come better times they were ahead of the game. The P1 as an example was conceived right in the middle of the worst of it. Ok so car companies have very deep pockets and can ride out the storm but the principle is the same, some how, somewhere you have to find the resources to up your game not dumb it down.

Dealers fair comment, and would be horrible for the dealers to find themselves chopped off, but needs must , I as the builder don't need to make money from my service, warranty, and sales arm when times are tough nor does my sales network have to make a profit I need units sold and the factory turning over albeit in a more limited form and the brand to remain top of its game and survivable into the future for better times.

 

[gjgm]

Maybe I am off base but I couldn't imagine being swayed to buy a yacht for £1m that was just Ok and average when I could have the absolute best for £1.1m or whatever, jeez I am spending a £1m +, I want what I want and I want the best, I don't want to be looking over my shoulder as I leave the dock and think , "bummer, I wish I spent the extra £100k , I only got the average'y one :-( "

Not my arena, and it depends on what is "best", but I think you are talking 50/100/200 pct, not 10pct.
Add if that arena is a competitive one, not an exclusive one, and suddenly cost matters.

 

[Nautical]

Not my arena, and it depends on what is "best", but I think you are talking 50/100/200 pct, not 10pct.
Add if that arena is a competitive one, not an exclusive one, and suddenly cost matters.

I think If you want the pinnacle of quality you go to a bespoke custom builder, what I am saying for a production builder is don't swop out s/s framed port lights for plastic ones, don't reduce the s/s railing to smaller lower quality or change out the deck hatches for stuff that looks like it came off a caravan. Swoping out Sunbrella for cheaper china made knock off etc. All this sort of stuff makes a difference its not huge money maybe it adds 10% to the price but in return its keeps the quality up and the brand image as it should be.

 

[MapisM]

This is our Drumbeat

Hang on a minute.
You've got a thing of sheer beauty like that, and we waste time debating the managerial choices of folks who are proud to have "competence in nothing but money" (true quote from a senior partner of a PE firm)....?!?
Go ahead and post a "Something bound to make you moboers green with envy" thread, with plenty of pics.
I for one would be VERY interested to see Drumbeat better!

 

[paultallett]

Hang on a minute.
You've got a thing of sheer beauty like that, and we waste time debating the managerial choices of folks who are proud to have "competence in nothing but money" (true quote from a senior partner of a PE firm)....?!?
Go ahead and post a "Something bound to make you moboers green with envy" thread, with plenty of pics.
I for one would be VERY interested to see Drumbeat better!

What he said

 

[gjgm]

I think If you want the pinnacle of quality you go to a bespoke custom builder, what I am saying for a production builder is don't swop out s/s framed port lights for plastic ones, don't reduce the s/s railing to smaller lower quality or change out the deck hatches for stuff that looks like it came off a caravan. Swoping out Sunbrella for cheaper china made knock off etc. All this sort of stuff makes a difference its not huge money maybe it adds 10% to the price but in return its keeps the quality up and the brand image as it should be.

Ok, with you. Makes even less sense if the ticket price is meaningless anyway.
I think on some boats you might be being a bit harsh on caravans

 

[longjohnsilver]

Hang on a minute.
You've got a thing of sheer beauty like that, and we waste time debating the managerial choices of folks who are proud to have "competence in nothing but money" (true quote from a senior partner of a PE firm)....?!?
Go ahead and post a "Something bound to make you moboers green with envy" thread, with plenty of pics.
I for one would be VERY interested to see Drumbeat better!

Absolutely!

 

[ari]

When you get into the stratosphere of super cars like the P1, 918, Veyron, Zonda etc (of which collectively probably sell as many units as £1m yachts) it is about cramming as much quality and tech into the product as you can and if it jacks the price up another 10% so what. OK so the demographic and profile of a Supercar buyer is a little different and there are a lot more people interested in supercars than yachts. But, again I can't see the mentality of building something costing £1m (I'll say that again ONE MILLION POUNDS) that is no more than a toy / past time / hobby a bit cheaper or less quality than the other guy just to shave a few % off the price.

I can certainly see your point, and you are dead right about cars like the Zonda. But do you really see Fairline (or Princess or Sunseeker) as the Zonda builders of the motor boat world?

They aren't. They're very lovely, very impressive, but non the less production built boats. In the car world they would be Mercedes or BMW or maybe Porsche, but not Zonda or Bugatti, building (relatively) tiny numbers in a 'no expense spared' way.

There are 'bespoke' boat builders who will build whatever you want to whatever quality you want. Builders like 'the big three' are more about turning out a very nice product, but in (comparatively) big numbers. And in this instance, price, or perhaps more accuratly value for money, surely has to be a big consideration.

 

[Nautical]

Probably the wrong comparison, more to indicate what people expect when they spend £1m + on a toy/hobby thing. Naturally if you want the Zonda of the boat world you go to a bespoke custom builder but I still believe most buyers or at least those with some experience of boat building will want to see quality commensurate with a £1m + spend. Honestly, you can walk on a some very expensive product and the door catches look like a cheapo parts bin special from China. In terms of the retail price to put proper stuff on there would be no more than a couple of hundred quid. I understand from an accounting perspective, shave £200 here, £500 there another £400 out of that and a massive £1000 by swopping out ss hatches for cheapo aluminium etc all adds up over the total unit output maybe an extra £1/2m profit PA. As a bean counter that's big pat on the back stuff. But, that's no use when customers are walking away because the product looks pants, the £1/2m you saved or might have was lost because (even if only half a dozen customers walked) T/O went down because the product isn't in line with expectations. Now you have customers disgruntled because the quality isn't there anymore and those walking on at shows etc can see the corner cutting, add into the mix dealers chopping the hell out of the prices and you're on a downward spiral to the end.