gjgm
Well-Known Member
I am not sure if that indicates good residuals by brand, or that you are a very fierce customer
Kevin Gaskell (CEO) leaves Fairline
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Deleted User YDKXO
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Er no, the only thing that counts is the difference between what you buy it for and what you sell it for. Discounts are an arbitrary figure based on an arbitrary list price and you certainly couldn't assume that small discount = high residual
jfm
Well-Known Member
My brain is definitely wired up differently from yours
Nautical
Well-Known Member
I would agree with a lot of what you say there Mike and Hugin, but would caveat that also with .... Boats today are a lot more complex than they used to be, the idea of having air conditioning on a 50' boat was a real luxury then and a big cost option, now some builders are including it in their standard spec. It is also hard to see how you could radically change the manufacturing process of boat building to such a massive extent as you could with the car industry. With cars you can robotise nearly everything, it would be impossible (until we have humanoid robots) to do the same with boat building and even the return on investment would be decades not years. In the car industry you can throw £1/2 billion into developing a new platform and engine package that spans ten different models, but the T/O is into Billions globally.
The problem is the turn over in the boat building industry is tiny and the margins very tight. To be frank any sensible investor would look at the yacht industry and run a mile. The ones that do are looking for the Kudos of being in a luxury market and the image it adds to the global presence.
What you can do as mentioned earlier is share 4 or 5 platforms over a 20 model range, vacuum cored infusion, standardised drive train, interiors built modular outside the boat and drop and tab into place. Cabling is standard backbone loom you drop into the hull and all the tails etc are pre cut and plug and go. That might shave 15% - 20% off the manufacturer cost but again the investment would be enormous in terms of T/O to invest ratio.
It does mean customisation is very limited or there is a big upcharge for anything non standard.
The only way to knock the pricing back to levels of 15 years ago is to chop out the labour cost which means going to China and as of today they haven't yet got the skill sets or the mind set to build yachts to the current level or standard. It will come but not yet.
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Hugin
Well-Known Member
The same is true for cars, computers, cellular phones.... more and more technology shoehorned in while prices stay the same or drop
Bavaria and Beneteau/Jeanneau have robotised parts of the production, but I don't think robotisation is the only road. VAG has a facility in Dresden where they assemble ~50 high-end cars of 3 different models per day (one of the models is a Bentley, BTW) - most assembly done by hand, machines (but not robots) to lift the heavy parts. These high-end cars have 100s of customer defined options. Instead of focusing on robotisation the money has been spent on computerized and automated supply logistics...... which could be introduced in the boat building industry too - the potential for rationalization doesn't so much depends on numbers produced, but on how many different bits and pieces you need to keep track of and combine at the right time and right place. At least Beneteau/Jeanneau has already (partly) gone down this path AFAIK.
I dunno.... if you are offered a 28% discount on a Fairline without too much effort then there is certainly something to give from. Toyota makes something like $400-500 profit per car they produce...... the German premium brands significantly more, but we are still way below 10% profit margin. I read it in a German car magazine last year.
If you think about it, then it makes sense..... in boat building numbers are small and it is a highly volatile market for a number of reasons so you calculate in a high margin to make sure even modest sales can cover your overhead - and then it becomes tempting on a day-to-day basis to give away some of that rather handsome profit to secure an extra sale here and now. In the car industry numbers are much higher and market predictability is also higher (which doesn't exclude that manufacturers get the numbers awfully wrong) and this allows profit margins down to a few % over the whole model range.
There are 2 fundamentally different ways to lower the labor portion of the total
1) Pay less per man/hour
2) Produce more per man/hour
The last one is of course the one with far the most potential as there are lots of hidden costs involved with cheap production in countries like China.
As an example how productivity of labor can be doubled - or even tripled - also in Western companies I recommend you study the remarkable turnaround of Porsche...... from near bankrupt, huge losses and frankly speaking lousy quality in 1993 to the best performing car producer in the world, hailed for its superior quality, less than 10 years later. Lean Thinking by James P. Womack and Daniel T. Jones provides a detailed description. It's an extremely interesting and uplifting read.
Last point, there are other ways to cut cost than to reduce pay to labor. E.g. if you can halve the through time (meaning reduce the actual time each boat is in production to half) then you also reduce your inventory of materials from suppliers to half..... in turn reducing your financing costs. I wager that if you go to any boat yard you will see a lot of half-finished boats....... and most of the time no one works on these boats (because they are temporarily working on another boat). That is a waste...... why begin building a boat if you are not yet ready to finish and deliver it? Why not begin the production of one boat and then have all workers work on it for 4 hours at the same time. Then it is finished and after lunch the workers begin and finished a second boat. Of course there are practical reasons why it can't be done..... but it illustrates the principle where you quickly finish what you have already started before starting something else. There are significant savings in this.
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Nautical
Well-Known Member
Hugin, understand all you say below, but trying to compare the boat industry to the car one is not going to make much sense. Your reference to say Bentley sounds "OK we can do that " but put it in context that on one model of Bentley say the GT they make over 5000 a year, tiny by car standards but absolutely massive by boat building standards. If you think that say one of the mid size builders (we are talking builders of more premium larger boats, not a builder of little sports boats or stack them high and sell em cheap types) on one model might make 25 units a year (in a good year ) to put all that infrastructure and management into a piddley little turn over it doesn't stack up. Lets say for instance you could shave some % out of the build time of your average 40 - 80 footer production but adding in just two robots to lift in the heavy stuff like engines, gear boxes and even a raft of other stuff, the bots would only carry out maybe a few hundred operations in a whole year, 90% of the time they would be sat doing nothing at a cost of nearly £1/2m a piece. And is a bot really going to save that much time lifting in an engine that can be done quite easily by an over head beam crane that cost a few thousand.
I can understand some streamlining like just in time parts/components and equipment management will help production cost but frankly the unit numbers out the door is so small to get the kind of investment you need to really take the thing to a whole new level is just not doable.
Secondly once you hit the 24m mark you have to offer some pretty detailed customisation and that is almost impossible to plan for if you set yourself tight timelines to have it in/out and on a truck heading to the dealer in x number of production hours.
Toyota making $500 profit per car sounds very poor but then they make 500,000 of just one model line a year that's $250m net on one line, the entire turnover of a big'ish boat builder whom probably on a good year makes a few million profit, the rest he is sailing close to the wind between break even and loss.
As said, the only way to really cut costs is to slash the labour cost and farm it out to a low cost territory but we have seen how that worked out for some !
The reason builders start several hulls at once and then move to the units that are sold is to cut production time from date of order to delivery. The lamination and pre production internals take a lot of labour and time, no one wants to wait 5/6 months for a 40' + boat, so builders tend to have several in the pipe ready to configure as the order comes in. Some of the reason is the boat buying season is very short, late year and early next you have show season and there builders take orders from dealers that are selling, you want to get your boat out and delivered by May next season if possible. If you take an order for a 45' in February and you have none in lamination its going to be hard to get it moulded , built and delivered by May.
I can understand some streamlining like just in time parts/components and equipment management will help production cost but frankly the unit numbers out the door is so small to get the kind of investment you need to really take the thing to a whole new level is just not doable.
Secondly once you hit the 24m mark you have to offer some pretty detailed customisation and that is almost impossible to plan for if you set yourself tight timelines to have it in/out and on a truck heading to the dealer in x number of production hours.
Toyota making $500 profit per car sounds very poor but then they make 500,000 of just one model line a year that's $250m net on one line, the entire turnover of a big'ish boat builder whom probably on a good year makes a few million profit, the rest he is sailing close to the wind between break even and loss.
As said, the only way to really cut costs is to slash the labour cost and farm it out to a low cost territory but we have seen how that worked out for some !
The reason builders start several hulls at once and then move to the units that are sold is to cut production time from date of order to delivery. The lamination and pre production internals take a lot of labour and time, no one wants to wait 5/6 months for a 40' + boat, so builders tend to have several in the pipe ready to configure as the order comes in. Some of the reason is the boat buying season is very short, late year and early next you have show season and there builders take orders from dealers that are selling, you want to get your boat out and delivered by May next season if possible. If you take an order for a 45' in February and you have none in lamination its going to be hard to get it moulded , built and delivered by May.
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Portofino
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10-04-13,*20:50 #38 U4
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Wow, you know an awful lot.. are you able to predict after 2014 ish or is that about as far as you can see?
Originally Posted by Portofino
It's insolvent ( basically without help of parent Co) because folks are buying the competitors boats in the narrow sectors sealine operate in .
Land locked - they lack long term vision of going larger than what they can truck out.This severly limits the even the most optimistic growth forecasts for a so called " venture capitalist Co in it for the long term"
The owners realise the brand is weak ( except in the UK) in nearly all of the rivals major markets -eg France ,Spain ,no chance in Italy well oversubscribed with builders - likewise the US ,
Next up emerging markets like China,and Pascific rim countries - they wade in at Pred 80's and Priny 95's etc as starter boats , Sealine don,t get a look in .They have missed the boat .
So with the EU Genaral ecomonic situation - the sub 60 fter,s are the hardist hit - sales wise
Sunseeker/ princess are shifting much bigger ( profitable) stuff onto a global market, kinda compensates for the shrunken sub 60 ftEU market , they have critical mass in brand image cultivated over he last 40 years - its payback time .
Sealine has nothing in the locker brand wise .
2011 Sealine opened Sealand France in LaNapoule ,next to Sunseeker.Fr and Princess.Fr .It was opened at the la Napoule Easter boat show ( check out this month mag advert) .it shut within 8 months did not make it to 2012 - fancy glamourously decorated office - gone before the year end !
Re Jeanneau - and Beneteaux , iam afraid French are fiercely loyal to there own , and to be fair they are great sea boats practical and priced accordingly ,with commensurate build quality .They are not rubbish sales are holding up in market .
Future of Fairline - tough one - I personally think they are on a knife edge .As I said modal range is just not broad enough in today's / tomorrow's global market ,- or they are not ' niche' enough or small enough yet .
I Predict Fairline next in the financial stocks ., 2014 ish ?
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10-04-13,*20:59 #39 therealmrprice
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I think we ( well me ) saw this coming -
Last published turnovers:
Sunseeker £288m (peaked at £304m 2010)
Princess £207m ( £213m 2009)
Fairline £79m ( £130m 2007)
Sealine £33m ( £ 61m 2004)
Says it all I fear - Portofino has it right, much as it seems crazy to most to see British builders moving bigger and bigger and abandoning most of us, business wise it has clearly been the right thing to do.
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10-04-13,*20:50 #38 U4
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Wow, you know an awful lot.. are you able to predict after 2014 ish or is that about as far as you can see?
Originally Posted by Portofino
It's insolvent ( basically without help of parent Co) because folks are buying the competitors boats in the narrow sectors sealine operate in .
Land locked - they lack long term vision of going larger than what they can truck out.This severly limits the even the most optimistic growth forecasts for a so called " venture capitalist Co in it for the long term"
The owners realise the brand is weak ( except in the UK) in nearly all of the rivals major markets -eg France ,Spain ,no chance in Italy well oversubscribed with builders - likewise the US ,
Next up emerging markets like China,and Pascific rim countries - they wade in at Pred 80's and Priny 95's etc as starter boats , Sealine don,t get a look in .They have missed the boat .
So with the EU Genaral ecomonic situation - the sub 60 fter,s are the hardist hit - sales wise
Sunseeker/ princess are shifting much bigger ( profitable) stuff onto a global market, kinda compensates for the shrunken sub 60 ftEU market , they have critical mass in brand image cultivated over he last 40 years - its payback time .
Sealine has nothing in the locker brand wise .
2011 Sealine opened Sealand France in LaNapoule ,next to Sunseeker.Fr and Princess.Fr .It was opened at the la Napoule Easter boat show ( check out this month mag advert) .it shut within 8 months did not make it to 2012 - fancy glamourously decorated office - gone before the year end !
Re Jeanneau - and Beneteaux , iam afraid French are fiercely loyal to there own , and to be fair they are great sea boats practical and priced accordingly ,with commensurate build quality .They are not rubbish sales are holding up in market .
Future of Fairline - tough one - I personally think they are on a knife edge .As I said modal range is just not broad enough in today's / tomorrow's global market ,- or they are not ' niche' enough or small enough yet .
I Predict Fairline next in the financial stocks ., 2014 ish ?
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10-04-13,*20:59 #39 therealmrprice
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I think we ( well me ) saw this coming -
Last published turnovers:
Sunseeker £288m (peaked at £304m 2010)
Princess £207m ( £213m 2009)
Fairline £79m ( £130m 2007)
Sealine £33m ( £ 61m 2004)
Says it all I fear - Portofino has it right, much as it seems crazy to most to see British builders moving bigger and bigger and abandoning most of us, business wise it has clearly been the right thing to do.
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petem
Well-Known Member
"Rumours Of My Demise Have Been Greatly Exaggerated"...
...aren't we getting a bit carried away here? We have no idea why Gaskell left (it really could be anything) and there was a cash injection into the business less than a month ago.
...aren't we getting a bit carried away here? We have no idea why Gaskell left (it really could be anything) and there was a cash injection into the business less than a month ago.
D
Deleted User YDKXO
Guest
Agreed. Fairline is a strong brand (arguably as strong as Princess) and in all probability an owner with deeper pockets and a longer term strategy than Better will eventually buy the company and put the necessary investment in to make the company grow again.
paultallett
Well-Known Member
Good luck to them and lets hope they can pull it off. Would never want to lose any builder.
Hugin
Well-Known Member
Nautical, production optimizations and economy are complex subjects..... and there are many roads to Rome. Maybe this forum isn't the best place to dig into details.
We will just have to agree to disagree on this one. I disagree because I know Western companies have gained labor productivity gains of 100-200% simply be completely rethinking the way production is organized and continuously weed out all identified waste. Your position seems to be that nothing much can be done differently - that we have to continue to think about production procedures, organizational models, supply train relations, market structures, customer needs and preferences etc. etc. in basically the same ways as always. I believe business-as-usual always has a last sell-by date and lack of organizational innovation spells certain death for any industry, just as sure as lack of product innovation does.
We will just have to agree to disagree on this one. I disagree because I know Western companies have gained labor productivity gains of 100-200% simply be completely rethinking the way production is organized and continuously weed out all identified waste. Your position seems to be that nothing much can be done differently - that we have to continue to think about production procedures, organizational models, supply train relations, market structures, customer needs and preferences etc. etc. in basically the same ways as always. I believe business-as-usual always has a last sell-by date and lack of organizational innovation spells certain death for any industry, just as sure as lack of product innovation does.
Nautical
Well-Known Member
I am not disagreeing with you in whole, indeed I have said that rationalisation of production methods such as just in time etc is a good thing, and , there are builders that are pretty slick with whole supply chain thing. But one has to take into context the particular industry you are talking about. There is a finite amount of tinkering you can do to the process of boat building without some radical change in technology such as the whole lamination process automated to be able to cut swathes out of the time/labour it takes to build.
If you can suggest any "organizational innovation" that could drastically cut production time and cost to a mid sized builder producing 100 units a year then you could make a small fortune as a consultant I am sure but I just can't see where this change would come from that could make such a big impact as to reduce the ex yard prices by 30%-40% which is where you would need to be to align pricing with the car industry over the last 20 years.
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rafiki_
Well-Known Member
I have tried to stay out of this boat v automotive building discussion, but have finally failed. Some will know on here that automotive is my sector, and I am fortunate (or otherwise) in travelling frequently to auto plants around the globe.
Firstly, in the vehicle assembly hall you will rarely see a robot. They are generally used to apply glue to bonded windows, and to stuff up the engine/front suspension system. This is the same for 1000 per year or 100,000 per year. You will see robots in the body-in-white assembly, for fixing and spot welding. You might see the odd 1 or 2 in an engine assembly hall. You will also see robots in a paint shop, plus some very skilled sprayers and finishers.
Secondly, labour time in auto manufacturing varies hugely, from around 15 hours per car for some of the Nissans out of Sunderland to several 100's or so for a Macca or Roller. This is where significant improvements have been made over the last 20 or so years. To lay up a carbon fibre tub and body for a Macca is a very labour intensive task, and the workers are highly skilled. Getting a class "A" finish for paint is vital, and the finish on any car, be it a £7,000 Dacia or £200,000 Macca is many times better than any boat of any price.
Labour costs in China are not orders of magnitude less than European, especially in the East of the country. My staff in China are about 70%-80% of the cost of UK staff. OK, they are not production workers, but Engineers. China is now outsourcing manufacturing jobs to Vietnam, Africa, Indonesia, as China is too expensive.
To build a boat, you need seriously skilled tradesmen, you won't find many of these in the lower cost economies. Taiwan builds some nice boats, but are they cheaper to build than European? I doubt it. Nice place Taiwan, has a 1st world feel to much of it, with process to match.
In my opinion, for what it is worth, there are not significant gains to be made fro offshoring work to a developing country, but the area that the auto sector has been able to work on is labour times and parts prices. I struggle to come to terms with engines for leisure boats costing over £100k. These are very simple engines compared to say the Macca, Bentley, etc engines and transmissions. Designed mainly for the construction world, they are unstressed, high emissions, low revving buts of kit. The most expensive OE transmission to my knowledge is the Bug Veyron, produced by Ricardo, about £25k. Got to work in ambients from -25C to +65C, wet, dry, humid etc etc. A marine engine has a much more controlled life, does very few hours (not that a Veyron does many a year on average, but it is well capable).
The discussion on Bimmer 5 series, also missed the huge increas in standard features these days compared with 20 years ago. Most Bimmers will have a powertrain that averages 45+ mpg these days, despite offering far more performance and reliability. They are specified for 300,000km life. The emissions performance is stunning, CO2 and clean! Exhaust aftertreatment is one of the biggest costs on any car. The engines are serviced at 30,000km, not 10,000, take 1 hour to service, not 3. The cars come with climate control, abs, esp, controlled lights, doors, windows, nav, excellent radio/comms/bluetooth, umpteen airbags, on-board computers (ave 70 electronic controllers per car), e-coated bodies that don't rust. If these were available 20 years ago, they would heve been £2,000 each! And price rises? No, it is a very competitive world in the auto sector, and few companies make much margin. The main difference is the amount of investment that goes into each platform, ave €1 billion. A low vol supercar might have €50 mil to €100 mil, but of course don't have the volumes to recover.
So what about boats? Their systems are generally much simpler, but much more costly, and almost zero investment. How many boats are tested for quality and reliability before sale? Feature content has increased, but not to the same extent as the auto sector.
So, what can the boat building business learn from the auto sector? Investigate every possible area of cost and quality, and do something about it. There are some ex auto people have made senior positions in the boat industry, Steve Coltate at Brunswick, Andrew Walsmsley was at Broom for a while, Andy Peck at Sunseeker to name a few, and there is much to share and learn. Boats and cars are techie bits of kit, with a fair amount of crossover between the 2 industries.
Rant over
Firstly, in the vehicle assembly hall you will rarely see a robot. They are generally used to apply glue to bonded windows, and to stuff up the engine/front suspension system. This is the same for 1000 per year or 100,000 per year. You will see robots in the body-in-white assembly, for fixing and spot welding. You might see the odd 1 or 2 in an engine assembly hall. You will also see robots in a paint shop, plus some very skilled sprayers and finishers.
Secondly, labour time in auto manufacturing varies hugely, from around 15 hours per car for some of the Nissans out of Sunderland to several 100's or so for a Macca or Roller. This is where significant improvements have been made over the last 20 or so years. To lay up a carbon fibre tub and body for a Macca is a very labour intensive task, and the workers are highly skilled. Getting a class "A" finish for paint is vital, and the finish on any car, be it a £7,000 Dacia or £200,000 Macca is many times better than any boat of any price.
Labour costs in China are not orders of magnitude less than European, especially in the East of the country. My staff in China are about 70%-80% of the cost of UK staff. OK, they are not production workers, but Engineers. China is now outsourcing manufacturing jobs to Vietnam, Africa, Indonesia, as China is too expensive.
To build a boat, you need seriously skilled tradesmen, you won't find many of these in the lower cost economies. Taiwan builds some nice boats, but are they cheaper to build than European? I doubt it. Nice place Taiwan, has a 1st world feel to much of it, with process to match.
In my opinion, for what it is worth, there are not significant gains to be made fro offshoring work to a developing country, but the area that the auto sector has been able to work on is labour times and parts prices. I struggle to come to terms with engines for leisure boats costing over £100k. These are very simple engines compared to say the Macca, Bentley, etc engines and transmissions. Designed mainly for the construction world, they are unstressed, high emissions, low revving buts of kit. The most expensive OE transmission to my knowledge is the Bug Veyron, produced by Ricardo, about £25k. Got to work in ambients from -25C to +65C, wet, dry, humid etc etc. A marine engine has a much more controlled life, does very few hours (not that a Veyron does many a year on average, but it is well capable).
The discussion on Bimmer 5 series, also missed the huge increas in standard features these days compared with 20 years ago. Most Bimmers will have a powertrain that averages 45+ mpg these days, despite offering far more performance and reliability. They are specified for 300,000km life. The emissions performance is stunning, CO2 and clean! Exhaust aftertreatment is one of the biggest costs on any car. The engines are serviced at 30,000km, not 10,000, take 1 hour to service, not 3. The cars come with climate control, abs, esp, controlled lights, doors, windows, nav, excellent radio/comms/bluetooth, umpteen airbags, on-board computers (ave 70 electronic controllers per car), e-coated bodies that don't rust. If these were available 20 years ago, they would heve been £2,000 each! And price rises? No, it is a very competitive world in the auto sector, and few companies make much margin. The main difference is the amount of investment that goes into each platform, ave €1 billion. A low vol supercar might have €50 mil to €100 mil, but of course don't have the volumes to recover.
So what about boats? Their systems are generally much simpler, but much more costly, and almost zero investment. How many boats are tested for quality and reliability before sale? Feature content has increased, but not to the same extent as the auto sector.
So, what can the boat building business learn from the auto sector? Investigate every possible area of cost and quality, and do something about it. There are some ex auto people have made senior positions in the boat industry, Steve Coltate at Brunswick, Andrew Walsmsley was at Broom for a while, Andy Peck at Sunseeker to name a few, and there is much to share and learn. Boats and cars are techie bits of kit, with a fair amount of crossover between the 2 industries.
Rant over
oGaryo
Well-Known Member
I do like it when you get angry Paul enjoyed that read, thanks for posting
enjoyed that read, thanks for posting
D
Deleted User YDKXO
Guest
No rant but a v interesting post! You are right about the cost of engines. Most marine engines are marinised versions of engines designed for the construction market and their unit cost seems to be significantly less in a construction machine than in a boat. However, the volumes of engines sold in the construction equipment market are far higher than the pleasure boat market so I guess there is a reason for the some of the difference but like you, I do wonder why an engine installed in a boat seems to cost 1 1/2 to 2 times what the same engine costs in a bulldozer. Also engines in construction machines are much further along the emissions regulation scale so they should be costing more not less
Nautical
Well-Known Member
I agree with a lot of what you say there Rafiki but I think you answered your own question to some extent, "A low vol supercar might have €50 mil to €100 mil" to invest . That would be equivalent to double the entire turnover of some small - mid sized builders. With a builder netting on a good year maybe 3%-4% and losing money in so so years the investment recovery would be decades.
I also agree (well I would) Taiwan build some fabulous boats but in some areas further advanced than even the EU and that has impacted the labour costs so not a huge saving to be made if any. China does have labour cost advantages but as yet do not have the skill set to build production boats to the Taiwanese/EU standards. Having said that, there are a couple that can and do but and a big caveat they are set up and managed by Brits and Americans (and the odd Australian) . Take a look at McConaghy Boats and the tri-maran Adastra they recently launched, very trick tech machine a match or more for any EU yard. But standardised production in China is a long way off yet. Nevertheless if anyone thinks the Chinese are not going to have an influence on global yacht building in the future is deluding themselves. How much and how far is another matter.
But I also agree that with good management and top of the line quality the EU can compete and still be the best, where the advantage is is in its tradition, history and brand recognition. A Bentley while not owned by the Brits anymore is still built in Britain or assembled anyway. Take that away from its Kudo's and it would struggle especially in that very same market Asia where the brand and where it is built matters hugely.
Engines, some agreement there but there is the marinising cost to add and in very low numbers compared to plant, secondly most of the makers have stand alone divisions which have big overheads operating the marine market but only a small t/o compared to their bigger plant, truck and bus divisions. They still have to design, test and emission control their product to the same levels as plant equipment because you can't just take a truck engine and plonk it in a boat under the same emission regs, you have to provide all the testing and reliability, emissions specific to the marine market. When it comes to warranty labour the costs are also higher than with plant.
I also agree (well I would) Taiwan build some fabulous boats but in some areas further advanced than even the EU and that has impacted the labour costs so not a huge saving to be made if any. China does have labour cost advantages but as yet do not have the skill set to build production boats to the Taiwanese/EU standards. Having said that, there are a couple that can and do but and a big caveat they are set up and managed by Brits and Americans (and the odd Australian) . Take a look at McConaghy Boats and the tri-maran Adastra they recently launched, very trick tech machine a match or more for any EU yard. But standardised production in China is a long way off yet. Nevertheless if anyone thinks the Chinese are not going to have an influence on global yacht building in the future is deluding themselves. How much and how far is another matter.
But I also agree that with good management and top of the line quality the EU can compete and still be the best, where the advantage is is in its tradition, history and brand recognition. A Bentley while not owned by the Brits anymore is still built in Britain or assembled anyway. Take that away from its Kudo's and it would struggle especially in that very same market Asia where the brand and where it is built matters hugely.
Engines, some agreement there but there is the marinising cost to add and in very low numbers compared to plant, secondly most of the makers have stand alone divisions which have big overheads operating the marine market but only a small t/o compared to their bigger plant, truck and bus divisions. They still have to design, test and emission control their product to the same levels as plant equipment because you can't just take a truck engine and plonk it in a boat under the same emission regs, you have to provide all the testing and reliability, emissions specific to the marine market. When it comes to warranty labour the costs are also higher than with plant.
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PowerYachtBlog
Well-Known Member
This post have been a very interesting one.
The market has its share of problems, and while I think the bigger size is one of Fairline problems, I think its not the only one.
Fairline can concentrate also on smaller sizes but currently its line is very empty look at the Targa for example 38 then its the 48, then a 50 then a 62 and now an upcoming 75.
Squadron is 42, then you have a 48, 50, a 60 (which in reality was born as a 55 became a 58 etc etc), 65 and 74.
That is quite a bare line up IMO especially in some important Fairline sizes which have been its bread and butter in the past.
Nautical I think you forgot to mention Cheoy Lee. Anyways China labour costs are going up, and I am against you here, China will never have an important peace of the market.
Most people 99.9% buy boats in China as a floating condo to play some of there games. Yes it will be good for a couple sales and to round up your balance sheet, but I will never imagine
China to have a double digit share of the global market share.
Production wise when you start to go high quality Rafiki has it spot on, it will cost you more or less the same. Cheoy Lee is an example of this.
I think the market will continue to struggle we have important yachting places as Italy, Spain, and Greece who are still way under performing.
I think Fairline has two options in the future, or have a buyer with a lot money and it continues operating how it is (with a vision to go bigger size), or it will scale down and become a more custom builder.
The market has its share of problems, and while I think the bigger size is one of Fairline problems, I think its not the only one.
Fairline can concentrate also on smaller sizes but currently its line is very empty look at the Targa for example 38 then its the 48, then a 50 then a 62 and now an upcoming 75.
Squadron is 42, then you have a 48, 50, a 60 (which in reality was born as a 55 became a 58 etc etc), 65 and 74.
That is quite a bare line up IMO especially in some important Fairline sizes which have been its bread and butter in the past.
Nautical I think you forgot to mention Cheoy Lee. Anyways China labour costs are going up, and I am against you here, China will never have an important peace of the market.
Most people 99.9% buy boats in China as a floating condo to play some of there games. Yes it will be good for a couple sales and to round up your balance sheet, but I will never imagine
China to have a double digit share of the global market share.
Production wise when you start to go high quality Rafiki has it spot on, it will cost you more or less the same. Cheoy Lee is an example of this.
I think the market will continue to struggle we have important yachting places as Italy, Spain, and Greece who are still way under performing.
I think Fairline has two options in the future, or have a buyer with a lot money and it continues operating how it is (with a vision to go bigger size), or it will scale down and become a more custom builder.
Nautical
Well-Known Member
I agree with you on some of what you say re China and yes they use their boats entirely differently to us but they will have more and more home grown builders that cater for that market which inevitably will take sales away from the EU/ US builders of which some can count a goodly proportion of their exports go to Asia, at the moment they have little choice but that will change. If you look at the huge amount of money going into marina and yard development they are not doing that for fun, they can also see the home market as a rapidly expanding part of the leisure industry. There will always be a market for premium euro product there but don't discount the home builders as they grow in ability to take the bread and butter end of it. And as far as Chinese investment in the EU and the US, well, we know how that is going, more and more and some of that production is going to end up in China whether we want to admit it or not.
While labour rates are going up they are still miles behind EU hourly costs, it will be a long time before they will be paying EU hourly rates.
But I am not suggesting the premium builders here are going to up sticks and relocate to Asia, far from it, I think the better and wiser builders recognise the same demographic for their product as do the premium car manufacturers, to send it off to Asia would defeat the whole ethos and kudos of the product.
While labour rates are going up they are still miles behind EU hourly costs, it will be a long time before they will be paying EU hourly rates.
But I am not suggesting the premium builders here are going to up sticks and relocate to Asia, far from it, I think the better and wiser builders recognise the same demographic for their product as do the premium car manufacturers, to send it off to Asia would defeat the whole ethos and kudos of the product.
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PowerYachtBlog
Well-Known Member
hmm the way you said it now sounds different and I agree with you. China is showing (showed) it can build with high quality levels, and while I mentioned a top dog there is much smaller builders who improved there quality.
The way you say it I can also see it differently. At the moment China are having for the most part European import boats with one of the cabins usually changed to a games room, that might not be the Chinese boat in reality.
So yes the Chinese market might evolve and we might end up with a China boat looking and feeling different to what European are giving to them.
Demographics have been very important in boat building; since ever.
The way you say it I can also see it differently. At the moment China are having for the most part European import boats with one of the cabins usually changed to a games room, that might not be the Chinese boat in reality.
So yes the Chinese market might evolve and we might end up with a China boat looking and feeling different to what European are giving to them.
Demographics have been very important in boat building; since ever.
Nautical
Well-Known Member
I don't think I said anything different really, if China can supply a goodly proportion of its own needs then that will affect the global builders ability to expand into that market. As they grow it isn't un-realistic to think they will be content with just their own market and while they will never out Sunseeker a Sunseeker they will have a damn good try at it for sure, they will be a player it is just to what extent.
As far as EU builders targeting the Asia market specifically, Azimut are probably the most aggressive and are significantly tailoring their product accordingly aka its Dragon series, their HK / China dealer does some pretty stunning business. I imagine many of the local yards are taking detailed notes of how, what, where and when if you get my drift
As far as EU builders targeting the Asia market specifically, Azimut are probably the most aggressive and are significantly tailoring their product accordingly aka its Dragon series, their HK / China dealer does some pretty stunning business. I imagine many of the local yards are taking detailed notes of how, what, where and when if you get my drift