Kevin Gaskell (CEO) leaves Fairline

[Deleted User YDKXO]

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.

And that is exactly the problem when you put a car guy who is accustomed to shaving pennies off the cost of making hundreds of thousands of units per year into a luxury boatbuilding operation building hundreds of units per year. As I said the key is to do it such a way as the customer won't notice and to innovate some other features to differentiate yourself from the competition. A good example might be the resin infusion process that Princess are now using to build some of their boats; I don't know whether this saves Princess any money but I guess it does. However the point is that few of their customers will understand the process and none will notice that it is a cost cutting exercise. Throw a few new design features at the boats and you've got an attractive proposition in the market that costs you less to manufacture
Then go and spoil it all by fitting cheapo portholes and undersized deck hardware

 

[henryf]

As has been said already the first thing to do is make people want your product. Once you've achieved that, then you can start discussing price.

The problem with Fairline for me is that they don't build anything I want to buy. Not in my realistic radar anyway. The big problem is the lack of usable space and constant stepping up and down.

Walk off a Fairline then onto a Princess of the same overall length and you will think the latter is 3 feet wider, 10 feet longer.

The mistake was / is, not addressing that. You need to resolve the fundamental architecture of the space first, then worry about fit and finish.

Are Princess perfect? No they aren't. But they are masters when it comes to delivering the largest, flattest and brightest space for a given hull length. Their conservative approach means styling is unlikely to offend and they keep in mind that first & foremost it's a boat so needs to be able to undertake boat tasks.

Henry

 

[Nautical]

And that is exactly the problem when you put a car guy who is accustomed to shaving pennies off the cost of making hundreds of thousands of units per year into a luxury boatbuilding operation building hundreds of units per year. As I said the key is to do it such a way as the customer won't notice and to innovate some other features to differentiate yourself from the competition. A good example might be the resin infusion process that Princess are now using to build some of their boats; I don't know whether this saves Princess any money but I guess it does. However the point is that few of their customers will understand the process and none will notice that it is a cost cutting exercise. Throw a few new design features at the boats and you've got an attractive proposition in the market that costs you less to manufacture
Then go and spoil it all by fitting cheapo portholes and undersized deck hardware

Infusion probably doesn't directly save money on that particular process of build V's hand lamination but what it does do is build a stronger more rigid platform. Because the ratio of fibre to resin is higher the hull is lighter too so you get better performance. The quality of the lamination is also better and with some clever engineering you can probably reduce the number of structural sections giving a better layout aka Henry's comment below. So yes it makes a better product and also saves some time in the build process and of course is much greener and less environmental controls required over the amount of styrene and nasty fumes that have to be filtered/scrubbed .

 

[paultallett]

Interesting thread. I can see what both camps are saying but I think the answer is actually a lot simpler.

We had 4 main British boat builders. However we say it, boating is an eye wateringly expensive hobby. I also think we sometimes lose reality with what a normal man in the street would say if they knew just how much it costs to buy, run & maintain each year.

So we go through an horrific recession (I'm in retail so tell me about it) and the numbers of boats being sold just isn't there anymore and I can't see getting back to where they were anytime soon. Simply there is more supply than demand and only the strongest, fittest, appealing will survive.

Clearly Sun/Prin have tapped the market better than others so are gaining numbers at the expense of others.

 

[Deleted User YDKXO]

Walk off a Fairline then onto a Princess of the same overall length and you will think the latter is 3 feet wider, 10 feet longer.

That I have to agree with. Fairlines have always felt smaller inside than apparently similar length boats from other builders. They do have a way of taking loa to it's maximum limit ie building a 40ft hull, adding an 8ft bathing platform and calling it a 50 footer

 

[Sandy Bottom]

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! [/QUOTE]

Just for you

http://www.ybw.com/forums/showthread.php?410523-Just-for-MapisM&p=4968669#post4968669

 

[diligaf]

I think (as I have said) their biggest problem is they have become the boating equivalent of Vauxhall. You walk into a dealership and there are always deals on and big discounts to be had without necessarily trying too hard. This (for me anyway) puts me off putting my hard earned there as the residuals are rubbish. It means people a 5 series (Sun) or E Class (Prin) rather than an Insignia (Fair). The thing with Fairline is they are building down to a price but still marketing at an inflated price. Bit like Sealine did - similarities....?

 

[AdeOlly]

That I have to agree with. Fairlines have always felt smaller inside than apparently similar length boats from other builders. They do have a way of taking loa to it's maximum limit ie building a 40ft hull, adding an 8ft bathing platform and calling it a 50 footer

Yep agree with that. There was a time I fancied a Targa 38, but it doesn't feel much bigger than my Prestige 34, which given the T38 is nearly 40' LOA it blooming well should! Also there's not enough headroom for me to stand up straight in the saloon/galley area. Yes, I'm tall, but 6'2" is hardly exceptional. My P34 easily accommodates my height without me ducking both under the HT and the entire saloon/galley area. I have no doubt that the Targa 38 is a much better sea boat than my P34, and many others, but that's never going to swing it with SWMBO. She also hates their 'gated stand' approach at boat shows - considers them arrogant and 'up their own backsides', ahem. All of which is a bit of a shame.

 

[jfm]

the residuals are rubbish.

Leaving aside other aspects of the pros/cons of the different manufacturers, I reckon the evidence is that Fairline have the strongest residuals. I sold my last Sq78 and my Sq58 before that at 90%+ of what I paid for them (counting the delivery and bedlinens and tenders - a proper calculation), in each case after 18 months/1.5 seasons from buying the boat new and in each case by selling thru broker not trading in. The pre-loved market loves them. I know what I would have paid had I bought the equivalent new Prin/Sun model (because obviously I shopped around as a real buyer) and can make a good estimate of what I could have sold them for, and I got the best answer on the residuals front. Incidentally, both sold to the first people who viewed them but that will have been more down to the scatter cushions than anything else. Whichever way you look at it, Fairlines are the easiest to trade out of when you fancy a new boat imho.

 

[Deleted User YDKXO]

She also hates their 'gated stand' approach at boat shows - considers them arrogant and 'up their own backsides', ahem. All of which is a bit of a shame.

I've complained about that for years and one year at LIBS they got the message but that approach is back with a vengeance at recent shows. I didn't bother looking at any Fairlines at SIBS precisely because of this. I guess they persist with this approach because it allows them to build up a database of potential customers but on the other hand I've never received any marketing material from Fairline despite having visited their stands and registered on many occasions. There has got to be a better way of collecting data than fencing off your exhibits from casual visitors

 

[MapisM]

Just for you

Wow, I'm flattered, many thanks!
Will follow up ASAP on the other thread, taking off shortly...
Goodbye clouds and rain, hello sunshine and 26 degrees both above and in the water!

 

[admillington]

Leaving aside other aspects of the pros/cons of the different manufacturers, I reckon the evidence is that Fairline have the strongest residuals. I sold my last Sq78 and my Sq58 before that at 90%+ of what I paid for them (counting the delivery and bedlinens and tenders - a proper calculation), in each case after 18 months/1.5 seasons from buying the boat new and in each case by selling thru broker not trading in. The pre-loved market loves them. I know what I would have paid had I bought the equivalent new Prin/Sun model (because obviously I shopped around as a real buyer) and can make a good estimate of what I could have sold them for, and I got the best answer on the residuals front. Incidentally, both sold to the first people who viewed them but that will have been more down to the scatter cushions than anything else. Whichever way you look at it, Fairlines are the easiest to trade out of when you fancy a new boat imho.

+1

My Squadron 55 sold within 4 days to the person who had purchased my Targa 52 3 years earlier!

 

[diligaf]

Leaving aside other aspects of the pros/cons of the different manufacturers, I reckon the evidence is that Fairline have the strongest residuals. I sold my last Sq78 and my Sq58 before that at 90%+ of what I paid for them (counting the delivery and bedlinens and tenders - a proper calculation), in each case after 18 months/1.5 seasons from buying the boat new and in each case by selling thru broker not trading in. The pre-loved market loves them. I know what I would have paid had I bought the equivalent new Prin/Sun model (because obviously I shopped around as a real buyer) and can make a good estimate of what I could have sold them for, and I got the best answer on the residuals front. Incidentally, both sold to the first people who viewed them but that will have been more down to the scatter cushions than anything else. Whichever way you look at it, Fairlines are the easiest to trade out of when you fancy a new boat imho.

Without wishing to go into specifics if you can buy at circa 25-30% off the retail I would think its fairly straight forward it move it on for 10-15% under what you paid for it. That makes it 35-40% off the then new retail price after 18 months. If you take into account the price rises then its more akin to an 18 month old boat selling for 50% of the new retail price. Not good residuals in my book.

 

[ari]

Surely the only residuals that matter are the ones that affect your wallet?

What you pay for it, and what you sell it for, the gap between is all that matters.

 

[jfm]

I define residual to be real selling price as % of real purchase price, and as I say that was 90%+ in my cases.

You are defining residual to be real selling price as a % of the then current MRSP. Each to their own, but frankly that defies all logic.

 

[jfm]

Surely the only residuals that matter are the ones that affect your wallet?

What you pay for it, and what you sell it for, the gap between is all that matters.

Exactly. I'd be intrigued to see how diligaf would compute the residual if you bought a 10 year old used boat and sold it a year later at a small profit. 25%?

 

[Hugin]

So we go through an horrific recession (I'm in retail so tell me about it) and the numbers of boats being sold just isn't there anymore and I can't see getting back to where they were anytime soon

Hold on, this explanation doesn't hold water. The Western economies as a whole is in slight recession, but these expensive boats are not sold to factory workers...... they are sold to the top centile of the income scale. Maybe even to the top 1/1000 of the income scale. And at the top it has never been better. Never. The top one percent takes a larger and larger percentage of the total income. This trend has been on since around 1980 and the crash in 2008 didn't change that, on the contrary it has accelerated since then (read Thomas Piketty for the numbers).

In layman's terms it means that where, say, 1 out of 800 Britons could afford a 45ft Princess 10 years ago it is now potentially 1 out of 600 Britons. If the output (produced boats) has shrunk then it cannot be because of the recession. We need to look for other explanations.

The market potential has increased by roughly a third (my back of the envelope rough estimate) alone in Britain, more in the US and slightly less in rest of Europe, simply due to more people moving into the income bracket where expensive motorboats potentially begin to appear on peoples' wishlists. And the further up the income brackets you go the more evident it is...... which is probably part of the explanation many boat builders are skipping the smaller boats to concentrate on the bigger.

Just looking at the numbers doesn't explain any deroute for the main boat builders, British or otherwise! Something else must have changed. Personally I believe it is the price-utility balance that has not followed the trend of other luxury goods. Or in other words, the industry hasn't managed to change the economic fundamentals of boat building in the same way as, say, established fashion brands have... i.e. going for the highest volume possible without undermining the market's perception of the brands.

The comparison between the car and the boat industry is on one hand tempting, but OTOH it is too easily dismissible by referring to the difference between producing 100.000s of cars and 100s of boats. One thing the car industry has done is to introduce platforms allowing producers to offer maybe 50-60 visually and functionally very different models (VAG, have at least that many, spread on 4 brands) based on only 3-4 platform architectures. Compare that to Princess, 23 different models, 22 different hulls each available with 2-4 propulsive set ups. No wonder the boats are expensive to build. I honestly believe the platform strategy could be used by boat builders too.

A few years ago I read about a manufacturer of turntables (used by many industries to wrap goods on pallets in plastic foil before shipping). The (US) company had something like 10 models, with different motors, diameter, available to many specifications. A logistic nightmare and production was a mess due to this, invariable also making waiting costumers unhappy. Some thorough analysis of costumers' needs reduced this to 3 models, each available in a few standard variants. Logistics simplified, production cost went drastically down and the company got much happier (=returning) clients. This company produced less than 5000 turntables, so it doesn't require production numbers in the 100.000s to rationalize and produce smarter.

Looking at the Princess range again I see 5-6 models in the class around 50.000lb displacement. Is it really rational to have a 52' Fly and a 56'Fly when the difference in reality is 1500lb in displacement and little else? In my book it would make a lot more sense to offer the same hull with significantly different layouts, choice between large, small or no flybridge, galley up or down, tender garage or crew cabin etc. etc....... but sharing propulsive options and many other components.

I believe the crisis (if there indeed is a crisis industry wide) is more a reluctance to embrace new ideas and ways than it is an economic crisis.

 

[Deleted User YDKXO]

I define residual to be real selling price as % of real purchase price, and as I say that was 90%+ in my cases.

You are defining residual to be real selling price as a % of the then current MRSP. Each to their own, but frankly that defies all logic.

I agree with you but I know where the concept comes from and that is residual values quoted in the car market which are always compared to list price not selling price. The reason for that is that selling prices vary hugely. So whereas the average punter might get 10% off the list price of a Mondeo, a car rental company buying 100 of them might get 40% off so its impossible to quote residual values against selling price. But the boating market is of course different and I suspect with much less variation in selling price for the same model so it's legitimate to talk about residual values as a % of selling prices

 

[diligaf]

Assume you are a buyer looking into the market. You see 18 month old boats for 50% of the retail price. Wouldn't you think thats a big hit?

If you go to dealers who offer a big discount (30%) and those that offer far smaller discounts (5-10%) I would think my investment is safer with the company that doesn't NEED to give give big discounts.

 

[Deleted User YDKXO]

The comparison between the car and the boat industry is on one hand tempting, but OTOH it is too easily dismissible by referring to the difference between producing 100.000s of cars and 100s of boats. One thing the car industry has done is to introduce platforms allowing producers to offer maybe 50-60 visually and functionally very different models (VAG, have at least that many, spread on 4 brands) based on only 3-4 platform architectures. Compare that to Princess, 23 different models, 22 different hulls each available with 2-4 propulsive set ups. No wonder the boats are expensive to build. I honestly believe the platform strategy could be used by boat builders too.

An excellent post and of course you're right. 15yrs ago I bought a new BMW 5 series for not a lot less money than what you'd pay for the same model today. Compare that to the boating industry where prices have habitually outstripped inflation year on year. I bet the cost of a new 45ft mobo is 2-3 times the price of a similar model from 15yrs ago and that's in absolute terms, not real terms. So the outcome of this is that a new BMW 5 series is accessible to a far greater market than it was 15yrs ago and the reverse is true of boats and hence BMW sales continue to rise and mobo sales fall. And the same is true of many other markets too where manufacturers have found ways of building their products with increasing efficiency and thus managed to keep price rises below inflation or even reduce their prices in absolute terms
Having said this, as I said before, the boatbuilding industry is still a cottage industry with too many players each having too small a volume. What is needed is the same kind of rationalisation as has occurred in the car industry in which there are now a small number of large manufacturers with sufficient volume to engineer real cost savings in their products. It will probably come in the boatbuilding industry but it will take many years