Oyster Yachts gone into administration

[lw395]

That is precisely my point. If the error was in the design, only the three owners of surviving 825s need to worry. If the error was in the construction, every Oyster owner has to worry because if Polina Star was laid up badly by two blokes in a shed, their prides and joy could have been laid up equally badly by the same two blokes in the same shed.

Design and manufacture are not supposed to be isolated from each other. Designing stuff that can't be made with the processes you have is a design failure. You have to design the process as well as the product. On the production side, you have to have your processes good enough to build to what you've signed up for. In my world, designing something to be built with a different process, you build some prototypes to establish the limitations of the process.
We also have QA people whose job it is to be sure things are built to the design.

 

[Lozzer]

I'd like to see some examples of this huge contribution to British yachting.

Been around for umpteen years, created many high quality yachts that many people have aspired to owning.

Enabled owners to fulfil their dreams of sailing around the world.

Created employment on the East coast and South Coast. This created further jobs in the industry.

They have lost one yacht over 40 years now that isnt a bad return. Terrible for Polina Star III I totally agree.

The new design was not un-conventional, Swan have used the process for years. The report shows that there was an error in production. All other yachts were inspected and put right so what more do you want them to do.

Seems like a lot of people on here are enjoying the situation. I wonder how much is jealousy.

Every yacht manufacturer has a cupboard with skeletons I can name at least a dozen. I just seems people really want to ramp this one up..

I oversaw the build of the first Oyster 745 and the passion and craftsmanship that went into it was second to none. I spent two years working closely with the Oyster team so I know the people that have been made redundant and I feel for them. Perhaps people on this thread should have a little more.

I for one hope they survive and thrive.

 

[dom]

I take it from those comments that you are not considering investing then....

LOL. It'll be a brave man! Liability side of the B/S is goodness knows what - but that's just money

Strong moats surrounding a core business are a must and in Oyster's case they were clearly breached, forcing it upmarket into a business - well that CEO chap seemed well out of his depth. Strong gross margins are alaso a must - don't know what they are obviously, but if PI co. not pursuing a pre-pack (and it might well be) then that's a bit of a concern.

Returning to the Oyster 825; imagine some of us took a hike down to Toulouse to look at the A320neo. Airbus might say:

"Look at our new A321, more seats, more range, more business class, It's Greeat!"
So how are the wings attached? we ask.
"Ask the bloke in a shed" they replied.
"And what is this building rubble behind the pilot's seat?"
"Well that's cos the balance was put out of kilter by lengthening it see........"

 

[Angele]

Strong gross margins are also a must - don't know what they are obviously...

The accounts for 2015 and 2016 seem to imply around 20% gross margin. The tough bit is having to spend £10m p.a. on "selling, general and admin" costs, leaving a very slender operating profit. Stop spending on marketing, and I guess you wouldn't maintain a 2 year order book for long.

Attending all those boats shows can't come cheap.

 

[JumbleDuck]

The report in YW referred to above (and the earlier Russian one) identified more or less what the problem was. The 825 was the first Oyster design to use this method (not sure about other new designs) and the other 3 boats were modified in detail. So, none of this affects earlier boats which are of more conventional (for the time) design and construction.

All well and good, but it still unhelpfully conflates "design" and "construction". The message which comes out from claiming against the moulders is that they did not correctly implement the new design, which raises the possibility that they didn't correctly implement previous designs either.

Compare how you would feel if you were taking drug A made by BigPharma Inc and saw a press report that said either

"Problems, including fatalities, with drug B have been blamed on incomplete testing by BigPharma Inc"

or

"Problems, including fatalities, with drug B have been blamed on lax quality control at subcontractors MinnowLabs Ltd, who also manufacture drug A for BigPharma Inc"​

It's not sensible to give other customers unnecessary cause for alarm, even if you're trying to calm the investors. Bad PR.

 

[dom]

The accounts for 2015 and 2016 seem to imply around 20% gross margin. The tough bit is having to spend £10m p.a. on "selling, general and admin" costs, leaving a very slender operating profit. Stop spending on marketing, and I guess you wouldn't maintain a 2 year order book for long.

Attending all those boats shows can't come cheap.

I think that's right. So what are we talking about here: T/O c.£40m and a GP of c.£8m. It seems that the normal annual running costs are also around £8m, comprised of what you say, depreciation, one-off capex, admin and maintenance staff (not quite sure what policies they follow here), leaving an Ebit margin and enterprise yield of basically zero. This wld put the co. in a precarious position even without nasty surprises?

 

[JumbleDuck]

Design and manufacture are not supposed to be isolated from each other. Designing stuff that can't be made with the processes you have is a design failure. You have to design the process as well as the product. On the production side, you have to have your processes good enough to build to what you've signed up for. In my world, designing something to be built with a different process, you build some prototypes to establish the limitations of the process.
We also have QA people whose job it is to be sure things are built to the design.

I couldn't agree more. Blaming the contractors is saying either "We use duff contractors to build all our boats" or "We didn't brief the contractors properly" or "We asked the contractors to do something novel and didn't monitor the process properly." None of these creates a good image.

 

[JumbleDuck]

The new design was not un-conventional, Swan have used the process for years. The report shows that there was an error in production. All other yachts were inspected and put right so what more do you want them to do.

Give some reassurance that the management and quality control errors which allowed the "error in production" to occur multiple times have been addressed?

Convince their backers that they are worth backing?

 

[Lozzer]

Have you looked into the accounts of many yacht manufacturing businesses? You will be very interested.

For what s a luxury item none of them make good % profits. That is why so many of them have been in trouble in one shape or another. Even the mass production yachts SunPrinFair. To put these boats together is expensive in terms of raw materials and labour.

 

[dom]

Have you looked into the accounts of many yacht manufacturing businesses? You will be very interested.

For what s a luxury item none of them make good % profits. That is why so many of them have been in trouble in one shape or another. Even the mass production yachts SunPrinFair. To put these boats together is expensive in terms of raw materials and labour.

Well, Richemont the owner of luxury brands inc. Cartier, Dunhill, Giampiero Bodino, Jaeger-LeCoultre, Montblanc, Piaget, Vacheron Constantin, Van Cleef & Arpels, etc., has delivered a rock-stready 64% gross margin for years, translating into a net margin of c.19%.

Just today Nestle (obviously not lux, just a massive FMCG company) reported an underlying trading operating profit margin of 16.4%. I cld go on.

Either way if Oyster is to continue in any form it will almost need a seriously good shake-up in terms of design, manufacturing, accounting and PR. A new anti-smugness policy might also be in order.

 

[Lozzer]

Give some reassurance that the management and quality control errors which allowed the "error in production" to occur multiple times have been addressed?

Convince their backers that they are worth backing?

I was right in the middle of our build, we were given every assurance about QC. Certainly the owners of the 825 yachts would have been brought up to speed. By the way we were a different model..

The marine industry is not the backers core industry. I would imagine they saw the original opportunity to good to be true so jumped in with heart rather than head. This is just a convenient excuse to get out.

So be it, it is their cash and they can call the shots.

 

[pvb]

I oversaw the build of the first Oyster 745 and the passion and craftsmanship that went into it was second to none. I spent two years working closely with the Oyster team so I know the people that have been made redundant and I feel for them.

Out of interest, did you go to the shed in the middle of nowhere at Ashmanhaugh and see the hull and deck moulded?

 

[ip485]

Either way if Oyster is to continue in any form it will almost need a seriously good shake-up in terms of design, manufacturing, accounting and PR. A new anti-smugness policy might also be in order.

To be fair, I think this is sweeping. Smugness is often part of the USP of luxury brands - you may dislike smugness, but that is another matter. In terms of their accounting I doubt we really have much idea what made up there top or bottom line, and I suspect you know full well, or should, that it is never as simple as the superficial statement in a set of published accounts. I could go on. I am not saying that Oyster did everything right (or maybe anything right), far from it, but this is all just so much speculation. Equally speculative were my previous comments about the reasons behind there present circumstances, but I know that this was a significant factor, and there may be other reasons.

 

[Lozzer]

Yes I did. It was actually manufactured on the outskirts of Poole, where Sunseeker also have work done. I also had our build surveyor inspect the work as well and he was more than happy with the quality.

I do have documented evidence, photos, reports etc.

 

[Tranona]

All well and good, but it still unhelpfully conflates "design" and "construction". The message which comes out from claiming against the moulders is that they did not correctly implement the new design, which raises the possibility that they didn't correctly implement previous designs either.

Compare how you would feel if you were taking drug A made by BigPharma Inc and saw a press report that said either

"Problems, including fatalities, with drug B have been blamed on incomplete testing by BigPharma Inc"

or

"Problems, including fatalities, with drug B have been blamed on lax quality control at subcontractors MinnowLabs Ltd, who also manufacture drug A for BigPharma Inc"​

It's not sensible to give other customers unnecessary cause for alarm, even if you're trying to calm the investors. Bad PR.

You really are making a meal of this. Nowhere have I said anything about the moulders. The overall responsibility is with Oysters who are responsible for the design and method of construction (although this in turn was subcontracted to Humphreys. If Oyster then believe that it is the moulding subcontractor who produced a defective product then it is right to pursue them for the monetary loss. no doubt this will go to court and we may yet get some idea where the fault actually lay. On the other hand, whatever happens the reputational loss is to the Oyster brand.

There is no suggestion, and never has been of any significant defects in hull construction on earlier Oyster boats, and as I said owners and potential purchasers are intelligent people who in the main are quite capable perhaps with the assistance of their professional advisers (project managers, surveyors, skippers etc) of understanding the differences in design.

 

[pvb]

Yes I did. It was actually manufactured on the outskirts of Poole, where Sunseeker also have work done. I also had our build surveyor inspect the work as well and he was more than happy with the quality.

I do have documented evidence, photos, reports etc.

Ah ,OK, I thought it would have been moulded by Bridgland Moulders, who made the 825.

 

[dunedin]

Pretty sure the owners of other Oyster boats are sufficiently astute to understand the difference between the design and construction of their boat compared with the one that failed. After all most people who have that kind of money to spare for one of them are not stupid.

So, while this saga will inevitably have some affect on their future activities it is unlikely to have any effect on either the desirability or value of the other designs going back 30 odd years.

Tranoma, how would anybody other than a qualified naval architect and structural engineer know that their boat was not at risk of similar issues? Particularly as virtually no information was forthcoming, even to the captain of the boat which capsized, in the months that followed. Even with the suspected information post recovery and Independent (non U.K.) investigative reports, it would be difficult to be certain without invasive structural tests.

And let’s not forget that apparently, according to reports from the Captain, concerns had reportedly already been reported to Oyster about the keel structure on Polina Star some months ahead of the final failure - including retorquing the keel bolts (twice?) due to these concerns. Not sure if this is the case, but I thought one report said they aborted their cruise to return for more investigation into the keel (this may or may not be accurate)
According to reports on another forum from somebody who claimed to be the Polina Star captain, Oyster allegedly wrote stating that the keel structure was fine http://www.cruisersforum.com/forums/f106/oyster-problems-151112-8.html

Certainly during 2015 and 2016 there would be lots to worry about due to lack of accurate information. And whilst Oyster said that two other owners were happy about their 825’s, it is now alleged that one of these “owners” was actually the owner of Oyster itself.

 

[SO40]

The problem with PSIII was known very soon after launch. As Dunedin stated correctly, several attempts were done to correct the problem. I do know this, as one of my mates knows the owner and captain of PSIII very well.
The owner of PSIII is now having a Contest 85 built. He owned Contests before making a move to the Oyster 825 and is now back with Contest.
The submarine adventure of his Oyster at least didn´t put him off sailing completely.

Anyway, from what I hear is that several Oyster staff are already working elsewhere and it looks like what was Oyster (drawings, moulds, tooling and most importantly, the brand name) ends up with a highest bidder. There are many parties that have shown and interest, according to KPMG. This is a press release:
----------------------------
KPMG, the administrator for Oyster Marine Holdings in the UK, has received 45 expressions of interest in purchasing the Oyster Yachts brand. This was confirmed to IBI yesterday by CEO David Tydeman. He has also confirmed that the main cause of the group’s collapse was the insurance claims that followed the sinking of Polina Star III in 2015.
“There has been a good response to the administration, with KPMG receiving some 45 expressions showing interest in possibly buying Oyster,” Tydeman said. “KPMG will start the process of working through these next week with NDAs and bids and it will likely take several weeks to complete.”
Polina Star III sank off Spain in July 2015, generating a claim and counter claims of £7.2m. To date only £400,000 has been paid, leaving a £6.8m amount to settled.
“Payment of the claim against Oyster and our counter claims against Bridgland Moulders (a Norwich-based subcontractor) have been delayed and delayed and our shareholder, HTP Investment, became inpatient over the delays so withdrew their support. They feared that our claim would be unpaid by the time they had to pay the claim against us.”
The claim against Bridgland alleges improper moulding of the Polina Star 111 and three other yachts – Albatross, Meagan and Reina, which have since been repaired.
The delays to the claim have lasted over two years and had been due to be heard late last year, but a further delay has now moved this to May or June this year.
---------------------------
I would imagine Beneteau would not be interested, but Hanse and Bavaria are known to take on yachting companies in trouble or that went under and a brand like Oyster would be super attractive ofcourse. I.e. Moody and Dehler went to Hanse. Dufour and Nauticat to Bavaria. Or maybe some Chinese or Korean billionaire. So new Oysters could soon be built in Germany and or Poland or even in the land of China!

 

[Walther]

Personally I would rather see Oyster die a semi-honourable death than have the name live on under Beneteau, Asian or similar new ownership. That would be reminiscent of the C&C name being purchased and (ab)used by Fairport/Tartan.

This is a press release:
----------------------------
KPMG, the administrator for Oyster Marine Holdings in the UK, has received 45 expressions of interest in purchasing the Oyster Yachts brand. This was confirmed to IBI yesterday by CEO David Tydeman. He has also confirmed that the main cause of the group’s collapse was the insurance claims that followed the sinking of Polina Star III in 2015.

Why is Tydeman still CEO/spokesperson for Oyster? Now that KPMG is in charge, what is his actual role, and how does he add any real value?

 

[JumbleDuck]

You really are making a meal of this. Nowhere have I said anything about the moulders.

Since the discussion was about Oyster's publicised decision to seek redress from the moulders, that was an odd omission.

What would have done more reputational damage to Seagull: "The new [insert model here] has turned out to have a design flaw but we know how to fix it" or "The new [insert model here] is proving troublesome because of quality control issues at the foundry which makes all our cylinder blocks"?