Sunseeker laying off staff

[westernman]

Exactly.

I'm reminded of Trader when they built their boats in China, the quality was abysmal.

And if I remember correctly, Pearl have had some serious structural issues in the past as well.

There are competent builders in China.

For instance many Nordhavns are built in China (I think the remainder are built in Taiwan).
China can do quality.

The better made Teslas imported into Europe actually come from China.

It is possible to make money building yachts in Europe. Beneteau build everything in France (except for the Seascape which was a Slovenian company). Bavaria build in Germany. Neither are exactly low wage countries. Both employ large degrees of automation in their factories.

There are other successful European builders who build in Europe.

 

[benjenbav]

It seems to me that UK boatbuilders down the years all followed the same path - 'Let's build bigger and bigger boats until we go bust'. It's just that some yards are still following the path and haven't yet reached the end.

On a different point, it strikes me that if all these successive owners of any single builder were greedy asset strippers then most of them weren't very good at it, or else why would the next one think they were buying a business with anything left to strip? I'm sure many of the new owners believe that they can make something of the business. Then they find they are mistaken, give up trying and flog it off to some more optimistic buyer - or else they manage to make enough of an improvement that they can make a better return by selling and investing their money elsewhere.

I can only assume that investors in boatbuilding imagine that they can transform loss-making businesses into profitable ones.

 

[Clash]

On a different point, it strikes me that if all these successive owners of any single builder were greedy asset strippers then most of them weren't very good at it, or else why would the next one think they were buying a business with anything left to strip? I'm sure many of the new owners believe that they can make something of the business. Then they find they are mistaken, give up trying and flog it off to some more optimistic buyer - or else they manage to make enough of an improvement that they can make a better return by selling and investing their money elsewhere.

You could well be right in some cases. For example the Russian owners of Fairline appeared to be boat enthusiasts who seemed to think they could turn it around and failed. But it's not about asset stripping per se, lack of investment is as bad if not worse. The pattern seems to be to take it over, lay off staff and try and cut corners without investing enough to increase efficiencies.

I hope Sunseeker don't go the same way, but I'm not optimistic.

 

[petem]

I wasn't referring to the past owners, I specifically quoted the section of the BBC article which referred to the two venture capital companies that have taken over.

What makes you think they're vultures either, rather then people who think they can invest in the business and turn it around?

 

[petem]

You could well be right in some cases. For example the Russian owners of Fairline appeared to be boat enthusiasts who seemed to think they could turn it around and failed. But it's not about asset stripping per se, lack of investment is as bad if not worse. The pattern seems to be to take it over, lay off staff and try and cut corners without investing enough to increase efficiencies.

I hope Sunseeker don't go the same way, but I'm not optimistic.

The previous owners of Fairline invested £millions in new models. And I believe that during their ownership they actually increased the number of staff.

What investment in efficiency do you think they could have made?

 

[petem]

I can only assume that investors in boatbuilding imagine that they can transform loss-making businesses into profitable ones.

Exactly this.

 

[Clash]

What makes you think they're vultures either, rather then people who think they can invest in the business and turn it around?

Because that's how venture capital companies work. They invest (mainly in the buyout), lay off staff, dump all the debt they incurred in the buyout on the company and pay themselves back from operations and external borrowings.

I quoted the eye-watering losses that Fairline reported over their last three years. From £17m in 2021 to £22m in 2023. Turnover in 2022 was £48m, loss was £18m. That's unsustainable.

 

[stelican]

Because that's how venture capital companies work. They invest (mainly in the buyout), lay off staff, dump all the debt they incurred in the buyout on the company and pay themselves back from operations and external borrowings.

I quoted the eye-watering losses that Fairline reported over their last three years. From £17m in 2021 to £22m in 2023. Turnover in 2022 was £48m, loss was £18m. That's unsustainable.

Interested in your first paragraph as it's something I don't have an understanding of.
How can the V.C. dump the debt they incurred in the buy out?
Fairline's annual losses seem crazy almost impossible to rack up?

 

[Clash]

Interested in your first paragraph as it's something I don't have an understanding of.
How can the V.C. dump the dept they incurred in the buy out?
Fairline's annual losses seem crazy almost impossible to rack up?

It's done regularly. Remember when the Glazers bought Man U? They did exactly that, they used borrowings to buy the shareholdings, which borrowings were then secured against the club's assets. United were saddled with a huge debt that held them back for years. The interest alone was around £60 million a year.

 

[Daydream believer]

So how come the venture capatilist that own Hanse seem to be handling things Ok? Not all venture capatilists are bad. Many supply much needed capital. The fact that they are moving operations to one manufacturng point seems sensible. Resources can be moved to match demand & it streamllnes producton. Staff are less likely to be lad off because one branch suffers lesser demand whilst another increases.
True that staff on the original companies suffer, but the brands survive in the long term, which gives predictability to new staff & outlying companies feeding the parent. Some of the original suppliers could still supply, if they are willing to adapt. It is up to them,

 

[Daydream believer]

Perhaps you should ask yourselves --where do venture capatilists get their funds to operate?
Remember, that these venture capatilists borrow money to operate & often are the basis for forumites investments-various funds etc.
So in an indirect way, forumites hands are not so squeeky clean

 

[Daydream believer]

It's done regularly. Remember when the Glazers bought Man U? They did exactly that, they used borrowings to buy the shareholdings, which borrowings were then secured against the club's assets. United were saddled with a huge debt that held them back for years. The interest alone was around £60 million a year.

Of course they did
How do 95% of people buy a house? They put down a deposit & use the asset of the house as collateral against a loan for the remainder. They pay it back over an agreed term.
All venture capatilists do that. If they had to raise the full cost of an asset, they would have insufficient funds for future investments. That would cripple the finance industry's ability to invest as much as it needed.

 

[Clash]

Of course they did
How do 95% of people buy a house? They put down a deposit & use the asset of the house as collateral against a loan for the remainder. They pay it back over an agreed term.
All venture capatilists do that. If they had to raise the full cost of an asset, they would have insufficient funds for future investments. That would cripple the finance industry's ability to invest as much as it needed.

Well yes. That's what I said above. It's not unusual.

But. The notion that VC is some sort of white knight when it arrives and promptly throws a millstone of debt onto a struggling company is a bit naive.

 

[volvopaul]

All the big brands have been 'about to move abroad within the next two years' for as long as I can remember

Princess was 'bound to move to France' when LVMH got involved 'because French owner' (and never mind that it never moved to South Africa during the many years it was owned by Graham Beck), Sunseeker was apparently off to China when the Chinese bought it, Fairline were off to Russia a few years ago. All apparently, all never happened.

I wouldn't hold your breath.

The only big ish builder I know that’s moved abroad is Pearl and they couldn’t build them much bigger than 60feet at Stratford on Avon , I believe they are Chinese built now judging by how much I’ve heard from surveyors on the design and build quality.

 

[rafiki_]

Sunseeker are a very good brand however as everyone is now acutely aware everything is unfortunately down to money . . Guarantee within two years all production will be in Eastern Europe or China to keep the shareholders happy and costs down ........ It doesn't end there however as the sandwich shop and coffee shop along Poole Quay will ultimately be affected so it really does have a detrimental effect on even the small businesses trying to survive and make a living

Why now? Sun seeker was owned by Dalian, a Chinese entertainment and property developer for years, and never moved production. While our fixed costs are higher than the far east and eastern Eu, our labour rates, particularly for skilled labour is not much higher. Sunseeker should stop trying to make everything in-house, and bespoke. They should focus on those things folk see, touch, and value. Who cares where the harness is made, the cabinetry under structure, and all the non-value add. They already outsource the minor mouldings to Poland.

 

[Daydream believer]

Sunseeker should stop trying to make everything in-house, and bespoke.

But that is what people are buying. Bespoke & quality.
The company needs control & needs delivery on time.
It may seem OK getting parts from abroad but it is not like, say a window, where one can get the DG units droped in at newcastle docks whilst the frames are being assembled in the works. Or a kitchen manufacturer ordering 10 Bosch cookers, or a thousand work tops.
One has to design then send the details, have them costed etc. Then one needs to be confident of on time delivery & accuracy. The outsourced co. has to carry the stock which adds to their cost & extra overheads go on the item before it gets to the boat. Making it on site means those O/heads are in house & the profit could be saved. Outsourcing is not always cheaper. It depends on the quality of ones own management.

 

[Clash]

I recently watched Aquaholics tour of Princess and was shocked at the process waste. Plus not a robot in sight. Then I watched a similar but shorter video of how MonteCarlo (Jeanneau?) build essentially the same thing. Very different, quicker and much easier.

I watched that series too. Excellent watch and would highly recommend it to all. But as you say, some jaw-dropping moments. One that struck me was the carpenter who was assembling a galley section (I think) which he proudly announced took him 60 hours. That was just to assemble it. The parts had to be manufactured first. I know this is a big boat with high quality components, but the time involved in just assembly must be enormous. It also struck me as a very haphazard production 'line' on sprawling sites. And yes, not a robot in sight. In contrast here's a Cranchi factory making admittedly smaller boats. But robots aplenty and not that many personnel that I could see. Cranchi complete a new boat every 2 hours and 42 minutes (or 1/20th a galley section)

 

[jbweston]

I watched that series too. Excellent watch and would highly recommend it to all. But as you say, some jaw-dropping moments. One that struck me was the carpenter who was assembling a galley section (I think) which he proudly announced took him 60 hours. That was just to assemble it. The parts had to be manufactured first. I know this is a big boat with high quality components, but the time involved in just assembly must be enormous. It also struck me as a very haphazard production 'line' on sprawling sites. And yes, not a robot in sight. In contrast here's a Cranchi factory making admittedly smaller boats. But robots aplenty and not that many personnel that I could see. Cranchi complete a new boat every 2 hours and 42 minutes (or 1/20th a galley section)

Now here's an idea. Taking those figures, Sunseeker could tell you that they could complete a galley section every 2 hours and 42 minutes if they wanted to - they'd just have 22 joiners working on 22 galley sections at the same time. Start them at 2 hour 42 minute intervals, and hey presto! Who needs robots! Joiner employment heaven.

Wallace and Gromit would be proud.

 

[rafiki_]

But that is what people are buying. Bespoke & quality.
The company needs control & needs delivery on time.
It may seem OK getting parts from abroad but it is not like, say a window, where one can get the DG units droped in at newcastle docks whilst the frames are being assembled in the works. Or a kitchen manufacturer ordering 10 Bosch cookers, or a thousand work tops.
One has to design then send the details, have them costed etc. Then one needs to be confident of on time delivery & accuracy. The outsourced co. has to carry the stock which adds to their cost & extra overheads go on the item before it gets to the boat. Making it on site means those O/heads are in house & the profit could be saved. Outsourcing is not always cheaper. It depends on the quality of ones own management.

Yes, folk are buying quality and bespoke. Sun seeker is delivering bespoke, but not the best quality. Who cares if it takes 1 hour or 50 hours to assemble the galley, if it works, looks good and lasts.
What do you think of Bentley cars? High end, high quality, bespoke, expensive? Who cares if it shares parts with Polo/Golf etc if you can’t see these, and they perform to spec?
The Italians are making quality, bespoke boats, with sustainable profits. They use significant amounts of contractors to minimise their fixed costs. It works.

 

[Clash]

Yes, folk are buying quality and bespoke. Sun seeker is delivering bespoke, but not the best quality. Who cares if it takes 1 hour or 50 hours to assemble the galley, if it works, looks good and lasts.
What do you think of Bentley cars? High end, high quality, bespoke, expensive? Who cares if it shares parts with Polo/Golf etc if you can’t see these, and they perform to spec?
The Italians are making quality, bespoke boats, with sustainable profits. They use significant amounts of contractors to minimise their fixed costs. It works.

Just for the sake of accuracy, the 60 hour cabinet assembly was from the Princess factory, not Sunseeker. Although that could also be true of them, I've no reference for it. I have found a walkaround of the Fairline factory from about a year ago and was struck by the presenter's insistence that the entirely manual method of hull building was unquestionably the best despite the fact that other manufacturers are able to do the same thing with varying levels of automation. The other thing that struck me was how messy the production lines looked compared to the almost sterile environment of the Cranchi unit.