Sunseeker ....

[Deleted User YDKXO]

I'm not convinced that it will be significantly cheaper to build in China. Labour costs on the east coast are not much less than European. Big savings will be on transport. How much to ship a 25+ metre boat to EU from China? £100k +? Taiwan costs are same as UK/EU. Local build really makes sense where you have penal import duties, like Brazil, where Snazi are now building.

In my industry (construction equipment) there are various large Chinese manufacturers and they seem to be able to price their goods sold in Europe at about 15-25% below European manufacturers although the European manufacturers are still ahead on technology and service. I'm not saying that Chinese boatbuilders could achieve similar price advantages but there must be a good reason why, for example, many American boatbuilders build their boats in China rather than in their own country

 

[petem]

In my industry (construction equipment) there are various large Chinese manufacturers and they seem to be able to price their goods sold in Europe at about 15-25% below European manufacturers although the European manufacturers are still ahead on technology and service. I'm not saying that Chinese boatbuilders could achieve similar price advantages but there must be a good reason why, for example, many American boatbuilders build their boats in China rather than in their own country

There must be good reasons why companies 'offshore' their IT development work but I've never come across one!

 

[rafiki_]

In my industry (construction equipment) there are various large Chinese manufacturers and they seem to be able to price their goods sold in Europe at about 15-25% below European manufacturers although the European manufacturers are still ahead on technology and service. I'm not saying that Chinese boatbuilders could achieve similar price advantages but there must be a good reason why, for example, many American boatbuilders build their boats in China rather than in their own country

Some of the savings are economies of scale, some savings with low tech commodities too. Things like metal forgings and castings can be sourced quite cheaply in China, but anything with value add costs nearly as much there. With the shear volume of construction, then vols of construction machinery is very high, so savings there too.

 

[PowerYachtBlog]

There is also less bureaucracy in China, to put it mildly.

It's a work-place with a lot less regulations. Less environmental rules, less safety at work etc etc
Things have improved a lot in the last decade (mostly because Chinese economy has grown) but the welfare system is far away from that of civilized Europe.
Europe also is much better in this area then most US states.

 

[Jurgen]

Wonder if Sunny is reading this?

 

[Deleted User YDKXO]

Some of the savings are economies of scale, some savings with low tech commodities too. Things like metal forgings and castings can be sourced quite cheaply in China, but anything with value add costs nearly as much there. With the shear volume of construction, then vols of construction machinery is very high, so savings there too.

No, my business is in a niche in the construction equipment industry with volumes in the hundreds rather than thousands (in actual fact similar volumes and prices to large motor boats) and still the Chinese manufacturers manage to offer prices which undercut European suppliers by 15-25% as I said. Of course this may be down to price dumping but its difficult to see what the Chinese have to gain by dumping their goods in such a small market so I tend to believe they have a genuine manufacturing cost advantage

 

[ari]

No, my business is in a niche in the construction equipment industry with volumes in the hundreds rather than thousands (in actual fact similar volumes and prices to large motor boats) and still the Chinese manufacturers manage to offer prices which undercut European suppliers by 15-25% as I said. Of course this may be down to price dumping but its difficult to see what the Chinese have to gain by dumping their goods in such a small market so I tend to believe they have a genuine manufacturing cost advantage

Are they of similar quality? I ask because I'm lead to believe Chinese motorbikes are quite a bit cheaper than the usual Suzuki/Yamaha/BMW type offerings, but not of comparable quality. (I'm not an expert on bikes so stand to be corrected if that isn't the case).

 

[oceanfroggie]

I wouldn't be so sure. Ferretti has been owned by a Chinese co for several years and Ferretti boats are being assembled now in China for the Chinese market. Its a short step from that to exporting Chinese built Ferrettis back into Europe. Its happened in other industries. Don't forget also that China already has a history of grp boatbuilding (eg Nordhavn) so building Sunseekers shouldn't be beyond them. Yes I suspect that the redundancies are down to poor sales and a desire by the Chinese owner to start getting a return on his massive investment

That makes sense. It's inevitable that most boat production move from EU to the east. The labour cost differential is just too high to be ignored, despite the time and costs that will be incurred for the transfer of skills east wards. Building boats will always be labour intensive due to small numbers and inability to automate much of the building work.

 

[Groot T]

Concerning building ships for less price, I would say look to Norway in the context of the commercial shipping market. They hold 25% of the global order book (in USD) for all new-build vessels.
However, their speciality is in offshore vessels. But the norm is for a hull to be built in (for example) China & the boat is fitted out in Norway.

I wondering if we'll see a similar setup for Squeaker or if manufacturing will completely shift to China. All I will say is we've seen a dramatic fall in through-put to squeaker over the past eight months and the yard has been quiet.
Maybe they could do with a few more "Thermal incidents"?

 

[Deleted User YDKXO]

Are they of similar quality? I ask because I'm lead to believe Chinese motorbikes are quite a bit cheaper than the usual Suzuki/Yamaha/BMW type offerings, but not of comparable quality. (I'm not an expert on bikes so stand to be corrected if that isn't the case).

No is the short answer but also the European manufacturers are ahead on technology and on customer service and therefore, so far, the Chinese manufacturers have not made any headway in my market in Europe but they are very strong in those markets like Africa and India where technology counts for less and price counts for more. IMHO it is only a matter of time before the Chinese manufacturers get a toehold in Europe either by direct sales or buying European manufacturers as they are doing in the boat industry but hopefully by then I will be floating around the Med not caring a damn

 

[Richard Shead]

No is the short answer but also the European manufacturers are ahead on technology and on customer service and therefore, so far, the Chinese manufacturers have not made any headway in my market in Europe but they are very strong in those markets like Africa and India where technology counts for less and price counts for more. IMHO it is only a matter of time before the Chinese manufacturers get a toehold in Europe either by direct sales or buying European manufacturers as they are doing in the boat industry but hopefully by then I will be floating around the Med not caring a damn

In your Chinese built large displacement trawler..

 

[Deleted User YDKXO]

In your Chinese built large displacement trawler..

Erm, could be

 

[Nautical]

We could have this conversation forever, EU/US V's china build , tech v's price, v's quality etc but the truth is I bet most of us are sitting in an environment surrounded by Chinese built product and technology, doesn't matter where you are or what you are doing or what you are using there will be a large component of Chinese product involved.

If someone said to us 30 years ago that a large % of luxury consumer goods used in the west would be made in China we would have laughed. At the time all they made was cheap plastic stuff and knock off western goods that fell apart. The same of Japan, when the first Datsun's arrived in the EU it was joke and the EU makers hardly gave them a second look.

The difference with China verses the EU or US, is, they are in it for the long haul. They look at everything in terms of decades from now, not a three or five year business model and a quick return. If they have to struggle at it for years and keep investing to get it right they will. They often have state funding at little or no interest or even a large "grant" that doesn't appear on a balance sheet. When you have access to cheap funding and lots of it you can afford to keep going when the rest fall by the wayside.

So we are here looking at the last few years and the huge changes in the boat building industry, things we couldn't have imagined a decade ago. If someone said 20 years ago that the Chinese would come along and buy Ferretti we would have thought "nuts" that'll never happen. If we think that the Chinese will never be able to build quality yachts , come back in a decade from now .

The Chinese are no different than any business globally, they see their labour and infrastructure costs rising and the pressures that puts on goods that have to be made cheaply, so, they want more high end , more expensive aspirational products to make. Luxury cars, Aircraft, Space technology, Armaments, bio tech, pharmaceutical etc. Yachts are a slightly different kettle of fish because of the enormous amount of hand crafting that goes into them, nevertheless I don't see them throwing in the towel anytime soon, indeed it seems with the Chinese the more difficult and more unlikely a product is to be made there the harder they work at it.

I doubt any of the big brands will ever even if owned by the Chinese be built in significant numbers in China and exported back to the west apart from what they build for the local market , there is that brand kudos they have to look after very carefully. But, what China does best is buy the technology / infrastructure and then replicate it under another guise/brand , so it wouldn't surprize me that off the back of an EU acquisition much knowledge, experience and know how will be learned and implemented and then sold back to us at a later date.

If anyone thinks the Chinese can not build high tech or hugely complex labour intensive millions of $ product look at what they are doing in the aviation industry. The C919 passenger jet already has 400 orders (albeit from Asia) , naturally some resistance from western airlines to buy at this stage but they are already in talks with BA to supply aircraft at some point in the distant future. We may never see a western brand yacht built in China and exported back but I wouldn't half bet we may see a range of Shanghai Sunshine 30'-50' sports cruisers premiering at Cannes in ten years from now and they will be well built, well designed and well priced.

 

[wakeup]

We could have this conversation forever, EU/US V's china build , tech v's price, v's quality etc but the truth is I bet most of us are sitting in an environment surrounded by Chinese built product and technology, doesn't matter where you are or what you are doing or what you are using there will be a large component of Chinese product involved.

If someone said to us 30 years ago that a large % of luxury consumer goods used in the west would be made in China we would have laughed. At the time all they made was cheap plastic stuff and knock off western goods that fell apart. The same of Japan, when the first Datsun's arrived in the EU it was joke and the EU makers hardly gave them a second look.

The difference with China verses the EU or US, is, they are in it for the long haul. They look at everything in terms of decades from now, not a three or five year business model and a quick return. If they have to struggle at it for years and keep investing to get it right they will. They often have state funding at little or no interest or even a large "grant" that doesn't appear on a balance sheet. When you have access to cheap funding and lots of it you can afford to keep going when the rest fall by the wayside.

So we are here looking at the last few years and the huge changes in the boat building industry, things we couldn't have imagined a decade ago. If someone said 20 years ago that the Chinese would come along and buy Ferretti we would have thought "nuts" that'll never happen. If we think that the Chinese will never be able to build quality yachts , come back in a decade from now .

The Chinese are no different than any business globally, they see their labour and infrastructure costs rising and the pressures that puts on goods that have to be made cheaply, so, they want more high end , more expensive aspirational products to make. Luxury cars, Aircraft, Space technology, Armaments, bio tech, pharmaceutical etc. Yachts are a slightly different kettle of fish because of the enormous amount of hand crafting that goes into them, nevertheless I don't see them throwing in the towel anytime soon, indeed it seems with the Chinese the more difficult and more unlikely a product is to be made there the harder they work at it.

I doubt any of the big brands will ever even if owned by the Chinese be built in significant numbers in China and exported back to the west apart from what they build for the local market , there is that brand kudos they have to look after very carefully. But, what China does best is buy the technology / infrastructure and then replicate it under another guise/brand , so it wouldn't surprize me that off the back of an EU acquisition much knowledge, experience and know how will be learned and implemented and then sold back to us at a later date.

If anyone thinks the Chinese can not build high tech or hugely complex labour intensive millions of $ product look at what they are doing in the aviation industry. The C919 passenger jet already has 400 orders (albeit from Asia) , naturally some resistance from western airlines to buy at this stage but they are already in talks with BA to supply aircraft at some point in the distant future. We may never see a western brand yacht built in China and exported back but I wouldn't half bet we may see a range of Shanghai Sunshine 30'-50' sports cruisers premiering at Cannes in ten years from now and they will be well built, well designed and well priced.

I agree that the Chinese will have the capability of building quality products in the boating market like they do in many other product sectors already e.g. Apple. But they have yet to create their own designs and brands that have been or will be successful outside of China. I cannot think of a single Chinese brand that has stood on its own two feet in any market in terms of quality and design. The only known home grown brands I can think of are Huwaei and Alibaba. Huwaei have garnered market share based simply on cost, not perceived as a quality product and Alibaba is a fishing well for all other cheap Chinese products by the pallet load. Their cars are piss poor in design terms even though they have the capabilities to make BMWs and they do for the Chinese market. It will be a long time before you see a Chinese designed and built boat that can compete with European designs. I think where they can probably compete is in the US small sports boat market where cost vs design is a greater advantage and the volumes are more interesting. Searays and Binliners will be a much more interesting market for the Chinese to go after.

 

[Wavey]

The customer base for Sunseeker products hasn't been affected by the global markets.

The sort of people that can afford boats over £3'000'000 still have plenty of money in the bank. The people affected worse by any financial down turn are those of us that buy boats between £30'000 & £1'000'0000. This is largley due to lack of affordable finance.
How many financial companies now lend to the leisure marine industry? Lombard, HSBC won't touch you unless you want to borrow £500'000 upwards.

Sunseeker are cutting jobs to increase profits and will despite Sunny's claims eventually move production to a lower cost based country

Not so sure. Was chatting to a guy over the weekend who had left his details with Sunseeker at one of the boat shows a couple of years back - he can't exactly remember where or when. Got a cold call from Sunseeker last week asking if he was still interested in buying one as there were interesting deals being offered. Not heard of Sunseeker doing this before.

 

[Deleted User YDKXO]

Not so sure. Was chatting to a guy over the weekend who had left his details with Sunseeker at one of the boat shows a couple of years back - he can't exactly remember where or when. Got a cold call from Sunseeker last week asking if he was still interested in buying one as there were interesting deals being offered. Not heard of Sunseeker doing this before.

Yup I've had an overload of Sunseeker promo material drop into my inbox recently too. Given that Fairline's turnover has dropped significantly in the last 2 years it would not be suprising if that reflected the overall state of the market and the other builders were suffering as well. Rumour in Italy is that Ferretti's Chinese owners are not satisfied with their recent sales/profit performance either and have issued warnings about cost cutting too

 

[wakeup]

IT could be the case that turnover is simply vanity and that FL might actually be able to weather the storm more easily than Sunseeker with 5 times the TO and no doubt overheads.

 

[Deleted User YDKXO]

IT could be the case that turnover is simply vanity and that FL might actually be able to weather the storm more easily than Sunseeker with 5 times the TO and no doubt overheads.

Yes and no! Depends on how much you have to cut overheads to align with that reduced turnover and your financing commitments

 

[Nautical]

I agree that the Chinese will have the capability of building quality products in the boating market like they do in many other product sectors already e.g. Apple. But they have yet to create their own designs and brands that have been or will be successful outside of China. I cannot think of a single Chinese brand that has stood on its own two feet in any market in terms of quality and design. The only known home grown brands I can think of are Huwaei and Alibaba. Huwaei have garnered market share based simply on cost, not perceived as a quality product and Alibaba is a fishing well for all other cheap Chinese products by the pallet load. Their cars are piss poor in design terms even though they have the capabilities to make BMWs and they do for the Chinese market. It will be a long time before you see a Chinese designed and built boat that can compete with European designs. I think where they can probably compete is in the US small sports boat market where cost vs design is a greater advantage and the volumes are more interesting. Searays and Binliners will be a much more interesting market for the Chinese to go after.

I would absolutely agree with you that as far as design is concerned they are still a long way off if using their own designers, but as mentioned I doubt they are looking at yacht building as a short term make or break, they will slowly but surely get there, if it takes a decade so what when you have pockets that deep. I know many of the major design houses have been approached or are in talks with the Chinese about new product. Our own Bill Dixon already has designs in production with the Chinese.

http://www.hanshengyacht.com/en/Product_Info.aspx?id=199&in_cateid=194

And that was a design from a few years ago and they have moved on from there.

I can imagine rather than a brand building exercise from scratch they will use EU / US designer's kudos to build their reputation. Take the recent World Yacht awards at Cannes last month , the Nisi cat designed in the US but wholly built by a joint venture in China won the most innovative yacht 2014, beating our all our own home grown offerings.

 

[Spare Thyme]

"I agree that the Chinese will have the capability of building quality products in the boating market like they do in many other product sectors already"

If its made in China it will be CE marked



Do a Google on China Export, its a bit scary especially if you then have a look around your house at those gadgets you buy from B&Q etc also
http://www.ybw.com/expert-advice/vhf/news/509220/warning-don-t-get-confused-between-the-ce-mark-and-the-china-export-mark