WHAT ON EARTH ARE THEY ALL DOING?
FINANCIAL ADVERSITY IS THE MOTHER OF CREATIVITY
There’s nothing like a little – or perhaps a lot, in this current economic climate – of financial adversity to stimulate (and I’m coming to hate THAT word) business discipline and creativity.
For years the superyacht industry clung to a mantra of fun rather than bottom line. It was, after all, a cottage industry, even though the yachts themselves cost more than your average Ro-Ro.
And life was good.
To be fair, what businessperson in any other industry would not agree that life would be a whole lot easier if cash-flow was not an issue and if there were never negative variances on the monthly budget-to-actual-analysis of previous month’s financial performance (my term for the exercise that well-run businesses do religiously each month, comparing actual financial results – sales, gross profit, cash flow etc - against forecast or budget ). Of course, for years, the superyacht industry got around nasty old budget-to-actual-analysis by just not having any budgets at all.
Perhaps the reality check for the industry came in the wake of 9/11 resulting in cries that the industry should be made fun again. In fact, yacht Captains were complaining when ISPS, particularly as enforced by the US Coast Guard, made entry into US waters just too problematic for some of them, “Does your Coast Guard know who owns this yacht?” But really why, if the Master of a tramp general cargo ship could cope…?
Anyway, where the superyacht industry ends up after the reality check that is this current global economic challenge is uncertain.
What’s interesting is how some of the superyacht players are responding to it.
Previously I have previously mentioned US builder Trinity www.trinityyachts.com who, despite having a dozen and a half or so superyacht new-builds on the go, has quietly returned to its roots and is building patrol vessels for my old employer, the US Navy.
In the same vein, last week I noticed a headline on seattlepi.com that US yacht builder Christensen Shipyards www.christensenyachts.com is diversifying into the manufacturing wind turbines and buoys (pronounced “boo eee’s” where I come from, by the way) to harness wave energy with the creation of Renewable Energy Composite Solutions LLC www.recscomposite.com . A US$ 1 million grant apparently also leverages an additional US$ 5 million of funding but most importantly lets the company bring back at least some of the company’s 300 laid off staff. Christensen’s President, Joe Foggia, is a nice guy and someone who not only has always understood budget-to-actuals but also the value of holding his team together, in this case by transferring their expertise in composites.
By the way, this is not the first cohabitation of yachts and wind energy, as a visit to www.knightandcarver.comservicing, rebuilding and fabricating wind turbine blades. shows. For years now, in San Diego, Sam Brown’s Knight and Carver, known in the superyacht industry for being one of the, if not THE, premier yacht repair facilities on the US west coast, has quietly been
GOING GOING GONE
Somehow the idea of an auctioneer’s machine gun patter before the crash of the gavel just doesn’t seem to mesh with superyachts, but that’s just what the Sacks Group Yachting Professionals www.sacksyachts.com plans to do on the last day of FLIBS (the Ft Lauderdale International Boat Show) should the 37m (121 foot) motoryacht JAVA not have been sold privately by 1500 local on 2 November.
Just a bit undignified wouldn’t one say, but hey, if it helps pay the rent....
But then Sacks also credits their Try-Before-You-Buy® program with their sale of
112-foot Westport Raised Pilothouse Motor Yacht MILK MONEY (ex-RAINMAKER). It does beg the question though, who in their right mind would not try a superyacht before they went, so to speak.
Whatever it takes.
DAMN THE TORPEDOES, FULL SPEED AHEAD
And then YACHTING INTELLIGENCE www.yachting-intelligence.com reported that while the British may be known for their stiff upper lip, Italians – the yacht builders at least – are now just refusing to back down, on price.
Under the headline, “Italian Yacht Makers Resist ‘Suicide’ Price Cuts,” they reported on an interview at the Genoa Boat Show with Paolo Vitelli, CEO of Benetti www.benettiyachts.it who was quoted as saying, “Whoever is cutting prices heavily is committing suicide, the buyer would probably think you have a product that loses its value quickly...”
And Italian builders should know – they are the global leaders. For now.
In the same piece Salvatore Basile, CEO of Ferretti Group www.ferrettigroup.com was also quoted, “Responding to the crisis by cutting prices, reminds me of when Italy devalued the lira to make its exports more competitive; that tactic lasted about six months after which inflation kicks in and you have to start all over again. It’s a little like a boomerang.”
Remember the Lira?
Meanwhile in Singapore, the first Asia Superyacht Conference www.superyacht.sg enters its second day....