Five years since Lehman collapse, industry begins to find 'new normal'
September 15 marked five years since Lehman Brothers' collapse signalled the start of the global financial crisis. The superyacht industry did not escape unscathed, and it is only the best purveyors of quality that survive under the new status quo.…
Sunday 15 September will single five years since Lehman Brothers collapsed, its bankruptcy acting as a symbolic marker for the beginning of the global recession that has ensconced the world since. A number of economic indicators now indicate that a [modest] recovery is underway, but the previous five years have changed the global landscape, and that of the superyacht industry, irreparably.
In the ‘halcyon’ pre-recession days, the industry was faced with an anomalous phenomenon whereby superyacht orders consistently outstripped deliveries. In 2006 this figure was 265 orders to 258 deliveries, whilst in 2007 it was 269 compared to 247. But from 2008 onwards, this trend was reversed and has remained that way ever since. This was most dramatically evident in 2009 when, as the world felt the full reverberations of the financial crisis, orders plummeted to 112, whilst yards ploughed through their inventories, delivering 227 yachts (data courtesy of Superyacht Intelligence).
The ensuing five years have thus, been an arduous process for yards in narrowing the gap between orders and deliveries and returning the industry to what Superyacht Intelligence’s editor, Ellie Brade has coined “the new normal”. For the first two years after the world’s economy collapsed, “the industry was in complete denial”, she explained. “It was only [in 2010] that people realised they needed to do something.”
Commenting in the The Superyacht Intelligence Global Order Book 2013, Brade said that, with 407 yachts in build, “we seem to have achieved a pleasing degree of stability”. And, Brade continued, “with that stability we are given the platform for growth that will allow us to maintain continuous growth.”
Since Lehman Brothers closed its doors five years ago, triggering an unprecedented domino effect all over the world, the most successful superyacht merchants have defined themselves by the quality of their service, and this is also true of the broader economic sphere. As Dick van Lent, director of Feadship told SuperyachtNews.com in summer 2013, “Before the crisis clients tried to find the cheapest yard and the smallest bank, van Lent said, “and if one of them started to perform badly, it would drag the other two down with them.” We would always try to help our clients through financial difficulties but people that sought out the least costs inevitably cost themselves the whole project.”
Going forward, he believes it is the best purveyors of quality who will prosper: “Reputable builders will inevitably survive a crisis and less reputable ones won’t. Despite the problems, certain yards keep coming back. The reason for that is that it is very risky for a client to enter into a construction contract with a yard that doesn’t have financial stability.”
In the ‘halcyon’ pre-recession days, the industry was faced with an anomalous phenomenon whereby superyacht orders consistently outstripped deliveries. In 2006 this figure was 265 orders to 258 deliveries, whilst in 2007 it was 269 compared to 247. But from 2008 onwards, this trend was reversed and has remained that way ever since. This was most dramatically evident in 2009 when, as the world felt the full reverberations of the financial crisis, orders plummeted to 112, whilst yards ploughed through their inventories, delivering 227 yachts (data courtesy of Superyacht Intelligence).
The ensuing five years have thus, been an arduous process for yards in narrowing the gap between orders and deliveries and returning the industry to what Superyacht Intelligence’s editor, Ellie Brade has coined “the new normal”. For the first two years after the world’s economy collapsed, “the industry was in complete denial”, she explained. “It was only [in 2010] that people realised they needed to do something.”
Commenting in the The Superyacht Intelligence Global Order Book 2013, Brade said that, with 407 yachts in build, “we seem to have achieved a pleasing degree of stability”. And, Brade continued, “with that stability we are given the platform for growth that will allow us to maintain continuous growth.”
Lehman Brothers closed its doors five years ago. Image courtesy of David Shankbone.
And although the market has seen some stability return, competition remains fierce: in the last five years, the number of shipyards registering new orders in a year has risen from 39 to 51 between 2010 and 2012 (Superyacht Intelligence Shipyard Report 2013), but numbers of yachts in build have not enjoyed the same growth rate with numbers of owners finite.Since Lehman Brothers closed its doors five years ago, triggering an unprecedented domino effect all over the world, the most successful superyacht merchants have defined themselves by the quality of their service, and this is also true of the broader economic sphere. As Dick van Lent, director of Feadship told SuperyachtNews.com in summer 2013, “Before the crisis clients tried to find the cheapest yard and the smallest bank, van Lent said, “and if one of them started to perform badly, it would drag the other two down with them.” We would always try to help our clients through financial difficulties but people that sought out the least costs inevitably cost themselves the whole project.”
Going forward, he believes it is the best purveyors of quality who will prosper: “Reputable builders will inevitably survive a crisis and less reputable ones won’t. Despite the problems, certain yards keep coming back. The reason for that is that it is very risky for a client to enter into a construction contract with a yard that doesn’t have financial stability.”
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