New builds must demonstrate genuine value for market to grow
As the second hand inventory of superyachts has increased over the last four years, arguably more than ever before superyacht builders need to offer a better value and quality product to compete with the instant gratification of buying cheaper, existing yachts.…
As the second hand inventory of superyachts has increased over the last four years, arguably more than ever before superyacht builders need to offer a better value and quality product to compete with the instant gratification of buying cheaper, existing yachts. For some, bringing down the quotes for clients has been an inevitable reaction, in the hopes of keeping slots full and employees busy. The effects of these price reductions are felt by not only the yards but also their suppliers, as the yards look to remain profitable. But greater emphasis needs to be placed on offering better value and quality rather than simply lower costs, said Dan Mickelsen, director of InteliSea, a monitoring and alarm systems supplier.
Prefacing a recent increase seen in the company’s new business, Mickelsen explained how the technical systems sector has been particularly hit by squeezed budgets. The company had to take steps to meet the challenging economic environment without losing quality, he said.
“From the standpoint of the owner, they probably don’t know or care about many systems because they aren’t familiar with that level of the detail on their yachts. They may be interested in the interior decoration details or AV system, and the captain will hold the yard to a high standard on the navigation and radio equipment. [But] as soon as you look at systems with less visibility, the motivation is not so much for the best systems money can buy. People will always say that they are happy to spend on a product if it’s the best, but when it really comes down to it, all they want is the cheapest thing.”
So, in 2011 the company went back to the drawing board to create a less expensive product without compromising on quality to attract new business motivated more by cost than value. The team found it was able to drive down costs by 30 per cent through software innovations it had not previously explored, he explained. Mickelsen said that in driving for new business, the reduction in cost has had a positive result for everyone, even though the difference in price is very small compared with the total cost of the build.
Questioning whether superyachts always need to be at the “bleeding edge of technology” Eaglen commented:
“For individual companies, it is always more cost effective and more profitable, even if you earn less money, to build the same thing again. What we need to do is start with a blank sheet, then overlay what we already know and look at where those differences are and ask ourselves, are those differences worth having?”
Delivering predictability and value alongside high-quality technological innovation that is not superfluous is one of the best ways a shipyard can offer a product superior to what exists on the secondary. This can be achieved when suppliers and shipyards work together to maximize efficiency and intelligent engineering. Amels and Heesen have been cited as good examples such business models. This mode of operation also pushes the industry to evaluate its business decisions – from a monitoring systems supplier to a superyacht builder – that will ultimately result in better yachts for its clients.
Related Links
InteliSea Profile | InteliSea Website
Amels Profile | Amels Website
Heesen Profile | Heesen Website
Prefacing a recent increase seen in the company’s new business, Mickelsen explained how the technical systems sector has been particularly hit by squeezed budgets. The company had to take steps to meet the challenging economic environment without losing quality, he said.
“From the standpoint of the owner, they probably don’t know or care about many systems because they aren’t familiar with that level of the detail on their yachts. They may be interested in the interior decoration details or AV system, and the captain will hold the yard to a high standard on the navigation and radio equipment. [But] as soon as you look at systems with less visibility, the motivation is not so much for the best systems money can buy. People will always say that they are happy to spend on a product if it’s the best, but when it really comes down to it, all they want is the cheapest thing.”
So, in 2011 the company went back to the drawing board to create a less expensive product without compromising on quality to attract new business motivated more by cost than value. The team found it was able to drive down costs by 30 per cent through software innovations it had not previously explored, he explained. Mickelsen said that in driving for new business, the reduction in cost has had a positive result for everyone, even though the difference in price is very small compared with the total cost of the build.
Shipyards should be working towards more efficient and 'intelligent' build projects.
It’s a difficult balance not to lose quality by decreasing the costs, but Intelisea’s report is encouraging. Technology is arguably dangerous territory to be talking about cutting costs. Make a vital piece of equipment cheaper and there could be valid concerns of jeopardizing the operation and safety of the yacht. But superyachts don’t necessarily need all the latest and greatest technology to be effective as Michael Eaglen’s speaking at Global Superyacht Forum last year, argued.Questioning whether superyachts always need to be at the “bleeding edge of technology” Eaglen commented:
“For individual companies, it is always more cost effective and more profitable, even if you earn less money, to build the same thing again. What we need to do is start with a blank sheet, then overlay what we already know and look at where those differences are and ask ourselves, are those differences worth having?”
Delivering predictability and value alongside high-quality technological innovation that is not superfluous is one of the best ways a shipyard can offer a product superior to what exists on the secondary. This can be achieved when suppliers and shipyards work together to maximize efficiency and intelligent engineering. Amels and Heesen have been cited as good examples such business models. This mode of operation also pushes the industry to evaluate its business decisions – from a monitoring systems supplier to a superyacht builder – that will ultimately result in better yachts for its clients.
Related Links
InteliSea Profile | InteliSea Website
Amels Profile | Amels Website
Heesen Profile | Heesen Website
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