While the new-build sector as a global entity has largely flatlined of late, Feadship is enjoying a record-breaking period in its history. According to data sourced from The Superyacht Intelligence Agency, at the time of writing, the company had a staggering 15 publicly acknowledged superyachts on its order book, ranging from 49.5m to 99.5m, complementing a summer of prolific activity in which four notable superyachts had been launched or delivered, including 87m Lonian and 110m Anna, the largest Feadship ever built and the joint-largest Dutch superyacht (alongside Oceanco’s Jubilee).
I sat down Henk and Tom de Vries (Henk as CEO while Tom oversees the provision of operational excellence and optimisation across the board or, in their own words, ‘the internal and external division of labour’) to find out what sets apart this ephemeral builder from its competition...
WM: When we analyse the numbers for the new-build market as a global whole, they are fairly flat. But when we look at the Feadship order book, it’s simply phenomenal, and your group is producing a broader and more diverse range of vessels than ever before. To what do you attribute this pronounced success in the face of a broader market that is struggling?
Henk: If you look at the market as a whole, you saw it crash in 2010 and then pick up again somewhat in 2011 and 2012 for Feadship; which meant that from 2013 onwards we were doing alright. From the external perspective, we have become very competitive. Up to 2008, we said internally that Feadship could be 20 to 25 per cent more expensive than [the nearest competitor], but in order to remain competitive, we re-thought the build process, standardising it, while making our boats even more elaborate, more custom, while most other were standardising the product itself.
Tom: Yes, as Henk said, it was difficult for a while, but what we did is challenge our team to think about how we can deliver a better product for a better price. Management started it but it was the guys themselves who gave the plan hands and feet; so really, it’s their plan. And because it’s their plan, they embrace it. Yes, sometimes Henk may sell a boat and we think ‘What is he doing selling it at that price?’, but we can still make a profit on it because of the efficiency of our processes, and that is the key challenge [the industry needs to meet]. The other important element is the family business, and the values that brings with it. Sometimes, even if you don’t make the profits that you wanted to make, you know you’re in it for the long haul, not just for the short-term gains.
WM: When you look at the market as a whole, do you feel we are entering an era of consolidation, where quality is the overriding factor for the client? When one evaluates the yards that continue to enjoy success, the common theme is that they all deliver quality products, albeit at different price-points. Is quality the key today?
Tom: It’s the quality that you put in; the clients are willing to pay a little bit more because it’s our company but what we’ve put in is a lot of additional elements to ensure they receive something that meets our reputation. It says that in every [builder’s] brochure, but we really do. We are building a boat at the moment for a long time client who we know, and we know he wants to change things. But even so, as part of the build process, we made mock-ups for him to see that what we’ve designed is what he thinks he is expecting to get. It’s the extra effort you put in that the client will always see, and [that] repays itself in the clientele.
WM: In retrospect, how do you think the industry has changed?
Henk: I think it has changed for the better. I have a theory that everything changed from our clients’ perspective, in the way in which they gather information, in 2010. Now you have all of the most intelligent people in the world with all the information they need in the palm of their hand. As a result of this, the industry has become tremendously more transparent.
There are two things our clients are afraid of: paying too high a price because their peers in the know will make fun of them, but also they are very worried that they have built with the wrong company because, again, their peers will mock them. This has played into our hands because it’s fine if you have a mediocre shipyard as there will always be clients for that. But if you want something mediocre you probably don’t want to wait, and so you buy something second-hand. There is still a huge pool of second-hand yachts of mediocre quality for sale.
This makes it very difficult and the only other option is to build top quality. But the problem here is that if you haven’t done it your whole life – and you must teach yourself to do it and remain economical – it becomes very difficult.
Our biggest worry is that superyachts will go out of fashion and people will find other things to do as our client base gets older. In the sailboat market 90 per cent was return business. And that’s why they got into trouble. So you continuously have to find new clients, and that’s our biggest challenge.
There are two things our clients are afraid of: paying too high a price because their peers in the know will make fun of them, but also they are very worried that they have built with the wrong company because, again, their peers will mock them.
WM: Do you feel there is a problem with the second-hand inventory at the bottom of the market inhibiting the feeder market, and preventing potential owners returning to it?
Henk: If people call us and say, ‘Do you know of a Feadship under 10 years’ old for sale?’, there are fewer than the fingers on one hand. So we are very fortunate.
Tom: And if they are for sale, we can do a very nice refit on them!
WM: That ties in somewhat to the new-build market, and where you believe it is heading. Over the next three to four years, when the next cycle of projects has left the sheds, what do you foresee as the next new-build paradigm?
Henk: I like that choice of cycle because the books have been filled for the next three or four years, and we know what’s coming out in 2021 or 2022. But like any transport business, I think the future is electric.
Tom: Definitely! It’s also the propulsion itself; we will step away from the normal shaft-line propulsion in favour of more compact solutions. We are talking to a Dutch group now that has a proven concept, but it has hardly been used in yachting even though it’s spectacular. We are also developing something spectacular internally on Tier III. We are stepping away from urea, so you don’t need the stainless-steel tanks, and you can take the boat anywhere you want. We are in the testing phase but the early results have been very promising, and it’s very compact in the engine room.
WM: We estimate that around four per cent of those who could afford a superyacht actually buy one. In order to expand the client pool into the next generation, do you see operational efficiency and sustainability as the discourse that will attract them?
Henk: Not for the clients. You often find that people who are very revolutionary in their own businesses become very traditional when it comes to yachting. But we’ve learned from certain individuals in Silicon Valley that they don’t know what they want; you have to tell them what they want. And that’s what we’ll do. But the four per cent you refer to worries me; it should be at least 10, so we need to become sexier for more people.
You often find that people who are very revolutionary in their own businesses become very traditional when it comes to yachting.
WM: For me, one of the most incredible things you have done at Feadship is create the ultimate brand. People associate you with style, sophistication and luxury, does the industry need to be more innovative in its marketing?
Tom: It’s a brand value. It’s something we worked very carefully on. It started with Cees van Lent and my grandfather, and some visionary guys in Holland, but it’s something you could lose very easily, so it’s something you have to develop very carefully. The brand is what makes the Feadship concept, and the brand stands for a lot of values, and it’s a bonus for our clients in everything we’ve built.
This article appeared in full in The Superyacht CEO Report, click here to download a copy or subscribe today.
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