Memo from the Deck Chairman: Is it going to be a Happy New-Build Year?
How can we make 2018 'The Year of the New Build'? Well, that's our mission here at The Superyacht Group…
I love all the messages and greetings at the start of a New Year, so sincere and well thought out, considered and targeted, wishing everyone a prosperous and successful New Year. So I pondered for a while and wondered what I would say to all my friends and colleagues for 2018, in order to send a message that is both relevant and poignant.
Once again, we start the year with our unrivalled The Superyacht Annual Report, a candid and unique look at the performance of the new-build sector. And while many seem to suggest that order books are, as always, overflowing and full, we tend to take a more honest approach, and try to look closely at who has successfully delivered, who has definitely secured replacement orders and, then, who is looking a little fragile or searching high and low for the next buyer.
From my perspective, and having had a 25-year relationship with the new-build sector, it is clear that we may be entering a phase that follows our corporate mantra of “Less is More”. While we are all aware that yards don’t just disappear or easily collapse, it is very clear that there are fewer yards who are successfully performing with more orders and more stability. The market is starting to segment and become clearer to the industry where players fit, who are the real actors, who are the wannabes, who are the one hit wonders and who are the ones who are supported by sugar daddies and, therefore, are not, in fact, real businesses.
So, when I think of the phrase “Less is More”, perhaps we need to add the word “clear” in order to clarify that 'less' yards in the various segments is clearer for the buyer; however, we are still faced with the madness that some advisors will tout a large new-build spec and concept to more than 15 yards, in order to generate a ridiculous spectrum of prices. Perhaps, by tendering with less yards, it will be more intelligent and fairer for the market.
By gazing into a crystal ball for 2018, it is clear that we will see a year of significant deliveries - some delayed from 2017 and some on schedule. But also some delivered yet still awaiting a client, and once again we are faced with market forces where yards and brokers are tendering for new customers for projects that are either crisis sales, spec builds on a go-slow or projects that have been on the market for some time, including yachts delivered last year and still for sale. So I wonder what level of happiness will be encountered in 2018, and will the industry start to realise that a major shipyard with multiple projects in build, making little or no profit, does not always make it the best and biggest builder in the world.
If only we could share insights and information that clearly demonstrated who is the best builder in the market, based on quality, performance, financials, warranty claims, customer satisfaction and resale value, well perhaps the time will come and a buyer can start to make decisions based on trusted facts and figures, rather than emotional relationships and personal interests.
At the start of 2018, as we look ahead to 2020 and the next 36 months - a typical build cycle - it is clear to me that beyond 2020 there will be some pain points and perhaps some yards will not fill the slots that will appear. Unless we change the way we communicate and make sure that everyone involved in the buying and building process is more transparent, and we compare apples with apples and stop trying to tell a client that they can build a Feadship in Tuzla or a Lürssen in China, and save 50 per cent of the build costs. As long as some people keep doing this, we won’t have a happy New Build Year.
A superyacht is not just a toy you buy and enjoy from day one - it should be a long-term personal journey where you devote energy, thoughts, fantasies and inspiration in order to build something that represents genius, bravery and passion. Think Maltese Falcon, M/Y A and S/Y A, Venus, Savannah, Limitless, Carinthia, Eco, Lady Moura and Skat.
On a final note, I remember the days when owners would say, "I loved building my yacht, I can’t wait to start the next project", however today we have changed the dynamics and we are seeing teams of intermediaries and advisors that take care of everything, and remove the client from the build experience, and help him buy the perfect toy with an incredible budget. My New Year’s resolution is to try to encourage any owner and potential owner to seriously consider and understand that taking a blank piece of paper, with a relatively good technical platform, and employing a fun and dynamic personality to draw a personal exterior and create an interior statement, spend hours, days, weeks and months choosing, sourcing unique finishes and dreaming of cool spaces and crazy ideas to make this a very personal, private yacht, is actually much more fun and interesting that walking down the dock, buying something second hand and then deciding it doesn’t quite meet your needs.
To make 2018, the Happy New Build Year, we need to inspire and educate every single UHNWI that owning a yacht can be fun, but designing, planning, creating, building, tweaking, adjusting, customising and christening your own new-build project is perhaps one of the greatest legacies you can ever leave behind. A superyacht is not just a toy you buy and enjoy from day one - it should be a long-term personal journey where you devote energy, thoughts, fantasies and inspiration in order to build something that represents genius, bravery and passion. Think Maltese Falcon, M/Y A and S/Y A, Venus, Savannah, Limitless, Carinthia, Eco, Lady Moura and Skat. Stop worrying about depreciation and focus on the appreciation of your peers, the awards and the recognition for creating your yacht and not just buying someone else’s.
Our mission is to make 2018 'The Year of the New Build' and ask everyone to take out a blank piece of paper and write down what your personal, private yacht would include, and then think about who you’d like to invite on the maiden voyage in 2020 or beyond, and then tell your family office, lawyer or finance director you’re going to go on a new and exciting journey. You never know, if you secure the right deal, someone may offer to buy the project off you before it’s finished at a huge premium. Stranger things have happened.
I wish you a prosperous New Order Book and a Happy Client base for 2018.
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