Government bailouts and the future of boating

As we approach 2009 I can’t help but wonder what the new year will bring for the Marine industry.  I recently read an op-ed piece by Thomas Friedman “Time to Reboot America” and while GM has become the poster child for the bailouts, I know that our industry could face a similar fate. It’s time to consider what we must do in order to reboot and get back on track.

Five things that need to change.

1) Customer Support - Customer Support in our industry is just short of pathetic. The #1 reason people get out of boating is problems with boats.  Broken parts, boats that don’t work, things that go wrong and no one to fix these items.  Its a problem and one that must be proactively resolved. Its not an accident that there is the saying “the two best days of owning a boat are the day you buy it and the day you sell it” .  With the number of boats being built over 50′ each year there is no reason that you couldn’t have your own personal technician to support your needs.

2) Difficult operation – Boats are too difficult to operate, maneuver, maintain, etc.   How can my car go 15,000 miles without an oil change, yet the boats engine needs one after 50 hours?  There is a computer system for the Navigation, Engines, Generators, Monitoring System, Audio/Visual, Alarms, etc. , and none of these systems intelligently communicate with each other in any meaningful way.  Why isn’t there one central Operating System for the entire yacht?  One that is smart enough to track the maintenance due, order parts needed for it and have them delivered to the next port of call that you have plotted on your Navigation chart.

3) Crew – (really only applies to boats 60′ and over) The #2 reason people get out of yachting is for lack of good, competent crew.  There is a shortage in our industry and as the boats get bigger the demand for crew is greater. The training for getting your license is outdated and its a system that needs to be brought up-to-date with current yachting technology. Where is the Ritz Carlton school for yacht crews?  One that teaches service, etiquette, hospitality.  Where is the training of maintaining, cleaning, and caring for a boat?  There should be a world wide recognized school for this profession. One that has the support of all the manufacturers, even sponsored by the manufacturers.

4) Production Costs – For the most part boats are built the same way today as they were in the 50′s.  I realize materials have changed as have techniques, but our industry is still very labor intensive .  Where is the automation?  Where is the breakthrough in material cost reduction?  In 1989,  a SeaRay 390 retailed for $149,995.  Today that same boat would retail for around $350,000, a 58% increase over 20 years.  For comparison the Honda Accord in 1989 had a base price of $11,230 while in today that base price is $20,775.  That’s a 46% increase.  A gallon of milk in 1989 was $2.34.  Today it would cost you $4.28, again 46% increase. The irony , is that while the price of a boat has increased so much the Gross Profit Margins have not.  I cant speak for every company however I feel very confident in saying that GPM are the same or in most cases lower today than they were in 1989.  We must focus on lowering the cost of producing boats or face the realization that we could soon price a product and industry out of existence.

5) Retail Experience – Buying a product that costs hundreds of thousands to millions of dollars should have a retail experience that is commensurate with that.  Today we don’t have that.  Why not?  Where are the knowledgeable salesmen with state-of-the-art showrooms. Where are the websites that have users feedback from their experiences with the products?  Where are the magazine articles with head to head shootouts that put one boat up against another in a test to see which one prevails?

Unless the leaders of our industry collectively work together to resolve these issues then we too will face the fate of the US Auto Industry.  The only problem is,  I’m certain there will be no bailing out our sinking ship.

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11 Responses to Government bailouts and the future of boating

  1. Marc says:

    I totally agree with you about the sales ‘experience’. My wife suggested I look at some express cruisers in the 50 up to what she refers to as your “baby lazzara” which to her was the 68 but I see is no longer featured.

    Your company has a superb user interface and you can get a very good idea of what you may or may not be purchasing. I looked at a few yachts who would have 3 or 4 photos of the exterior and no interior shots ( cranchi comes to mind) and if they’re italian – forget it – you get a few glossy photos with sexy tall long legged brunettes and information is secondary or tertiary.

    ( don’t get me wrong, i love the long legged brunettes – being italian myself – but you could hardly do your research solely online with just superficial photos and information )

    a few other companies told me ” come on down ” or “hop a ride down to florida” – well that’s great, but people ( I’m in my 30s ) my age prefer to do their homework online, before flying and making appts to each and every yacht. Why get there and see the interior the first time and go “ohhhhh uhhhhh ooops not for me, sorry ) right ? Do you work online, so that when you do go and see a yacht up close and personal, you already ‘know’ it’s in your taste and character and you would be that much closer to closing a deal.

    The times have come a long way from when “dad” took you to the local Cadillac, Buick, Pontiac, Oldsmobile, Ford, Chevy dealers to look at each of the models and kick the tires. You can do 90 percent of that online now and then just pinpoint your choices down to a firm 1 or 2. I see no reason why the yacht industry can’t hire teh techs to upload the information and the photos to give their potential customers the same experience – we’re not talking a 50,000 cadillac, but a several million dollar yacht. yet, the 50,000 car has more information online than the yacht in most cases.

    I would say your family is a major exception – I saw the website you prepared just for your 92 – and it was superb – save actually walking on the yacht, I got a feel of everything you could possibly want w/o having to book a trip to Florida. Of course, my wife wants to buy a house with a dock that is either 60′ or 75′ – so sort of leaves me short…LOL

    Anway..just thought I would vent after reading your vent on the state of the industry…

    I enjoy your blog – I click on it every few days.

    Marc
    Southern California

  2. Chris Larson says:

    I agree with you here, as noted in the latest issue of BI USA from the Super Yacht Symposium, it was noted that the quality is sometimes too high in yachts. Citing that while Celebrity Cruises began construction of a new ship 2 years after that of M/Y A, they launched at the same time. 2 years is a lot of time, time that leads to higher labor costs. As for the service being needed every 50 hours, maybe we could look towards Evinrude, whose E-Tec outboards with no oil changes, ever, and no scheduled maintenance for 3 years/300 hours. It’s a shame they only make outboards, as this would be nice for stern drive, inboard, and ips driven boats.

  3. Chris Larson says:

    On the sales experience Marc touched on, I would like to add Lazzara’s preview of the LSX 75 is a very nice tool in improving this experience. It really gives you an idea about the yacht.

  4. mike carel says:

    Hi Rich,

    Have you given any thought about developing a yacht configurator similar to what the car companys are doing? I would recommend having perhaps 3-4 choices of wood, leather, carpet, exterior or deck materials as a baseline. Prospective owners could then choice an area to configure such as the deck, salon, galley or master stateroom area. That would give them a starting point to at least get them into the ballpark. Then prospective customers could then get with your Lazzara sales staff for customized features or color combinations not included in the configurator.

  5. Pingback: Is too much quality a bad thing? « richlazzara

  6. Marc says:

    Commenting on Chris Larson’s suggestion – I think that is an EXCELLENT idea about having a pseudo yacht configurator. Just taking one possibly example — say the galley – you have produced so many different styles for so many different customers lets say of model xyz. It would be great to see the different variations that have already produced to show the capability of your interior design team.

    Working example: My wife just looked at the italian Absolute 56 in Italy online – she fell in love with the exterior. In fact, she said is shares the “sexy” factor with your own Lazzaras. However, she then clicked on the interior and went “YUCK” super super contemporary modern. No matter how many times I told her I am sure they can make the interior anyway you want; she was unable to “envision” it in her mind. Now if they had given more than 1 example of the interior, then it could open up the mind ( and pocketbook ) of a prospective customer.

    Look – my wife love’s the exterior of your new ’92 , but she is more ‘old school’ and is in love with your previous “high gloss” cherry and walnut creations. I told her I am sure they can produce that for you if you wanted it. She totally believes that and so do I — but why ? because we know from previous photos that your design team is capable of that – so Lazzara stays in her mind. The Absolute 56 – ‘fughgettababoutit – no convincing will change her mind after seeing only a super contemporary layout.

    If you expand on Chris’ idea plus what you already are working on – it would be great to see a “galley” or “master stateroom” of “xyz” model in different interior design forms. It would definitely appeal to a broader base and not get the “ewww, I don’t like that” and have to explain to your wife, butttttt they can make it the way you like it. In short, a picture is worth 1000 words.

    Okay, I’m rambling, but I hope I made my point..LOL

    Nevertheless, the ’92 website is superb – it’s a great idea making an individual website for a feature yacht – why not ? if the customer is going to spend a few million, the custom website in 2009 is a no-brainer and you guys are right on the technology with it.

    Marc

  7. Kesh Prashad says:

    Hi Rich, the new lauch of your 116 looks spectacular to say the least. What are your thoughts regarding the economic downturn with respect to the Marina and Service Industry for the superyacht sector, are owners still spending on routine maintenance and refits or ‘keeping their hands in their pockets’ for the near future?

    I met with Braithwaite last week in Poole and apparently, it’s dramatically slowing. Is this the same in the US?

  8. Rich says:

    Marc, thanks for the comments. I agree with you 100%. Even our website needs to improve and its something we are pursuing on a daily basis. The complexity of the boats tends to get overshadowed by the lifestyle it offers. So what do companies do? They put pretty people enjoying their time on the boat. Im convinced that we will see that change and more and more transparency of product will be seen. This blog is one way, more pictures is another, more detailed info is yet another. Lets hope the trend continues and in the end everyone will benefit.

  9. Rich says:

    Thanks for the comments. I saw that article but have not yet had time to read it. Will do so tomorrow. Great point on the Evinrude E-Tec outboards. I had forgot about those. No reason that cant be done on other engines.

  10. Rich says:

    Excellent idea. In fact we have thought about it and did a mock up of one for our website. This is something we are going to introduce in the near future. Thanks for the ideas and keep them coming.

  11. Rich says:

    Hey Kesh, how are you doing my friend. Thanks for the nice comments. Yes the entire industry is slowing retail, marina and service. The only thing that has been hit as hard is the brokerage stuff. People are wanting/needing to sell and others are looking for a great deal. I almost came to the London show this year but had to pass. Oh well maybe next year so we can meet up. Later

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