It is not new that the sector of S/Y over 40 meters, is reaching almost the levels of 2006.
The increase, at the world level, of the “Upper classes”, especially in the Middle and Far East and their tendencies to surround themselves with extreme luxury goods, are an important factor to understand this – so much desired – rebirth.
According to the “Top 10” of Forbes, India, China and South Korea are the countries with the highest growth potential in the yachting market and ready to equip themselves with more and more performing and modern boats, built by world historical shipyards.
We had the pleasure, before the ninth edition of Yare (Yachting Aftersales & Refitting Experience) of Viareggio, to accompany an English Stakeholder on a visit to one of the most important shipyards in the world, which confirmed that it could not acquire new orders until 2020!
During the days of Yare 2019, I had the pleasure of talking with Captains, Stakeholders, Yacht managers, shipyards, charter and brokerage companies and I must admit that almost nothing has changed compared to the past.
Here are some considerations on the side of the event:
- The relationship between the Customer and the Shipyard
Even today, relations between the customer and the shipyard are not regulated by a common modus operandi and are these relationships result unclear. On the contrary, it would be nice that they will be more inspired by the principles of clarity, correctness and competence and, to do this, it would be necessary to draw up standardized rules and procedures that are widespread among the parties. It would be a good idea from this point of view to create a “refit disciplinary”, with a sort of “book of inspections” with pre-established times and activities.
- Market inhomogeneity
The market is not homogeneous and this represents a critical aspect to be considered when the objective is to achieve the “perfect refit”. The shipyards are not at the same level: some (very few, indeed) have a well-established company structure (technical, legal, financial and organizational); others – despite the excellence of the workers – do not have the same complex structure. Consequently, the stakeholder who approaches one of these realities, if he is not assisted by specialized Consultants, will not be at ease and able to understand all the problems and/or opportunities of a refit operation.
- Programmed Refit
Unfortunately the concept of programming the refit is still not widespread. Therefore the management of the yacht and the shipyard do not plan “inspections” of the yacht in advance. Someone could object that is impossible to create such path since each yacht is unique.
In my opinion this is a fake problem, often generated not only by the lack of will to share the know-how of the construction site with others (this is why a “refit disciplinary” would be necessary), but also because highly specialised people able to make the parts interact in an organic way, are missing.
- The price of the refit.
The lack of planning of the interventions and of a refit disciplinary has immediate implications not only in execution times and on the final price, but also on the fiscal impact of the interventions themselves. This subject is generally left out.
Actually, price and delivery times go hand in hand. One of the usual requests coming from the Captains of the yachts is to carry out the refit in a short time and with anticipated deadlines compared to the “normal” times needed to complete the work.
Generally, the behaviour of most of the shipyards (which can be understandable) is to raise the price of the work to compensate the need to find additional third-party resources to be used to compensate for the lack of time to spend on the refit.
- Lack of standard contract
The lack of standardization of the procedures and also of international contracts is an advantage, at least for the yards, that are able to maintain a margin in case of wrong evaluation of the preliminary budget, but this lack the other brings to an inevitable increase in litigation. It emerged, in fact, that about 60% of the orders end, if not in a dispute in the courtrooms, with a discussion between the construction site and customer.
- Key man
Also during this Yare emerged the key role of the Captain (and sometimes of the crew) in deciding which jobs to perform and how to perform them.
On this point, I believe that the figure of the yacht manager is not sufficiently evaluated since it is normally assimilated to a paying agency, whose only purpose is to contain costs. The YM should have some skills in technical, legal and economics subjects in order to be able to “connect” the shipyard, the captain and the owner of the Yacht or, at least, be assisted by competent professionals who can allow the YM to better coordinate with all the other figures involved.
WHAT ARE THE POSSIBLE SOLUTIONS IN THIS SCENARIO?
First of all, it is necessary to bring the discussion back into a legal context that protects both parties by attributing rights and duties.
It is unthinkable to rely on the common sense of the parties. Instead, it is necessary to move within a technical-juridical and economic “framework”, which has to be clear and at the same time, complete, represented by a contract that, in the case of particularly anomalous orders, can be clearly adjusted.
Another aspect that I consider essential is programming the refit TIMES.
I believe that refit starts before the arrival of the yacht at the shipyard.
The Yacht Manager must report in advance to the site about the ordinary and extraordinary work to be carried out so that the yard can best weigh up any difficulties, problems and peculiarities of what needs to be done.
The shipyard should send its project manager on board, in advance, so that he can inspect the yacht with the Yacht Manager. Doing so he will be able to report the yard all the details of the work that needs to be done.
This modus operandi would allow an early sharing of the value and details about the order, allowing the yard and YM to sign the refit contract in full awareness.
Proceeding in the aforementioned way, the discussions between the parties is less likely since the refit work was previously discussed.
Obviously, the above is possible only if there are key figures with the necessary skills to manage the process.
The third aspect that should be taken into account is the education of a Yacht Manager per Yacht, who becomes the catalyst for the crew, the captain and the property.
The YM should be the ideal link between:
- Yacht owner
- Yacht departments
- Yacht department manager
The YM should have managerial, technical and financial skills in a broad sense.
In this way, during the refit organization, the YM (possibly supported by the Captain in the most delicate questions) will dialogue with the shipyard manager.
This should happened within a legal and technical context (that is to say the refit contract), set and shared in advance by both parties.
For years now, our Team has been coordinating and assisting all aspects of the operation and its protagonists, simplifying – in this way – its success.
As always, may the wind always be at your back!