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New build advice needed

Discussion in 'General Yachting Discussion' started by rigoletto, Jun 17, 2019.

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  1. rigoletto

    rigoletto New Member

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    Hello,

    How those brokers like Burgess/Edmiston/Fraser/etc. charge to assist for new (custom) builds, and what sort of traps a client should pay attention?

    Also, is there any real advantage on contracting those services instead of going directly to a reputable builder, like Palmer Johnson?

    Thank you.
  2. olderboater

    olderboater Senior Member

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    Reputable builder and Palmer Johnson might today have to be considered an oxymoron. But back to your question.

    I believe you need someone managing the project for you, someone with expertise and experience and someone you can trust. I think the selection of that person is very critical. However, for me, it would not be a broker.

    Do you currently have a captain and chief engineer? What is their knowledge and experience? At least they should be able to help you.

    We had an extremely reputable builder but also an experienced captain and a chief engineer who had been involved with many builds. In addition we engaged a surveyor in the area of the builder who was on site one day a week for the entire time. That worked for us.

    Much depends on whether you're building a boat that is part of a builder's regular line or something new and unique.

    We have a member here who is heading toward retirement but was one of the best there was in managing new builds. I hope K1W1 speaks up and shares how to find the right person and can provide some advice. If not, you might message him.

    Here are my observations on using a broker to do it. I've observed that the broker often seems to perform more like an agent for the builder than for you. Their ties are often close and I've seen them make excuses for the builder and support the builder in disagreements. While it may be separated departments within the broker's business, the reality is the broker has a commission riding on the build. I just have seen too many times that the broker did not even act like an independent third party much less like your representative, fighting to protect your interests. I want someone who has no business relationship with the builder. Perhaps it may be someone who has been involved in managing builds with them but not being paid by the builder for any work.

    If you would like to read how badly using a broker can go, then dive deep into the build of Baden at Northern Marine. They used a broker, one of the ones you mentioned. That broker then totally disavowed their role as managers when everything fell apart.
  3. rigoletto

    rigoletto New Member

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    I don't have anything yet, this is just an intention for now. However; I have been involved with port management and foreign trade corporations for more than a decade, and I indeed am close to a Corporation (Wilson, Sons) who own several shipyards (mostly for their own use) but they just do commercial ships, mostly PSV (platform supply vessels) projects they buy from Damen.

    I've talked with a friend from there who have being involved in all steps of ship building during the last decades but he is a bit uncomfortable with yacht building, given the fact he has no experience with this particular market - and we are in South America too what may have some practical differences.

    More likely to be a custom build; however I don't have anything specific in mind right now. Currently I am more concerned to acknowledge how the whole thing works, including at the Maritime Law side (I have a Master Degree in International Law of the Sea but had very little contact with Maritime Law).

    Let's wait. :)

    This is exactly what I was expecting.

    Thank you. :)
    Last edited: Jun 17, 2019
  4. Capt J

    Capt J Senior Member

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    You didn't mention which size you are planning on building, but I'm guessing somewhere between 120-200'. I tend to agree with Olderboater that you'd be best served, having a Captain and engineer that works for you to oversee the build as well as a good surveyor checking it as various steps are completed. But make sure all of these people are very well experienced in the size range you are looking for. Also in yachts, as the systems are drastically different than OSV's.
  5. rigoletto

    rigoletto New Member

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    Hello.

    I am still can't say the size. I am intermediating in some very large foreign trade deals and industrial investments, and for the end of this year or the next I should be able to retire very well out of it; however IDK how much exactly I will make from those (can vary a lot depending on how the thing will evolve from this point), but I expect to be able to afford and maintain something with 50 meter or more.

    Thank you.
  6. olderboater

    olderboater Senior Member

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    A couple of follow up comments. Do not undertake a yacht build with a builder who doesn't build yachts. Seems simple but sounded like it was something you'd considered.

    You have little Maritime Law Experience so hire a Maritime Lawyer and use them.

    With this being your first time, I would strongly discourage full custom. You don't know enough to necessitate one. You don't know what you'd want to do differently with a hull or elsewhere. What I'd recommend is what I call semi-Custom. Now the amount of semi vs custom varies with every builder. However, there are many fine builders building boats up to 150' every day and the hulls remain the same while the interiors change. You can customize all you want inside. You can select equipment with many. However, you have a structure, hull and topsides, that is proven to work well. You likely can even find one in charter to sample prior to buying and learn what you like and don't like of the part you'll customize.

    The vast majority of boats built are either production or semi-custom. Years ago above 100' there were few production and relatively few semi-custom but that has changed. Just a few are Westport, Sunseeker, Sanlorenzo, AB, Custom Line, Pershing, Benetti, Cheoy Lee, Hargrave, Ocean Alexander and even "custom" builders like Heesen have standard models in their line. You have no reason to design a hull and structure with so many previously designed. The checklist of choices you still get to make and have to make will be overwhelming enough.

    Once you figure out a size and price range, I'd definitely charter some just to see what appeals and doesn't. You might find the perfect boat or might decide the one you thought you'd love wasn't as enjoyable as you hoped it would be. And chartering may be expensive, but less so than owning and a lot less so than a wrong purchase.
  7. rigoletto

    rigoletto New Member

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    Sound like a very good advise. I do appreciate.

    I was asking questions to people from another market in order to get a general idea of what is involved in the process and what are the general practices - how flexible they are.

    For instance, how/who the parts are sourced? I have some contacts I could probably get some parts, e.g. steel and/or aluminum, directly from the producer with reasonable reduced price as a personal favor. Also, I rather prefer to oversight/control the logistics of the delivery of the parts by myself one time there is a proper schedule.

    My main issue is with the yacht construction/market specifics. :)

    What could you tell about Lateral?

    Thank you.

    [EDIT]

    When I said custom I was referring to the exterior design as I didn't find anything I liked. The closest were PJ SuperSport 72M and Oceanco's Esquel. I quite like the trimaran idea but that PJ was the only I ever found that not looks funny.
    Last edited: Jun 17, 2019
  8. rigoletto

    rigoletto New Member

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    This a pretty funny situation for me. I have contact with everything imaginable in commercial maritime affairs and navy, from commercial lines to admirals, and none of them seems to know a thing about yachting. o_O
  9. olderboater

    olderboater Senior Member

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    No reasonable builder is going to allow you to source their materials or parts. Well, they might if you agree to pay a huge penalty when they're late. You don't even know the involved parts and it is ridiculous and arrogant to even think you could manage the logistics. No, your issues are far more than yacht construction. I'm sorry if this sounds harsh, but just because you can do all these things in other industries, doesn't mean you can do any of them in this industry. I've spent my life in manufacturing, but I'm not manufacturing a boat. Wait until you see a materials list for a boat. Now, if this boat was aluminum, no wise boat builder would dare consider anyone but their regular source. They can't risk it.

    You're experienced in foreign trade and you're a lawyer. However, you know nothing about building a boat and maritime law. It's wise to follow closely, but also wise to allow the experts to do their jobs.
  10. olderboater

    olderboater Senior Member

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    Correct.

    Yachting people don't know commercial shipping either.
  11. rigoletto

    rigoletto New Member

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    It is not arrogance, far from it. I've been working with so many sort of different industries and in different countries, I usually can easily anticipate where the contractor may have some arrangement with its supplier to fool the client in spending more money where it is not necessary - some ports love to have arrangements with customs to make the cargo delay in order to get more money from storage, or invent costs doesn't exist when they know the client don't have experience. That may not be everyone, surely not, but can happen everywhere.

    E.g. luxury industry: not a fooling thing but in general the retailer buy from the maker with 40% off of the street price. The street price usually is 20% off the list price. So, something that cost 100k (list price) from the retailer costed about 48 for them (40+20 off). Perfectly fine, but I am not paying more than 48 in any way. I always buy B2B FOB from the maker - shipping costs are negligible.

    What really annoys me is not the 60% thing but the fact luxury retailers try to put themselves like they are some kind of superior entity who have exclusive access to some magical product. Countless times I saw audiophile products makers and retailers laughing of their clients who paid 80K to buy their product that costed 3K to build, and now they (clients) are paying 100K to buy the same product again but in a new package, with minor changes and new marketing, and how they were easily fooled with some volume trick they did during the presentation.

    In short, I don't trust anyone selling me anything unless by those I already know very well. I don't have a problem to pay the proper price for anything but I really don't like to be fooled and I rarely overpay. IMO if someone feels they need to earn more put it on their price, if no one would be willing to pay is because they don't worth it.

    I foresee very long negotiations, because they will come with some budget and I will need to re-do it (will probably take months) in order to have proper means negotiate, and that is not ever hard to discover for how much certain product is getting in some country, and so how much in average it is costing to their supplier too, all ports know how much are being paid for the cargo they handle. You just need to get somebody you know from some port and ask them to make a call to another port and ask for how much the importers in there are paying for steel or anything. Storage and other operational costs are often ease to guess.
  12. RER

    RER Senior Member

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    There is no more extreme "luxury industry" than the large yacht industry and they eat some of the smartest & richest people in the world for lunch. Good luck with your strategy. Let us know how you do changing the mega yacht business to fit your model.
  13. rigoletto

    rigoletto New Member

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    I am not trying to change the industry and all industries are equal, they need to sell to survive, the luxury one sell in small quantities, and none of them will lose a deal if you arrange with them to advertise you paid more than you really paid. All luxury industries I had contact were the same, you pay 15 and tell everyone you paid 150 and so the do their marketing. If one decline there is another.

    It is hard to believe the big sharks are being eaten by the Yacht industry as advertised, when they are not by the Art market, and that is the real extreme luxury market. Art galleries are ages ahead in fooling people compared to anything, they actually lock the clients with them, who in practice never completely own the piece, and control the whole industry price with no real justification, and the big sharks rarely overpaying in there. It's all the same pay X and tell you paid X*Y.

    Try to make a fool of a Russian oligarch to see how much time you will be alive. And that doesn't ever need to be in millions, I already see people disappear for a lot of less than that.
    Last edited: Jun 17, 2019
  14. kevin8tor

    kevin8tor New Member

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    Now this is getting interesting. Go on.
  15. rigoletto

    rigoletto New Member

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    So, in case you are wondering why I know a bit about luxury industry, years ago I knew a person who own one of those audiophile industries and indeed he actually is well know to be the inventor of the "high-end audio market", and he is also one of the very very few whom is serious in that business.

    His "top of the line" products are extremely expensive, the retailers (in general) are crap as usual, but he is usually clear about how much his products cost to be made to everyone who ask. He don't care.

    He negotiate over what he earn (but with limits) but if you find a way to get the parts cheaper he is all with you because he also want to make his cost go down.

    So, he often sell custom electronics and some of his fully custom top end amplifiers can easy cost (advertised as) one million euros (each, mono). No one pay anything ever close of that price. The only people who buy those custom amplifiers are err... the exactly same people who are buying 100m+ superyachts (many Russian oligarchs and alike), and they usually pay close of the build costs.

    What is the deal? Those custom things demands some R&D and they are extremely good for marketing, so the big sharks are indeed financing his business... they are somehow his partners, because the R&D he did now allow him to bring new versions to his products lines...

    So, who are actually paying for his company profit? The aspirational people buying retail...
  16. Pascal

    Pascal Senior Member

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    Each industry is unique. You can’t compare building a boat to anything else

    Anybody with just half a pound of common sense will understand what can and will likely happen if they supply or handle the supply of materials, parts and systems to the builder if anything goes, not wrong, but less than perfect.

    No respectable builder will accept this deal and no respectable owner would even consider it.
  17. rigoletto

    rigoletto New Member

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    By boat you mean in the Yacht industry because that is quite common in the commercial ship industry, since no one is a fool on that industry. ;)

    But now that bring a interesting situation. Damen is in the commercial ship business but also in the Superyacht business.

    People in here often buy projects from Damen and then source and do everything they want the way they want, now if the same people want one of the Damen superyachts they will decline to act like that?
    Last edited by a moderator: Jan 28, 2023
  18. olderboater

    olderboater Senior Member

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    I'll sum up what I've learned. If I was a builder and you came, I'll send you on your way. Yacht builders don't make outrageous amounts like some and regardless of what they make, doesn't matter how much you know about their costs, they're not reducing their profits. You can negotiate off the total just as well as the pieces. They're take a certain amount and that's it. I don't negotiate with people who indicate up front they don't trust me as I'm 100% direct and honest in the process and I don't deal with people I don't trust.

    I will say this, I've worked with several boat builders that I trusted and do trust immensely. They're companies and people with integrity. There are those I don't trust, but I'd never buy from them. I found the right builder and let them do their job while having someone watching to be sure it was done as specified.

    We're not talking the electronics industry or any similar industry. You treat recreational boat builders like electronics suppliers and you're headed down the wrong road. The kinds of margins you're referring to don't exist here.

    I've done a good bit of industrial construction and we did use an engineer who could advise smaller contractors where to buy materials cheaper and safe us money. I've gone into textile manufacturers and asked for their internal cost sheets so we could help them be profitable.

    Yachts are not like that. They're not going to buy their fiberglass and resin from other suppliers. They can't trust it. Same with metals. Then the majority of other things have limited sources. You can't shop MTU engines, or Northern Lights Generators and many other items are like that with single sources.

    You go for a long negotiation in yachts and you'll lose more on cost increases during that time than you just saved. But then you insist on designing your own yacht in every way and you're going to be very limited in people who will build it and the ones who will are not those willing to negotiate. Well, except the ones who can't and won't deliver.
  19. rigoletto

    rigoletto New Member

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    I think you didn't understood me right, I never said I want them to reduce their profit (other than by regular negotiation), I indeed said exactly on the contrary - you can review.

    What I mean is I am not willing to be fooled with arrangements made with suppliers e.g. to inflate the prices of the budget, and then they make more money out of it. I have means to re-do the whole budget and assure that is not happening.

    This kind of thing can happen everywhere if you are not prepared to properly discuss the price of every part in detail. Let's get the example of a broker acting as a project manager I brought in my OP.

    I saw even worse things happen inside of a quite reputable company I am quite close, some people working in there (executives I knew and had very good reputation too) were doing personal arrangements with the suppliers to get a kick back from every stuff the company buy regularly. They were cough after several years because someone met someone in a bar and the prices were not matching.

    Also, I don't treat boat builders as electronic suppliers, I do business with all sort of business and professionals, from small to multinationals, and business for me is business, everyone want something and I look at any business like that.

    Like you, I trust on people I know but I don't trust people I don't know for free and I have serious reasons for that. Get some time in foreign trade business and the amount of scams are so high and so sophisticated even the most experienced one can fall sometimes.

    A quite well known and experienced trader in here almost fall in a pretty serious scam. The scammer had all expected documentation, fake but almost perfect, to buy commodities in behalf on UN, repeat the documentation was perfect. The only reason she didn't felt was because a diplomat friends of her come for vacation and pop up in her office as a surprise. The scammer was in there, she said he (her friend) also work in UN, the scammer acted completely natural and show him his UN identification and he saw that was fake.

    The only single reason he saw that was fake was because the UN was changed their identification card a couple of weeks before and no one had that old model anymore, otherwise he would be fooled too. So, he silent called the police.

    So, yes I am guilty to be 100% of the time prepared to be dealing with a scammer, but I have reasons for that.

    Btw, one thing I didn't understood who is in fact the builder in this conversation?

    That involve a designer for the concept, naval architects to create the (executive) project (I am looking at Lateral), project managers, people for ISM, ISPS, SAMS etc. a shipyard. What am I missing?

    Also, it is not that I do insist on a complete custom build but I couldn't find anything that remotely interest me other than the PJ SuperSport 72M and Oceanco's Esquel (and just the general lines).

    Thank you.
    Last edited: Jun 17, 2019
  20. olderboater

    olderboater Senior Member

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    No, I fully understood what you wrote and meant and I won't say anymore about it as my opinion of it is clear. I hope you plan on living a long time because your boat build will take it.

    With Lateral, your likely builder is Oceanco.
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