Princess Yachts is making a boat each day as it recovers from global upheaval

Post by: TheYachtMarket News
26 July 2016

Luxury yacht builder Princess Yachts is producing a vessel a day as it recovers from the global upheaval which caused it to shed 172 jobs in the first half of 2016.

The Stonehouse-headquarted firm had initially feared it would have to shed 350 workers as it restructured in light of huge challenges in its global market place.

The manufacturer, which has sites across Plymouth, called a meeting with more than 2,000 staff and unions in January 2016 and said jobs would be going across the company including in back office and in its development and production divisions.

The firm, which marked 50 years in business in 2015, said the redundancies were "regrettable" but part of a strategic plan to improve productivity.

But the company stressed its underlying business was strong, that it was not pulling out of Plymouth, remains a major employer retaining 2,000 people, and even expects to grow in 2016.

Nevertheless, the firm said the yacht industry had faced a set of "unprecedented challenges" which had led to it suffering a £11.3million loss in 2014.

Factors hitting the export-heavy industry include unfavourable euro/sterling exchange rates, recession in target markets, political upheaval in the Middle East and Russia, a slowdown in the Chinese economy, and even the 2014 storms which battered the South West.

In December 2015 Northamptonshire-based competitor Fairline Boats went into administration after what Princess Yachts described as a "gruelling year for Britain's yacht-building industry in 2014/15", which saw other manufacturers suffer factory closures, redundancies and insolvency.

However, Princess Yachts stressed its core business was sound, with a strong order book and that it has pumped "multi-millions" of pounds into developing three new M Class yachts, of which it has already sold a "significant" number.

Indeed, Princess Yachts' management said the development of these boats had required an increase in the number of workers, some of whom are now not needed as the boats enter their "running phase".

The company also stressed it had "weathered" the recent global turmoil, and indeed the recession from 2008, maintained high staff numbers, and had posted a profit of £4.8million in 2013 and recorded turnover of £239.5million in 2014.

It said it is looking at implementing a range of long-term strategic measures designed to steer the business securely into the future.

With six new models across the M Class, S Class, V Class and Flybridge yacht ranges taking the company into new markets and sectors, and strong order books following good performances at the Cannes, Southampton and Ft Lauderdale boat shows, Princess Yachts said it had entered 2016 with "assurance and optimism".

It stressed there would be no loss of capacity and an ongoing investment programme will see its range develop further, and new initiatives secure greater market share and brand recognition.

The firm would strive to secure "a bigger share of a smaller market" and challengers, its main competitors being Britain's Sunseeker and the Italian firms Ferretti and Azimut Benetti.

In January, Swiss-born, American-Italian former managing director of McLaren Automotive Antony Sheriff became Princess Yachts' new chairman.

He said: "We have a solid order book and a very broad and complex product line and are trying to find other ways to maintain that very strong product line and simplify what we do internally

"But we are definitely in an upswing and are very busy, we are churning out one boat a day.

"Some are 39ft sports boats, some are 40m super yachts and quite different. We build a broad range.

"We are very strong in smaller boats and building strength in bigger vessels.

"We have a base of customers who started buying smaller boats and worked their way up the range, coming out at super yachts. There's a loyalty."

Mr Sheriff (above) said Princess Yachts is experiencing "solid growth" in the USA and the European market is growing.

"Currently Europe is the biggest market, USA is second," he said. "But we sell all over the world: the Middle East, South East Asia, Latin America, Scandinavia."

He said this world-wide reach enabled the firm to offset shifts in the global economy, which has seen turmoil in areas such as Russia and the Middle East.

"Some markets will come back," he said.

Mr Sheriff stressed the commitment to the finest British materials and peerless craftsmanship will always set Princess Yachts apart.

And he stressed a huge part of that is due to the firm's location in Plymouth. He said the company is unique in that it constructs every boat from scratch in the city.

This gives Princess Yachts control over the quality as it eschews importation of inferior components.

"Pretty much everything on this boat is made here in Plymouth," he said, standing on board an S65 vessel in King Point Marina. "Journalists from all over the UK, Europe and South America have been amazed at the detail of the work we do.

"It's unique among our competitors and testament to our workforce. And that level of thought and detail is unique because we do everything ourselves."

"I went around the boat shows as the new kid in town and thought the level of finish and quality was top notch."

Mr Sheriff stressed the use of skilled labour was vital to the development of the boats and said: "One of our challenges is to keep these skills in the area."

He also stressed the USP of Princess Yachts extended to "making proper boats", by which he explained: "Out sea-keeping is fantastic. They are manoeuvrable boats that can handle all sea conditions.

"There is quality and elegance, but out boats are not flashy, there is understated elegance. And they are not dull but contemporary and won't go out of date.

"And the other part is how we take care of customers, the level of service we provide. A beautiful boat that can't be repaired, or the after sales are poor, will see customers leave in droves.

"If you can offer a first class product with fantastic after sales you will never lose customers."

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