With the world now in a virtually complete shutdown all wheels seem to have come to a standstill. Apart from the major impacts in our personal lives, job worries, anxiety and the frightening restrictions of civil liberties and personal freedom, as a sailor and a employee in the boating business, I am thinking a lot about how Corona might change the business and sailing in general. For I am not (and nobody is) able to look into the future, there are some scenarios worth exploring.
As the global economy comes to a halt, whole key industries stand still, commercial shipping lanes are rarely travelled as big container ships are moored, large ports closed and hundreds of thousands of people on short-time work or even laid off, it will surely have an effect on the boating business: Yards are closed all over the world (well, most of them) and workers bound to their home office. But of course, you cannot laminate a hull from your home office-sofa …
Cautious Optimism vs. dark prophecies
Is there a shutdown, or not? Well, officially yes. The French yards are closed as there is a very strict curfew imposed by the government. For Beneteau for example this means that a total of 13 production sites are shut down and secured. 15 different sailing yachts from 14 to 62 feet cannot be built. Ridiculous: The yards are not closed because of workers being infected, they are coming to a halt because no truck can leave and the parking spaces of all sites are cramped full with finished boats. Nevertheless, Polish-based production sites are still open and no restrictions whatsoever imposed: Production is on normal level, trucks can leave and deliver boats at least to their commissioning ports. Well, at least for now, things change quickly these days …
Same goes for the Italian brands, as far as the shutdown is concerned. I talked to Gianluca Neri, CEO of Aquilea-based high-end brand Solaris about his general opinion on the impact of the Corona-shutdown on the industry. “We are entering a deep crisis, which will last for at least two years.”, he said: “It will be mainly the mass-production range of products which will most suffer, and most likely those products intended for charter use I think, even if we do not have experience in this field. Generally speaking, for the next year the shipyards which do not sell direct to the clients will be more affected by the crisis, because their distributors will have to sell off their current stock boats. For the high-end products the market I expect it to keep on, although of course the market could suffer some decrease for some time, but more modest. Solaris Yachts falls into this category.”
An interesting connection: People losing their jobs, cannot afford vacations, won´t charter boats, charter-companies won´t buy new boats … a pretty somber outlook.
Solaris-CEO Gianluca Neri says: “We don’t know what might happen. Some of the shipyards which are economically and financially weak may risk closing. But the customers’ behavior is unpredictable. If on the one hand they could re-discover a kind of nautical tourism more “isolated” and away from the crowd. On the other hand the crisis will for sure lead them not to spend extra money and to opt for a more sustainable lifestyle and possibly, in this view, the sailing yacht market could have some chances to make it.” That is more optimistic view which by the way I share as well: No matter how long this crisis will last, in some way, we will get through it and afterwards people will of course have a need for spare time activities, vacation and “good life”. Boats will always be part of this longing.
Magnus Rassy, CEO of Swedish luxury brand Hallberg-Rassy, sends me an email that is brimming over with confidence: “Our Hallberg Rassy-yard works absolutely normal and we have no reason not to continue to deliver boats on time. The number of ill workers is so far on a completely normal level, or even less than normal – we still do not have a single confirmed Corona-case amongst our team. Also, all deliveries of components from sub suppliers work as normal. Our financial situation is strong and we are debt free. We are getting our first demonstration boats ready in the water. It is more a question how our many non-Swedish visitors have issues of reaching us here in Sweden due to travel restrictions. But if you can get to us you are welcome visiting us and we can show you boats, sail and deliver boats.” Magnus Rassy sees a bright spot and a positive byproduct of the crisis: “The Swedish Krona has weakened considerably since the Duesseldorf boat show and that makes it an excellent opportunity to order a new boat now.”
I agree with Gianluca and with Magnus in parts of their analysis. Seen from a customer´s perspective there might be advantages, like a weak currency and big unsold stocks in the yards (maybe or maybe not leading to a decrease in boat-prices) and on the other hand a loss of sales results could lead to complete insolvencies and closing of yards – just a quick reminder of Oyster´s bankruptcy due to just one single boat. It is a pendulum going from “chance of my life” to “Zombiecalypse”. And let´s not forget the personal circumstances of each individual life of the clients: If they lose their jobs or income, they won´t be able to finance not even the cheapest boat with the biggest bargain. Apart from that: Who wants to buy a boat from a brand that might not survive this crisis? Me personally, I think it all depends on the duration of this shutdown: The faster the economy is re-started again, the better the chances we all can shake off the shocks of Corona and try to re-start a normal life – as well as buying boats and sailing them.
Complete Standstill in Marinas
I do not know in every detail the situation in the ports and marinas in the U.S. or rest of Europe, regarding Germany and our neighboring countries, for now there is a strict ban on entering harbors as a private person and boat owner. Sailing out of ports and entering ports from seaside is strictly forbidden – so that´s a complete shutdown for pleasure crafts here in Europe. Besides, with a curfew in place, you are not allowed to leave your home other than to get food in many European countries.
At least, some countries have exceptions. There might be some for private boating clubs for example and I´ve also read of marinas allowing single persons entering the area to work on their boat on dry stand. Good for me, because I am in the middle of selling my own boat and magically there are a lot of people interested in acquiring my King´s Cruiser 33. But visiting my boat and taking a look at the marina I can only see the professionals working (but not full force) and seldom a private owner on his boat. It will be a very late start in 2020 sailing season for sailors.
However, commercial riggers and marina-workers are allowed to resume, which is good. Referring to the earlier assessment of this situation by Magnus Rassy and Gianluca Neri, the boating industry is not shut down completely. Last week our first Oceanis 30.1 boats had been finished by the yard and went on their truck-transport to be commissioned and rigged for the clients: We are ready to re-start with full power once the restrictions are lifted, which makes me tend towards a more optimistic view in the outcome of this crisis, business-wise.
A change in sailor´s minds?
What I find very interesting, apart from the question which brand will make it and which maybe not, is how the market might change client-wise. As I said before, in order to buy a boat people must have a steady income and financial reserves. That said, simply: They need a job. But how will budgets change? How will mindsets change? Will there be a shrinking market? Or will the market size of boat buyers remain reasonably the same but budgets shrink? I can imagine that we may see a shift in sold boat sizes: Away from the exaggerated oversized big boats to smaller (more affordable) boats, maybe trailing-ready boats, no need for a berth, no need for large maintenance costs.
Will prices drop? Well, all yard-representatives I asked negate this and currently prices of boats haven´t changed. I guess that´s mainly a psychological decision not to send out a wrong signal to the market and yards will be able to maintain this policy as long as they have enough reserves to negotiate through this crisis. But the longer the shutdown takes, the less turnover is generated, the more demand ceases, the more the automatism of decreasing prices in order to stimulate sales will set in. For now, only stock boats might see a price-reduction as dealers – which surely aren´t as financial potent as big yards are – try to turn over their GRP into cash. People with budget in their pockets and the will to acquire a new boat might have a chance for a really great bargain right now: Just look for dealers with brand new stock boats.
Another factor to bear in mind is how the boating industry works in terms of normal owner-sailors. I am not diving into the market of directly sold charter fleets because I am not really an expert in this topic. Regarding a private client, the normal procedure is selling through boat shows. Almost every client I sold a boat up to know at one or another time met me on a boat show. Which is logical: Boat shows are a chance to finally see and feel a boat in reality and a way to compare different boats to each other. Now, all boat shows are cancelled until late summer and I fear that Cannes in September will be the first major boat show after the crisis. So, dealers are facing a very tough time without any spring or summer boat shows. On the other hand: Once restrictions are lifted, people will be crazy buying everything connected to spare time, vacation, getting away. After the crisis, I am sure, boats will see a skyrocketing demand, thus an increase of prices is very likely.
So, what about my own plans? Well, the plan to acquire a big aluminium yacht is of course completely on hold since the project to re-finance this purchase has been cancelled as well. There is more to this fact than just Corona but in essence the virus was the final nail in this project´s coffin. So, back to start again. I regret this very much on the one hand but on the other I see doors opening when others get closed: I am back to thinking “go small – go now!”, re-scheduling my plans, being creative in setting up new projects to raise funds and taking others, smaller boats into consideration. It´s exciting and – strange to say it in the context of the viral crisis going on right now – it´s fun to play around with different ideas.
I hope you, dearest readers, have a similar approach: Stay healthy and keep up the faith, be strong. You can be sure that the sailing virus will persist and don´t forget that Poseidon, the God of the Oceans, is the coolest of them all! Be safe, guys.
You might also be interesting to read:
At RM Yachts of La Rochelle – before insolvency
At the Oceanis 51.1-production of Beneteau
Handbuilt marvel: A Berckemeyer in the making