This article titled “We’re going to need a bigger boat: UK yacht makers buoyant as buyers cash in on Brexit” was written by Rupert Neate Wealth correspondent, for The Guardian on Thursday 11th January 2018 06.00 UTC
Whether it’s over pints of warm ale in a mocked-up canal-side pub or flutes of champagne on the bow of brand new 76ft (23-metre) luxury yachts, the London Boat Show’s organisers were raising a glass to Brexit on Wednesday.
The collapse in the value of the pound since the referendum vote in June 2016 has fuelled a boom in British boat building as the vast majority of UK-built yachts are sold overseas. Boats and equipment sales totalled £3.1bn last year – a 3.4% increase on 2016 and the best year since before the 2008 financial crisis, when rich people’s appetite for new yachts evaporated.
“We suddenly became 15 to 20% cheaper than our competitors in Europe and the US [after Brexit],” said Russell Currie, managing director of Fairline Yachts, at the opening of the London Boat Show at ExCel in east London. “It’s been a fantastic year.”
Currie said 95% of the company’s yachts, the biggest of which sell for several million pounds, are exported so the collapse in the pound has made its vessels better value compared to European and US rivals. “That doesn’t mean that only 5% of owners are British,” he said. “Most of them are British but they are buying them in a sunnier climate than ours.”
Brexit has helped Fairline recover from collapsing into administration two years ago. “We’ve gone from zero employees, with zero contracts and zero dealers in January 2016 to more than 380 employees, and a full order book,” Currie said. “We’ve sold 162 boats in the last two years … no, 163, we sold one this morning.”
Currie explained that Fairline’s customers, who he said are generally very rich with self-made wealth, are increasingly demanding bigger boats, which had created a headache for the company which is based in landlocked Oundle, Northamptonshire.
At present Fairline’s boats are transported to the sea by lorry in the middle of the night, but doing so has limited the maximum size of its yachts to 78ft.
“Our Oundle base is nowhere near the sea, and the cost [of transporting boats to the sea] has compromised the size and design of our boats,” Currie said. “So, we have invested £30m in a shore-side manufacturing facility on Southampton Water.” The company will hire about 200 new workers in Southampton.
The new base will allow the company to match its customers’ growing demand for roomier boats. “We have made 115 78ft boats, and 80 65ft boats, that gives you an indication of the appetite – they want bigger,” he said. “Buying our boats is how our customers reward themselves for the success they have achieved.”
Currie said the company’s customers tend not to be too ostentatious, but have been been known to buy “seven, eight, nine or 10 Fairlines – but not all at the same time”. He said the company’s strategy is to encourage owners to start small and then upgrade to bigger models as they get more experienced with yachting, and their bank balance grows.
“They want to bring their families and enjoy their free time,” Currie said of his customers. “They tend to be very family-orientated , they want to enjoy their wealth rather than show their wealth.”
Even Fairline’s Russian owners Alexander Volov and Igor Glyanenko, who bought the company out of administration for £4m in 2016, do not own the brand’s biggest boat. “One owns a 42ft boat the other a 62ft,” Currie said. “These are conservative guys. These are very hard-working business guys – this is not an oligarch story.”
Sales are so strong at Poole-based Sunseeker International that the now-Chinese owned company is splashing cash on sponsoring the 2018 Fifa World Cup in Russia, which will allow the company to invite a selection of its super-rich customers to the tournament.
Phil Popham, chief executive of Sunseeker International, said Brexit had helped fuel “very, very strong growth” and he expected 2017 sales will have increased by at least 10% on 2016. The company collected revenue of £252m in 2016, an increase of 26% on 2014.
“We sold 140 yachts last year, and we expect to sell a lot more than that this year,” he said, on the bow of a newly launched 76ft model. “We’ve sold 90% of our production for 2018 already on forward order.” For some larger models customers will have to wait until 2020 for delivery if they order now.
Popham said demand is strongest for superyacht-sized models, including the largest 131ft Sunseeker, which costs £16m plus tax. “It takes 10-12 guests and requires seven crew, it really is a superyacht,” he said. “We’ve sold 125 boats over 100ft since 2002.”
Sunseeker is now the world’s largest producer of yachts over 85ft, turning out about 30 a year.
While Brexit has helped make Sunseekers more price competitive, Popham said cost was not the primary motivator of his customers. “This [he said tapping the yacht] is a discretionary purchase, no one needs a superyacht.
“The world is becoming more and more affluent. There are more ultra-high net-worth individuals than ever before, we see that trend continuing and that is clearly our target market.”
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