Editor’s note: This is the second in a new series on MegayachtNews.com we’re calling the Superyacht 101 Series. For an explanation as to why we launched it, see “Introducing the Superyacht 101 Series.” For this article, we spoke with Burger Boat Company. Jim Ruffolo, president of Burger, and Ron Cleveringa, vice president of sales and marketing, explain the importance of choosing a pedigree yard, why price alone should never influence your decision, and other advice to make the relationship right for both you and the yard.
Q: The term pedigree is used a lot in evaluating a shipyard; what does, and should, it mean?
A: “Pedigree yard” means several things. A pedigree yard is one that has a long history in business and has earned the respect of its clients, the industry, and those who aspire to own the brand. Pedigree can only be earned by establishing a long history of building meaningful relationships, demonstrating ethical behaviors, and finally, by reliably delivering high-quality projects and services. Its brand can be easily identified and is both revered and sought after. Shipyards with pedigree offer more than just a product, they offer membership into an elite group and lifestyle, even a family. People who own yachts from a pedigree yard own a piece of history and are immediately welcomed by other owners of yachts of the same brand. As our ownership aptly puts it, “We are not owners of Burger, we are its caretaker until the next generation takes over.”
Q: Related to pedigree is the cost of ownership. Why do you think some buyers mistakenly focus solely on purchase price? How would you define the Cost of Ownership?
A: We believe that it’s because they have not been fully informed. This is not exclusively their fault. Currently there are so many advisors who, due to their own lack of knowledge, have helped to create a strategy of shopping shipyards based solely on price. Yes, the initial purchase price is very important. However, it cannot be the only driving force.
The industry is well aware of instances where a “great deal” turned out to be a miserable and costly experience. We strongly believe that buyers should view the real price of a yacht as the Total Cost of Ownership (TCO). The essence of the TCO concept is that the full cost of the decision can only be determined if one considers the costs associated with buying, owning, and selling the yacht. These include the initial cost (the purchase price), the additional costs associated with unexpected repairs, and finally, the resale value of the yacht. A pedigree yacht will always minimize the unexpected repair costs and will ultimately bring a higher resale price, thereby lowering the TCO.
We believe that influencers needs to learn about, understand, and embrace the essence of TCO, and then make it a point to clearly explain it to their client. Clients not only expect, but deserve to be given all of the facts in order to make the right purchase decision.
Pedigree shipyards provide lasting value to the owner. Although many yards offer similar-looking vessels, the informed buyer will find that specifications vary greatly, and that in some cases the initial price leaves out many important items that come only at significant additional cost. A pedigree shipyard’s internal standards assure a much higher level of quality, service, and safety. The safety of those aboard needs to be placed far above the allure of the lowest price.
Q: When a client has a preliminary design, it’s helpful to get the yard involved early in the process, but what does “early” mean?
A: The timing depends on where the client is in their decision-making process. The best results are achieved when a three-party team consisting of the owner, a designer, and the shipyard is developed so that all can contribute to the project from the beginning. This way the design does not get too far down the road without having the third leg of the team—the shipyard—involved. Yes, this means researching shipyards and, if possible, narrowing it down to the yard of choice. A pedigree yard can help move the design forward with the best interests of everyone in mind and likely reducing the cost.
As to what we like to review, because every design has different features and goals, we prefer asking a few questions such as what is the vessel’s estimated gross tonnage, whether there will be a bulbous bow, how the tender will be launched, and whether enough space has been allocated for engines and mechanical equipment. We also like to see examples of the interior being envisioned, perhaps photos of other yachts the client likes. Since we have our own joinery shop, our joiner team will review the G.A. for typical shipyard construction practices. We want to work with the designer early to incorporate cost-saving practices.
Q: If a client sends you a preliminary design and asks what it would cost to build and how long it would take, is this putting the proverbial cart before the horse?
A: This is actually too typical. We understand why clients want to have a feel for the cost before committing to a yard however, we do believe this is putting the cart before the horse. If a yard provides a ballpark number over the phone, as is often requested, how would the client know what is included in order to properly compare yards?
Our recommendation is that the client should visit the shipyards under consideration. During these visits the client can review the shipyards capacity, facilities, processes and people in order to determine if a working relationship can be developed.
Q: Why is it important for clients to reveal how many other yards they’ve approached?
A: It may seem strange on the surface, but when there is an understanding of which yards and how many are being considered, this lends valuable insight into a client’s end goal.