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How Heesen is safeguarding its business for the future

Business
Written by
Vivian Hendriksz

Despite Frans Heesen, the founder of the Dutch shipyard, officially leaving the company in 2012 after visiting the sprawling 22,000 square metre facility in Oss, it is evident that Heesen is still very much a company with a strong family feeling. 

When visiting the yard for lunch with Arthur Brouwer, Heesen’s CEO, and Mark Cavendish, Director of Sales and Marketing, the familiarity and friendliness with which the employees greet me and interact with each other catches my attention. Although the construction halls and dry docks are vast and wide, the atmosphere created by the busy craftsmen, engineers and naval architects is warm, pleasant, and reassuring.

Arthur BrouwerPhoto: Heesen

It comes as no surprise to hear that five of the original 20 employees are still working at the yard 40 years later. Even though Heesen shipyard has grown considerably since its beginnings in 1978, its focus on core values has remained the same."The norms and values of being a family company are still there, and people like that,” says Brouwer on why Heesen has such a high employee retention level.

"The other reason is that no one day is like the other at Heesen, which is the main factor to successfully attracting new personnel.” With no fewer than 13 superyachts currently in build at Heesen, employees relish new challenges and the opportunities these new-builds bring to the workforce. “It’s the same skill set, but it’s always a new and different project.”

Currently employing over 450 people full-time as well as working with hundreds of temporary employees and subcontractors, Heesen shipyard is set to continue growing its workforce and its revenue over the next coming years. “Our projected growth for the next few years is 30 to 40 percent - revenue and turnover wise, but also in gross register tonnage (GRT). Our ships are getting bigger, and therefore we need more skilled craftsmen to build them.” 

Since the launch of Heesen’s first yacht Amigo in 1979, the size of the yachts the yard builds has increased from 20 metres to 80 metres. Today the yard is capable of building superyachts of up to 83 metres, and Heesen is currently working on its largest custom motor yacht to date, the 80.7m Project Cosmos. While the all-aluminium Cosmos marks several new fronts for the yard - she will offer 50 percent more interior volume than Heesen’s previously largest superyacht, have a top speed of almost 30 knots and feature the new patented ‘backbone’ to increase structural rigidity, Heesen builds more than just custom superyachts.

Heesen shipyard yachtsPhoto: Heesen

In order to fulfil all of its customers' demands, Heesen’s business model is split into three pillars: full-custom superyachts, platform-based superyachts (yachts built using existing hull forms and engineering platforms) and speculation building. This way, potential owners who do not want to wait years for a new superyacht can still buy the vessel they want.You don’t have to buy a boat that is three years out there; it’s 14 months, 18 months or 20 months away - that has been one of the keystones of our success.”  Since Heesen has started work on larger custom superyachts, it has also started working on bigger spec builds, building up to 55 metres. “We could go up to 57 metres or so. We do not build one at a time, we build a couple, and we have timed that pretty well over the last couple of years,” explains Brouwer.

This in itself is a testament to Heesen’s growth, as not all builders are financially secure enough to invest in the speculative building. It can be a challenging option - especially for smaller yards who are inexperienced in developing a brand or turning a single model into a successful series. But Heesen has fine-tuned its spec programme into a well-oiled machine. For example, one of the most recent spec vessels sold is the 50m project Aster. Part of the Heesen 5000 Aluminium class, she was sold to experienced owners in late November 2018 as work to her exterior was nearing completion and is set to join her six sister ships next summer. But when is the best moment for Heesen to sell a new build?

“A year before you start building it. And every day after it gets progressively worse,” says Cavendish with a charming smile. “No, the best moment for the customer to buy is when all the options are still open. Changing the interior will cost time and money and disrupts the production process. But we are pretty good at adapting,” he adds.It’s what to do when you have a business model with boats on spec.” Heesen has been lucky or successful enough to have a few owners to purchase spec boats in turn-key condition, taking everything from the exterior styling to the interior decor and design. Ventura, the owner even took the name!”

Heesen shipyard yachtsPhoto: Heesen

Designing an attractive spec boat is indeed no easy task, as the yard has to predict what the market, as well as its clients, will want even before the yacht has been built. “We tend to go with a weight average of what the market will expect, a bit higher in quality on average, but it is less extreme than a custom. For example with Irisha, taking her into a spec boat programme would make me hesitate because of her specific looks,” notes Brouwer. “She is a beautiful boat but designed around specific usage. We don’t do that with spec boats. We avoid extremes as it has to be sellable.”

When working on a new spec boat, the yard has to deliberate what innovations will be coming to the superyacht segment within the next three to five years and how to implement them into the design. “It takes the team of designers, developers and sales team a while to decide on what to build and how to bring it to the market. For instance, if we have a new boat, we have to decide if it will it be an X-bow or a Pelican beak bow, which can make an enormous impact because the boat will be sold four years from then. If we miss that mark, then it can be quite costly for us,” stresses Cavendish.

Turning to the yard’s financial situation, we discuss how the yard’s spec building programme is effectively financed as the two senior executives explain the Dutch company’s financial operations. “We have our own finance lines with the bank, not with him,” points out Brouwer. “We have a very healthy balance sheet with a solvability of over 50 percent and have never underperformed - that is why the bank happily agrees to finance us.” While Heesen’s current business strategy sees 40 to 50 percent of its annual revenues stemming from is spec programmes, most clients looking to purchase a superyacht over 60 metres tend to go for a custom yacht as they have a particular idea of how it should be.

Heesen shipyard yachtsPhoto: Heesen

Despite a healthy bank balance, Heesen shipyard is not rushing to build more spec yachts, as the margin for the different types of newbuilds is the same. What’s more, the yard’s pricing for custom yachts and speculation builds is also approximately the same. “There is a bit more risk when it comes to custom, but that’s priced in because of the complexity of the build. We do consider factors, such as if we build a certain hull form or platform for the first time then there will be some inefficiency in the build. But at the end of the day, there is not much difference.” 

Heesen is only capable of building two custom superyachts over 60 metres at the same time in its docks, meaning the yard can work on three or four custom yachts over 60 metres simultaneously at different stages together with its spec boats and platform vessels. “The flipside of being so full with production, with sold boats means that you cannot take orders that rapidly," admits Brouwer. 

When walking through the facility, it is evident that Heesen is nearly working at full capacity as all the halls and docks we pass through are occupied. However, the team is well aware that its current busy state may not last, so Heesen’s business plan and projected growth is continuously reviewed. Every time the yard sells a new contract, it re-evaluates what could happen to its business within the next five to six years, taking into account changes to labour, rates and inflation. 

We create potential scenarios. One scenario takes into account what could happen if there is a slow-down in the market like we had a few years ago. We look at what would happen if we take out one boat from our production plans and what the impact would be - not just monetary wise but people wise as well.”

Heesen shipyard yachtsPhoto: Heesen

The yard has purposefully set up its business so that if it does witness a slump in demand, taking out one boat from production will not harm its workers. On the other hand, Heesen also has a scenario which predicts what would happen if it sells another new vessel within the next two to three years. “For instance, if you plan for a 60-metre full-custom, but Mark is successful in selling a 67-metre, which goes into the same hall, then it has an enormous impact on labour, on throughput times and design. It may be a positive impact on the bottom line, but I’ll have to move labour off other projects which means we may not build a 55-metre boat on spec, we build a 52-metre.”

It’s evident that Brouwer and his team at Heesen are pretty good at predicting what changes in the future may affect the company, but what are their thoughts on future trends? One of their latest concepts, X-Venture, designed by London-based studio Winch Design sees the Dutch yard branching out into explorer yachts. A new range, X-Venture features 50 to 60-metre concepts, which can be built on speculation, as well as designs for 70 to 80-metre semi-custom yachts to show the market what Heesen is capable of. “If someone comes here, it’s not a wild idea; it’s already developed, GAs and everything is ready. It’s a more active offering in the market, and it does attract new clientele to come and talk with us.” 

Heesen shipyard yachtsPhoto: HeesenAt the same time, Cavendish is also aware that the explorer yacht market is still very small in spite of the recent spike in interest. “We are not looking to compete with the SeaXplorers or anything like that,” he says. “We compare X-Venture to a Range Rover, a very luxury craft which is capable of long-range cruising.” The concept had a more rugged appeal, which Cavendish suspects will attract the younger generation of superyacht owners, who may be a little fed up of going around the Mediterranean between Monte Carlo and Cannes each season. “It’s glorious, but I can imagine that some people think there is more to the world than Cannes and Saint Tropez.”

As Heesen continues to look to the future with new concepts and rapid growth - their interior design department is set to grow 35 percent over the next year alone - it does come as a bit of a surprise to hear that Brouwer does not want to move into a larger size segment. “We started at 37 metres, but are now pretty successful in the 50 to 60-metre sweet spot where we operate in. That is where the most transaction of metal boats are.” 

The market for 90-metre plus superyachts, on the other hand, is a lot smaller and is driven by a handful of established yards, such as Lürssen, Feadship and Oceanco. But in Oss Heesen is not physically capable of building vessels over 83 metres at this point due to its current construction facilities, surrounding bridges and waterways. Also, breaking into a new category could also negatively impact the yard’s margin, adds Cavendish. 

The CEO has no plans to move production outside of Oss any time soon. “We work with our own people here at Heesen, we believe in controlling our quality by having skilled people, using a guild system,” says Brouwer. “Moving our people from this location to another is not going to work because they live here with their families. We would have to rehire and retrain a new team.” 

Mark CavendishPhoto: Heesen

This reassuring notion underlies the idea that no matter how large Heesen may grow, its values, ideals and norms will remain the same. Because at the end of the day, a shipyard like Heesen is not just a workplace, it is a community that is invested in turning individuals dreams into reality.

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