Although the majority of the industry knows Princess Yachts' Antony Sheriff as the Executive Chairman who led Princess Yachts into the black last year, the American/Italian businessman previously carved out a name for himself within the automotive industry before taking over the management of the British yacht builder. He is credited with overseeing the launch of McLaren’s first sports car production models since the McLaren F1, and since joining the team at Princess in January 2016, his bold and unconventional strategy has led to record-breaking sales.
After heavily investing in R&D, expanding its workforce and launching new products, such as the carbon fibre R35 and the X95, Princess has become one of the top ten superyacht builders following the global financial crisis in the world.* To learn more about Princess Yachts' ongoing success, how it is fortifying itself for the future, and Sheriff’s view on yachting, we spoke with the Executive Chairman himself. Photo: Princess Yachts
You made quite the switch from the automotive industry to the superyacht industry when you joined Princess three years ago. Are there certain things you think the yachting industry could learn from the automotive?
I think there are a lot of interesting things in the superyacht industry which the automotive industry could learn from. But there are a heck of a lot of things in the auto industry, that if applied intelligently can change the game in yachting. The yachting industry is still somewhat immature. Many companies started out in a shed many years ago, as did Princess, and are now grown up. But it’s only as they've gotten to a certain size, where their business has become too big to manage without proper processes, and their products have become more complicated with the speed of development, that the industry’s lack of professionalism has become apparent.
Funnily enough, the thing that really surprised me is that this should be the ultimate, super luxury business, yet it’s not run as such. There is nothing more discretional than buying a superyacht. But superyacht businesses do not have a clear understanding of what luxury is or how to run a luxury business. They over-produce and are not as focused on certain services as they should be.Photo: PininfarinaYou introduced a new business strategy at Princess with the aim of transforming it into a ‘true luxury business.’ Can you tell us a bit more about this strategy?
It's quite simple. We started off by cutting production because we were overproducing and trying to keep the level of demand higher than the level of supply. We have put more focus on quality - both build quality as well as design quality - and we're spending more money developing our boats. We launched ten new products in 2016 and 2017 combined, we have launched seven new yachts this year and will introduce three more over the next three months, and by 2019 to 2020 we will launch 15 new products, so we're getting more aggressive.
We are spending more time during the upfront design process to ensure we offer better aesthetics as well as functional features, and we're focusing more on after sales service as well. We asked what the ownership experience is like and how we can make our customers' life more enjoyable.
One of our value propositions is that we make everything ourselves, partly because we are quite isolated, but it's turned out to be a fantastic competitive advantage because we can control the quality. We can push manufacturing to make things that other suppliers won't make. It’s kind of funny - since cutting down on its production, Princess has witnessed a surge in orders. It seems antithetical, but that's what happened. We are predicted to produce just under 300 boats in 2018 and have record advance orders through to 2020!Photo: PininfarinaPrincess’s strategy heavily focuses on cutting down on the number of products while investing in the development of new products - how do you ensure the new products stand out?
We're trying to cover the market much more broadly and make sure that at any given time we have the freshest, most up to date product range in the business. We are not just replacing older models; we are also expanding the range to include different types of models, such as the R35 and the X95. Every time we start working on new products, I challenge my team to tell me what features there will be on the boat to ensure we are not making ‘just another boat.’
If you look around, there are a lot of boats coming out, which are too similar to their predecessors. Maybe they are slightly bigger, with more space, but what’s new? If you have nothing new to offer in your new product, then we are not interested. Everything we're doing now has something new and interesting, whether it's the layout, the technology, or other features that we haven't been done before to enhance the user experienced. For example, the X95 is a complete revisitation of what the layout of a large motor yacht needs to be. We moved things around and managed to create 40 percent more interior space and about 15 percent more exterior space on any given hull size.Photo: Princess YachtsIn addition to investing in new products, Princess Yachts recently expanded its team to 3,000. Do you aim to continue growing your team and has it been easy to find these employees?
Not really, it’s been a struggle to find the people we have now. We mostly hire locals, but we have a number of European workers who’ve come over as well. There’s a big boat building community in Poland, but there's also quite a large Polish community in Plymouth.
Photo: Quin BissetDo you think that a yacht model which may be more limited in supply automatically becomes more desirable?
There is a virtuous circle in the yachting industry, which if you do it the other way it’s a death spiral. I would say that many of our competitors are in the death spiral. In the virtuous circle you produce fewer boats, therefore your order bank goes up, and you can be more efficient with production. There's product scarcity, so you need to discount less, and may even price your products a little bit higher because you're discounting less. The residual value of old, pre-owned boats then goes up, and it becomes quite attractive to buy one because you don't lose as much money when you trade it in. In turn, demand goes up, and because there is insufficient supply to meet the demand, people want to buy the boat even more, which extends the waiting list out, and the whole virtuous circle starts again.
However, if you do it the other way and you build too many boats, and then you have to discount. You drive the residual values down, and you lose 40 percent after two years, and nobody wants to buy that boat because it's a money pit. In order to sell the boat or another boat you've got to discount even more, and you go down the death spiral. It shocks me to see how many companies that are in the death spiral still give a discount.
As a policy, Princess does not have yachts in stock. Our dealers do have a handful of boats in stock, but it's one-third of the level that it was just two and a half years ago and they only stay in stock for a month or two. We're in a very healthy position at the moment, and it's contributed to the company setting record revenues this year.Photo: Aurélien Herman / SuperYacht Times
Is there a particular type of clientele Princess Yachts is trying to attract through its renewed product offering?
No, not really. We appeal to anybody who appreciates the fun in boats. Princess as a brand offers a level of understatement which is nice - we don't go after flashy customers. Our designs are understated, although they’re becoming much more evocative.
If you look to automotive design, a lot of the Italian cars from the 1960s had these beautiful, long, flowing lines that ran the length of the vehicle, which were designed by hand. But these curves were taken from yacht design and applied to cars. Nowadays a lot of the superyachts on the market look like angry Pac-Men with lots of jagged lines. You struggle to see a line which starts at the bow and ends at the ends of the stern.
We're trying to bring back a little bit of the romance of what a beautiful boat is supposed to be. Our customers also tend to focus a lot on the quality of the design and build. We’re pushing the perceived quality up, which means the quality of the materials that we use to make the boat ensures you feel that you're on an X-million pound boat.
Looking to the future and yacht ownership, do you foresee any shifts when it comes to models of ownership?
It seems like everyone is talking about what to do - is there going to be a push for yacht sharing platforms? The yachting industry is perhaps among the most evolved when it comes to leasing and sharing boats, so it’s difficult to come up with something very new. You've got to think of something that is notably unique and offers a better possibility of people to experience yachts.
At the same time, I think there's a whole swath of the market that has all the money in the world to buy a yacht, who may even have the propensity to because they own a super sports car and the idea of buying a toy is perfectly natural to them, but we don't attract them at all. We tend to attract buyers from the same area where our current customers are. To attract new customers, we need to create products that are more accessible and attract the interest of people who may not be traditional boat buyers.
Photo: Ocean IndependenceWhat areas within the yachting industry do you think could be improved on?
Honestly, all of them. Suppliers need to up their game and improve their quality, manufacturers need to improve their quality, and marinas need to improve their quality. The bases are all there, but it's not enough to simply offer a product. It needs to be high-quality and reliable. It also needs to be repeatable, and it needs to be predictable, and that's something that will only come with time.
Customer service also needs to be improved, especially the level of responsiveness, because ultimately we are all working for the customer. The superyacht industry needs to become more mature, especially when it comes to its expectations of what quality levels are acceptable. This is a business that tends to build boats and then add quality as opposed to building quality, and we're desperately trying to change that now.
With the date for Brexit looming, what impact do you think the UK’s exit from the EU may have on Princess Yachts?
No matter what happens, we want to stay in the UK and continue manufacturing here. Honestly, it would be an awful lot of disruption for us to want to move from where we are. At the moment the potential impact of Brexit is positive for us, bizarrely, because we have some degree of exchange rate benefit. But as with every other business, all you really want is stability and free trade. If you have economic security and free trade you're right, so I'll leave it up to the politicians to make sure we get that. If there are no tariffs, we're good.
Lastly, where do you see Princess in the next five years?
We want to offer the best quality boats in the industry. We do believe that we have designs and design qualities which have taken us a huge step forward. We know that our seakeeping is fantastic, we know that our layouts are very appreciated, and we know that we have the technologies that make our boats even more efficient than they were before, so now we just need to screw it together.
(*according to the number of 30m + superyachts delivered, based on SuperYacht Times iQ data.)
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