By Ed Slack
Ed Slack speaks with Richard Hadida, CEO of Oyster Yachts
Richard Hadida: Everyone is back at work, and we are recruiting in both yards, we’ve got a big recruitment drive going. So actually, our momentum is increasing throughout COVID, not decreasing… the objective was by December to have these extra people, we need a hundred more people, and we’re still on that path to find those people.
Yes, we’re at capacity for the next two years, so we’ve got boats to build and we’ve got a two-year waiting list, as it were, right now. So, we’re in good shape. We’re focusing on every part of the business and we want to build the boats… that involves production, we are trying to enhance that production as much as possible whilst keeping all the DNA, and the things that are most important about Oyster which is the craftsmanship, and the safety, and the beauty of the things. So that’s all work in progress, but that’s not a quick decision, it is a long process of making things faster, or making things more efficient. But I couldn’t be happier with the way the business is right now.
When I bought the business, there wasn’t a bill of materials which is the big list of everything that goes into a boat. There wasn’t one, right? So therefore there was no line item list for every single boat, of every single piece of equipment, and stuff that you need to build a boat. So it’s very hard to price a boat when you’ve got no idea what’s in it. So even just getting the bill of materials absolutely down in black and white so we know what it costs, and we know what’s involved in hardware, and equipment, and whatever, that was an important thing. You know, that was part of the previous Oyster’s problem, no question about that. And … now, we’ve built a wiring loom division which creates the loom for the yacht, and the yacht’s looms are all built off the boat now, with it all laid out room by room… we now have wire printers that print on every single wire what its job is in life. So if you pull down a piece of the headlining and you find a wire, you’ll know exactly what that wire is, and you won’t have to then try and use testers. So anyway, the point being, we now have the looms completed for a yacht even before the hull has arrived at the yard for building. So there are efficiencies like that, that can have a huge effect on the boat. And then the other thing is we’re trying to build bigger and bigger items off the boat, where we have all the carpentry skills and they’re creating all this cabinetry, a lot of that now is done and completed off the boat.
With our new brand new 595s and the 565s we now create the whole engine room with everything in the engine room off the boat, and then drop it in … So production efficiencies like that only add value, because they increase the speed. And of course, everyone wants their boats usually sooner rather than later, so anything that I can do to bring that boat forward means that same bay can start building other boats sooner. And of course one thing that we haven’t had a problem with at the moment, long may it last, is orders. So like I say, we are full for two years and of course, if you end up being full, then you might end up suffering because someone doesn’t want to wait three years for a boat, they want a boat in a year and a half or whatever it is. So it’s trying to balance the demand. It’s a difficult thing to do.
We’ve modified it, because originally there were more boats in the range and I felt that it was a bit too complicated. So we’ve got six yachts, the 565 and the 595, which are the traditional self-sail boats, and they’re both brand new. Then you’ve got the 675, 745, 885 and of course the 1225 which is big, very big, and that’s also brand new. The first one of those, ARCHELON, has just sailed off this year and up for some awards. So I think we have to be able to then go where the demand is. So we’ve had a lot of 885 requests, we’ve sold a few of them recently. But maybe if we hadn’t sold them we might have sold more 565s. So again, it’s just being able to adapt as the demand fluctuates around.
We’re well under way doing that project. Richard Matthews, who is the founder of Oyster back in ’73. After he sold the business he had nothing to do with the it going forwards. So when I bought the business, I invited him back onto the board and he’s now very much involved in bringing our new baby Oyster to life. Which is great because he’s got huge experience. She’s going to be a beautiful boat.
To be honest with you, we’re now heavily into the wait-list on that one – we’ve already sold every slot and we’ve got people wait-listing up, so we’re now trying to work out how we manage that going forward. So this has become, no question, more and more popular. It’s interesting because we’ve had bumper brokerage sales through COVID, like the biggest brokerage run ever, I believe. And then chartering has gone through the roof as well. And people are not taking one-week charters, they’re taking one-month charters. So maybe in the old days they might, I don’t know, go to a hotel here and then take a week on the boat, and then doing something else in the Caribbean for example… we’re getting long charters.
I believe there will be more and more people who are nervous about going to hotels, and if you know your crew haven’t got it, and you’re on board, then you know you’re okay. And also maybe next time, if there’s a resurgence, they know they can go to the boat and position the boat in a place where there’s very little COVID activity.
It’s hard to say for sure, but I do genuinely believe that, and I’ve said this many times, but I bought the business because I believe the brand is the strongest brand in the world in the segment that it occupies, and owns that segment of blue water luxury cruising. And you can’t create a brand like that today, it doesn’t exist because of the adoration that it has had for 45 years out there. And I do believe that it’s becoming sort of socially a bit less acceptable to be driving around in massive powerboats, and I do believe the children of today influence their parents. You know, “Daddy, why have we got two and a half thousand horsepower engines on our big boat? Why couldn’t we fly around the world without causing any carbon issues?” And which of course, yachting is the original hybrid, I mean, it’s there.
People say to me, “What are you going to do? How are you going to make your boats ecologically friendly?” And I’m like, “Well, they are.” I mean, they sail around the earth using wind. I mean, you can’t improve on that. We’ve got research division looking at what else we can do, but they have to be real things, right? For example, everyone’s talking about, “Oh yeah, what about banks and banks of batteries?” Well yes, you could have banks of batteries, but it’s not like a car. A Tesla you can plug it in at home, you can drive 300 miles and plug it in somewhere else. If a yacht is going somewhere, you can plug it in for a day at the port, maybe, and then how far do you get on that battery? And yes, there are other systems for putting power back into the batteries, and that takes away speed, which is a good thing. You can pay a knot to then have all your hotel systems, or some of the systems catered for through banks of our batteries and stuff like that. So we’re looking at how the latest technology can make our yachts even greener.
I’ve been funding it, and I mean I’m pushing real money into lots of areas within the business and bringing them up so that they are fully fit for purpose, and I’m not shy of investing. I wanted to do as much investing at the front, so that then once we’re good, we’re good. So this year is still in the investment stage, but like I say, as of the end of this year, every single bay is full, and so there’s no question that looking forwards we’re back in the land of black and I won’t have to be writing checks every month. But yeah, obviously I have had to put a lot of money in. But we will be in profit next year.
One of the things I did when I bought was say “We’re going to put the prices up by X and there’s going to be no negotiation, there’s no discount, zero discounts.” And my sales guys are like, “You’ve got to be kidding me, we have to.”
And I’m like, “Well no, because if everybody knows that there are no discounts, and more importantly everyone knows that no one else is getting a discount, because that’s what they really care about. At the end of the day, they want Oyster not to go into administration and to go belly up again.” I mean, that’s the most criminal thing that can happen. So as long as the business is safe and secure, the value of their boats is going to be better and it’d be better for everyone obviously, everyone wants the brand to continue. And remember that people that buy Oysters, nearly half of them are bought by people that already have Oysters. So once you buy your first Oyster, it’s the beginning of an Oyster journey probably for the rest of your life. And so, they want to buy the next Oyster and trade up, or whatever they want to do. So again, I think, nobody objects to a company making a profit, in fact, they want it to.
There was a period of time when lots of negotiations, people were trying to negotiate, and I just said, “No, no, no, no, no.” And so, there were no sales for the first two or three months. And then suddenly… boom, everyone … Because a lot of people talk to each other and then they all realize that no one was getting any discounts, and they’re like, “Well, I better get my order in or I’m going to end up having to wait two years.” And nobody can argue with that. I think it's sensible, it’s common sense, isn’t it?
I would say that we’re definitely attracting younger [buyers], I mean, okay, everyone that buys an Oyster by the default is successful in whatever they do. And they’ve also got this adventure gene,right? But at the same time, they know they can rush it into the harshest conditions and they’re going to be safe coming out the other side, so they have this kind of adventure gene in them. And I meet a lot of them, and I count a lot of them as friends now, and it’s not an old set of people. The people that are buying these new boats are young successful people. The generations of today are wanting to go round the world on a yacht with their kids. And so we’ve got a couple of people signed up for the rally, one guy, young family, he’s 40, his wife’s 40, the kids are eight and nine, so they’re not at that teenager state, but at the same time they’re young kids. So they’re going to do a two-year circumnavigation with us, and the other 30 boats, and they’ve got home-schooling, and then there’s another boat that’s also going to be doing a similar thing. And so I think, there’s no question that Oyster appeals to younger people and, of course, then it’s just down to the money. Can you afford it? And that’s why I think we need a smaller boat because our cheapest 565 starts out at about £1.5 million, so it’s a lot of money. So, we’re trying to get something that’s sub a million and there’s obviously a much bigger market at that level.
It’s bloody hard work, I’ll tell you that. I mean, I love it, right? I love it for lots of reasons. I love it because I love the end product, which is what I had in the beginning. The happiest moments in my life were on my yacht. So when I see these yachts coming out of the yards it gives me a lot of joy, and I do think I can bring some different views as a person that loves sailing, knows what I like on the yacht, knows technology, and has a yacht.
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