Sun, Aug 18, 2019 - Page 16 News List

Princess Yachts undergoes revolution under Sheriff

By Jamie Kitman  /  Bloomberg

Princess Yachts International executive chairman Antony Sheriff poses in front of an R35 yacht in Plymouth, England, on March 12.

Photo: Bloomberg

Antony Sheriff came to Princess Yachts International PLC three years ago, not long after leaving McLaren Automotive. He expected to bring lessons learned from making supercars to yacht manufacturing, a hidebound business famous for losing money the old-fashioned way — hand over first when times got tough.

With no experience in boatbuilding, executive chairman Sheriff suspected that many of the auto industry’s cost-cutting strategies developed over the past two decades would transfer neatly.

However, he soon found how little the application of time-honored money savers, like outsourcing and cutting jobs, transferred to hand-building yachts and superyachts of up to 40m in Plymouth, on England’s south coast.

So rather than streamlining Princess Yachts, Sheriff took a different tack: Go upmarket, innovate, improve design.

In just a few years, he has expanded staff by about 1,000, or almost 50 percent. Some new looks, such as the R35, come from Italy’s storied house of Pininfarina, the hand behind scores of Ferraris, Alfa Romeos and Lancias. Beneath that design, the yacht also features a stability mechanism first developed for British efforts to capture the America’s Cup.

The timing of the turnaround could not be better. The current economic climate, with a growing class of super-rich, has been good for the yacht trade, and Princess, which last year earned almost £30 million (US$36 million) on revenue of about £340 million, has been among the lucky beneficiaries. Its books are filled through the year and well into next year, with more than £700 million in commissions. To match record boat sales, record-high employment of 3,200 makes Princess one of the UK’s largest specialist manufacturers, overtaking Aston Martin.

Princess was sinking financially as recently as 2015, with a £19 million loss. L Capital 2 FCPR — a private investment fund underwritten by LVMH, the owner of luxury brands like Louis Vuitton and Dom Perignon — had acquired the company 11 years ago from its founder, David King.

The new owners, along with the family investment house of billionaire chairman Bernard Arnault, brought fiscal muscle and a necessary modicum of patience to the task of righting the respected builder of sturdy, but slightly dull, luxury craft. A £100 million, five-year turnaround plan started in 2016 and coincided broadly with the announcement of a partnership between LVMH and Catterton, the wealthy Greenwich, Connecticut-based private-equity firm, an association known as L Catterton. It controls the yacht maker today. Sheriff joined not long after the deal was done.

“When I got here I thought: ‘We’ve got an amazing facility with people with 50 years of experience working in it. We make everything ourselves. We’re vertically integrated to a ridiculous extent,’” he said in an interview. “And then I looked around and realized: ‘Well, there’s nobody else within 200 miles [322km] who can make this stuff anyway.’”

So with outsourcing off the table, hand-crafted work became a marketing line. “Our brand is no longer ‘Princess.’ It’s ‘Princess, crafted in Plymouth,’” he said.

About 75 percent or more of each Princess yacht is made on site — all the way down to wire harnesses and fuel tanks.

“We really do have little old ladies and little old men and young men and young women making everything,” Sheriff said. “The customers come and they see not just a boat being assembled with purchased parts, but they see sheets of wood coming in and being transformed into this beautiful furniture.”

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