Why the cost???

[db71]

I actually wonder why does it cost so much to build a boat? If you really think about it a boat is very simple compared to a car so why does a per unit cost so much more? I do understand some volume things but still think about how much technology you can have in a car compared to boat.

My persaonal opinion is a couple things one is that Mercury sets the engine prices. For the most part they are the bar that everything else is compared to. The other is the overhead if there where only 3 to 5 builders as compared to 20+ than they would have more buying power.

The theory is boating is a luxury and the boats we like are even more of a luxury. If the costs could be cut we could grow our hobby and attract new people. Of course with new untrained people would come maybe a situation where people would need a license. Which maybe would attract unwanted laws.

The problem is that the sport or hobby is a dying thing which means as we become more the minority we become more likely to become victims of legislation we cannot control.

Just think if you could get a 25ft boat with 500 hp for $15,000.

I know this may sound stupid but it is possible almost everthing done to manufacuter a boat can be done through automation so labor would not be the biggest issue.

Everyone may think this sounds dumb or no way possible but we have to figure out ways to grow the sport we love or risk being told where to go. My local lake will not even aloow more than 2 boats tied together and has basically killed boating (It is corp ran) If we do not find ways to bring in new people than we will risk facing this everywhere. All this while they build a skatepark for kids. (nothing against skating but the cost is a lot less to get into the sport)

I am ready for ridicule but think about the high volume low profit per unit business model. It is taking over our world think Mcdonalds, Wal-Mart, Aldies, Etc If you watch stocks these are still performing well even in this economy.

 

[boatme]

I am ready for ridicule but think about the high volume low profit per unit business model. It is taking over our world think Mcdonalds, Wal-Mart, Aldies, Etc If you watch stocks these are still performing well even in this economy.

You stated your own answer- High volume spread over many units drives cost down
Low volume and high cost of tooling, materials , and labor to be spread over a few units is very costly

I sold to the auto industry for 20 years and we made many parts for many car and truck lines.
Take for example the fuel line quick connectors.
I had one per cylinder on many car models. At the time Jeep alone was building 400,000 units a year. On that Chrysler vehicle we had 6 or 8 connectors, a total of around 3 million parts for one car line. These parts were on many car lines so do the math.
Even with a part like a grab strap, that we made for many SUV's that used only one per vehicle it still usually resulted in over a million units a year due to the fact it went over many models.

Even in the heyday of offshore I would guess that there was not many offshore boat companies that built over 100 boats a year (Maybe a couple of them did) so do the math. The cost comes in the form of tooling, design, testing, R&D, facilities, utilities, insurance, employees, materials, and maybe a bit of profit. Spreading out the cost of all these plus the cost breaks on buying materials for over a million versus a couple hundred is obvious.
There are many other factors to today's cost but these are a few. I am sure that there are a few boat builders on here that will chime in and give a better explanation that I can

 

[BRD]

One thing I have seen over the years is that alot of people mite think they want a boat , and then once they make the purchase , find out they really don't enjoy it as much as they thought they would . Not to mention all that goes along with it .... especially the "sport" boats . I don't think there's as big of a draw as we like to think there is . . .

The automotive comparison doesn't really fit as it's more of a common part of everyday life here in America anyway . Other then some metro areas ... ya kinda gotta have one.

You do make a good point > there a alot of people out there ( and some in here !?!?! ) that you don't want behind the wheel of a 25 foot boat with an HP500 !!!

Annnnnnnnnd ..... not to ramble ..... but I think your budget boating segment has been targetted by the PWC / jet boat guys like Yamaha , Bombardier , Kaw , ect ....

Sorry guys .... too much coffee I guess .

 

[PARADOX]

DB
I understand your point, while the automaking industy analogy don't realy apply. However... agreed with the cost issue.
Every toy is overpriced. Every luxury item cost is in Pluto. YOu go to WEst MArine and buy a small wood handle brush "for fiber glass repairs" for $3.25. THe same brush at Home Depot cost $.89 THe mark up and profit margin in the marine industry and in some other "toy stores" are crazy. A few years ago I was at the Miami show, looking at a Sunsation. THe economy was still pretty good... expandible income was around. Just for chit's and grins I put a price together for the boat with 500's. Everything. from bulb to fiberglass resin, to labor, paint, wireing, Mcloud seats, gauges, motors etc. It was less then half the price. Now we add a reasonable profit, (15%) overhead, advertisement etc. etc. and the boat still had 40-45% mark up. THen I talked to the sales dude. THen I askd whats the upgrade to 525's. Plus 75K the guy said. I showed him my numbers and the OEM price on the 500's and 525's. THe diference was about 10K-15K. yet they wanted +75K. I said OK. let's add a larger mark up then "resonable" say 20% not 15% and I said I buy the boat with the 525's at the price. THe guy was ready to deck me flat .. walked away.. Truth hurts. Boat builders don't want the consumers know actual manufacturing costs or OEM prices. I also talked with Mike's (OL) dad about this while drinking at the Sarasota Hyatt a few years ago, and while I uderstood the reasons we were both laughing on the profit margins in the marine industry.

 

[GENERAL LEE]

It's not any different than buying supercars, planes, or any other big ticket item. Top of the line machines, homes, hotels, foods, etc, aren't for everyone, and are never going to be. They all require more time, the most skilled people, consistent upkeep, and things not found easily anywhere else.

The composites, paints, quality of the parts, etc, on performance boats, has to be ten times as durable as anything on a luxury car or similar. They require people with unique skills and lots of time to build them. Countless hours of sanding, waiting for chemicals to bond, or set up, wiring/rigging, etc, all adds up.

The boats that don't require these things, aren't high end, and the price reflects that. As a result, you obviously see more of those kinds of boats on the water, than you do top tier performance boats. It's simple, and applies to everything that costs money to own, or enjoy.

It's a waste of time for a company that devotes a year, a staff, a factory, etc, to build 15 boats, & not be compensated for that time. You can put a price on the parts, but you can't put a price on quality, and that's where people stop understanding the "cost" of building these boats. Outside of the money needed to aquire the materials, the cost includes LOTS of "time" to properly build & install those parts. It's hard to build a chitty boat, so it's even more difficult to build a nice one, and VERY involved to build the best boats.

Yes, just like anything else, it's true that if luxury items were more affordable, obviously everyone would have them. They aren't, and that's what makes them a luxury item.

There will always be the know it all, that walks around the shows being an ass to manufacturers, by trying to tell them they don't see the value in their product. They can have all of the "notes" they want, to show their uneducated reasoning for why they think a boat should only cost 10% more than it did to build. At the end of the day, that guy is leaving the show for another year, with no boat. I'm sure "that guy" really thinks he's left a mark on the manufacturer, and "stuck it to the man" that day. The joke is always on that guy in the end though, as he stands on the dock another Summer, barking about how overpriced all of these boats passing him by are to the gas dock attendant.

Most people understand the cost of things are what they are. If someone doesn't see the value in buying an expensive boat, outside of the money, they probably aren't REALLY into boats anyway. The ones that really love boating of ANY kind, are usually much more educated in the process & time it takes to build a 5 Star yacht, sailboat, or performance boat, and will "pay to play" if they are in a position to do so.

The sport isn't "dying". it's just regressed back to a smaller group of buyers that have always been there. No high end company wants to sacrifice the quality of their boats, so they can "grow the sport" to people that shouldn't be buying high priced items, that depreciate over time. This is why there are so many used boat for sale, too many bought more than they should have, and are being burned for it.

 

[TCEd]

Two things could bring the cost down, automation and volume production :
Automation which needs volume production to fund
and
Volume production which need automation to fund
Neither will ever happen in this industry

ed

 

[fund razor]

The sport isn't "dying". it's just regressed back to a smaller group of buyers that have always been there. No high end company wants to sacrifice the quality of their boats, so they can "grow the sport" to people that shouldn't be buying high priced items, that depreciate over time. This is why there are so many used boat for sale, too many bought more than they should have, and are being burned for it.

This paragraph made me think of the Great Fountain Infusion and Payment Plan days. How many of those $999.00 a month Executioner folks are still boating today?

 

[GENERAL LEE]

This paragraph made me think of the Great Fountain Infusion and Payment Plan days. How many of those $999.00 a month Executioner folks are still boating today?

That is EXACTLY what I was thinking of, as I typed that portion. :cheers2:

 

[JupiterSunsation]

DB
I understand your point, while the automaking industy analogy don't realy apply. However... agreed with the cost issue.
Every toy is overpriced. Every luxury item cost is in Pluto. YOu go to WEst MArine and buy a small wood handle brush "for fiber glass repairs" for $3.25. THe same brush at Home Depot cost $.89 THe mark up and profit margin in the marine industry and in some other "toy stores" are crazy. A few years ago I was at the Miami show, looking at a Sunsation. THe economy was still pretty good... expandible income was around. Just for chit's and grins I put a price together for the boat with 500's. Everything. from bulb to fiberglass resin, to labor, paint, wireing, Mcloud seats, gauges, motors etc. It was less then half the price. Now we add a reasonable profit, (15%) overhead, advertisement etc. etc. and the boat still had 40-45% mark up. THen I talked to the sales dude. THen I askd whats the upgrade to 525's. Plus 75K the guy said. I showed him my numbers and the OEM price on the 500's and 525's. THe diference was about 10K-15K. yet they wanted +75K. I said OK. let's add a larger mark up then "resonable" say 20% not 15% and I said I buy the boat with the 525's at the price. THe guy was ready to deck me flat .. walked away.. Truth hurts. Boat builders don't want the consumers know actual manufacturing costs or OEM prices. I also talked with Mike's (OL) dad about this while drinking at the Sarasota Hyatt a few years ago, and while I uderstood the reasons we were both laughing on the profit margins in the marine industry.

So you built your own Avanti with 525's and best of everything.....Did you come out ahead? What did you build it for and why was it advertised for 169K? You should have had that thing done for less than 125K and after using it for a couple of seasons it should be for sale for 75K by your own reasoning.

 

[JupiterSunsation]

I think there are boat manufacturers that don't really know what a boat costs them! Skippy once said in an interview that a Cigarette has twice the man hours in the job than any other builder.....How would he qualify that? Does the guy washing his car count in the hours count? Guy sweeping the floor at the factory or even the guy cutting the grass? Since they are all on the payroll it could be argued they are part of the boat building process. How does he qualify the statement if he doesn't know what the other builders count as "man hours in boat building process?' Too many variables in the process.

I think where a lot of builders get hung up is they collect the money on the sale of boat in some cases before all the bills come in. If production is cruising along no big deal but if a guy delivered his last boat for 6 months and the bills keep piling up then that is where the trouble starts.

Production vs. overhead is a major issue for some builders also. If a guy has a fixed overhead of 120K and builds 10 boats then in theory 12K of each boat sold goes to overhead. If that same guy builds 120 boats then 1K of each boat goes to overhead. When production slows on the guy building 120 boats and he doesn't adjust for the rise in overhead costs then he gets into trouble. There are way too many variables to go into a dealer/boatshow and tell him what a boat costs to build. The dealer probably doesn't know or care since all he knows is what the boat cost him and the margin he can make selling to Joe Boater is called his "profit."

 

[Sean H]

spread out the cost of a large facility, full time staff, boat shows, marketing/advertising, demo boats, etc over a typical sales year of 5-25 boats for most (high end) builders. It wouldn't be hard to already have 100-200k in each boat before ever waxing up the mold or buying any products.

Now add in high end products and more time consuming builds (OL, Mystic, Skater, MTI, DW, Statement, etc) and the prices soar accordingly.

 

[JupiterSunsation]

On the subject of overhead......

Skippy owns a 5mm building in Opa-Locka
Reggie own(s/ed) a factory in the woods of NC that he bought many years ago
Nortech is based on the cheaper side of S. FL
Sunsation is based in the woods of Michigan

Shouldn't their prices directly reflect their overhead costs? If you were doing a business model for a product that can be shipped worldwide and built anywhere wouldn't you want the lowest overhead possible? Doesn't location somewhat dictate wages? S. FL should have higher wages due to the higher cost of living? What about hiring low level immigrant labor to keep costs down? What if you have no access to low level immigrant labor and have to hire local tradesman at decent wages?

Think about if you were building a boat company from the ground up and who's lead would you follow. If you think Cigarette had to stay in Miami to keep the legend going, remember that they were building their next level boat in Turkey! (55 yacht).

Like I said before, way too many variables to get a % or dollar figure of MSRP for the real cost of building a performance boat. Now a simple boat like a 15 Boston Whaler you might be able to do it but the more complex the vessel the harder it is to get a true cost of building the boat.

 

[JupiterSunsation]

spread out the cost of a large facility, full time staff, boat shows, marketing/advertising, demo boats, etc over a typical sales year of 5-25 boats for most (high end) builders. It wouldn't be hard to already have 100-200k in each boat before ever waxing up the mold or buying any products.

Now add in high end products and more time consuming builds (OL, Mystic, Skater, MTI, DW, Statement, etc) and the prices soar accordingly.

R & D would be tough to put a number on as well.......especially if you are trying to be the fastest, lightest etc.

 

[PARADOX]

LOL Jup.. you just proved my point. But I didn't build the Avanti to make a profit, and at 169K I would be still out of pocket,, but that's ok. I also didn't build it at OEM.. more like "Wholsale" sort of speak.
I didn't say making a profit, is wrong.. It's great. Any business should make as much as they can, what ever the market will bare, and that's fine. Now even the new boat prices are down a bit.
Quote>>> I also talked with Mike's (OL) dad about this while drinking at the Sarasota Hyatt a few years ago, and while I uderstood the reasons we were both laughing on the profit margins in the marine industry.

Quote... >> You should have had that thing done for less than 125K
I'm not picking on Sunsation, but is this mean that Sunsation or any other comperative builder should make a 33 footer for around 125K-150K ?

Like Lee pointed out... and I just referenced profit margins on luxury items, not that a large margin is wrong,, it's just THERE.

 

[PARADOX]

Not disagreeing with anything you said above JS.. All good points.

 

[JupiterSunsation]

LOL Jup.. you just proved my point. But I didn't build the Avanti to make a profit, and at 169K I would be still out of pocket,, but that's ok. I also didn't build it at OEM.. more like "Wholsale" sort of speak.
I didn't say making a profit, is wrong.. It's great. Any business should make as much as they can, what ever the market will bare, and that's fine. Now even the new boat prices are down a bit.
Quote>>> I also talked with Mike's (OL) dad about this while drinking at the Sarasota Hyatt a few years ago, and while I uderstood the reasons we were both laughing on the profit margins in the marine industry.

Quote... >> You should have had that thing done for less than 125K
I'm not picking on Sunsation, but is this mean that Sunsation or any other comperative builder should make a 33 footer for around 125K-150K ?

Like Lee pointed out... and I just referenced profit margins on luxury items, not that a large margin is wrong,, it's just THERE.

No 33 foot boat should cost over 150K in today's market I agree with you there and Mercury is a great place to start in the grand scheme of realigning boat prices/costs.

My point about you building your Avanti was that boat building on paper is one number and reality quickly turns into a bigger number. Many guys learn this when "restoring/ improving" used boats. Obviously the smart guy is the one that buys the boat after someone else restored it for 40% off what it cost the first guy!

 

[GENERAL LEE]

On the subject of overhead......

What about hiring low level immigrant labor to keep costs down? What if you have no access to low level immigrant labor and have to hire local tradesman at decent wages?

Think about if you were building a boat company from the ground up and who's lead would you follow. If you think Cigarette had to stay in Miami to keep the legend going, remember that they were building their next level boat in Turkey! (55 yacht).

It's hard enough to get employees that have experience with building boats in the first place, AND to get them to come to work every day. The farther you get away from Florida, the harder it is to find the right people with the specialized skills needed to build a 5 Star caliber boat. You can hire low level immigrant labor to sweep floors, & mow the grass of course, but 99% of those guys can't work with epoxies, laminates, or fiberglass. Florida has the most of both low level immigrant labor, and people with the skills & experience to build these boats. Since they are all hand made, those people are even more important.

 

[JupiterSunsation]

DB........great thread btw!

Two businesses that scare me to death are "restaurants and boat building!"

I love both but I wouldn't dare go into either, failure rate is way to high. I know many restaurant success stories but for every McDonalds there are 1,000 mom and pop pizzerias that went down in flames! If a guy like Reggie can fail after 30 years, what chance does a guy with a wallet full of money and no experience have?

 

[PARADOX]

No 33 foot boat should cost over 150K in today's market I agree with you there and Mercury is a great place to start in the grand scheme of realigning boat prices/costs.

My point about you building your Avanti was that boat building on paper is one number and reality quickly turns into a bigger number. Many guys learn this when "restoring/ improving" used boats. Obviously the smart guy is the one that buys the boat after someone else restored it for 40% off what it cost the first guy!

:cheers2:

Painfuly true. Once I was all done.. it DID cost me more then I thought when I started... but.. partially my fault.. Dennis.. (prev, owner of Avanti Boat Co.) screwed me royaly, Lightning Bay (rigging) and Cobra too.

But here is a question for everyone.. I been talking to Merc. for some time regarding many issues..
What is the "mark" up from OEM pricing.. (like motors from Merc for example.. or parts) to the consumer. ??
Or.. example... Gafrig gauges, from direct?? (OEM) to retailes.. / consumers...??? CMI headers??? I don't even want to go there.:ack2:

 

[fund razor]

:cheers2:

Painfuly true. Once I was all done.. it DID cost me more then I thought when I started... but.. partially my fault.. Dennis.. (prev, owner of Avanti Boat Co.) screwed me royaly, Lightning Bay (rigging) and Cobra too.

But here is a question for everyone.. I been talking to Merc. for some time regarding many issues..
What is the "mark" up from OEM pricing.. (like motors from Merc for example.. or parts) to the consumer. ??
Or.. example... Gafrig gauges, from direct?? (OEM) to retailes.. / consumers...??? CMI headers??? I don't even want to go there.:ack2:

I always assumed that your boat was more of a personal choice and statement than a business decision. You built what you wanted, how you wanted it, for you. I think that this makes it a little different. (Doesn't excuse the screwing part, of course.)
In essence, you built what you could not buy.
That's why I am restoring a Brave. I can't buy one new, and the characteristics that make it desirable to me (like extra resin and weight) aren't so common among newer boats of this length. I wanted as much wave crusher in a 28 foot package that I could get. I like to keep my boat at home, and the 28 is pushing it already.