The refit conundrum: stick or twist?

A report on the benefits of fullservice yards

Tanguy Ducros, chief commercial officer at Monaco Marine, reflects on factors of differentiation within the refit market and explains how a realignment of UHNW rhetoric may paint a clearer picture.

BY GUEST AUTHOR ‘Refit’ as a term is often bandied around as a catch-all phrase used to describe the process of making amendments, updates or significant changes to a superyacht. However, all refits are different and not all businesses operate the same model.

Tanguy Ducros, CCO of Monaco Marine, one of the industry’s leading refit specialists, has his own views on why one particular model is superior to others, and also why owning a superyacht is not necessarily the be-all and end-all of the boating experience.

“You have to look at the refit market from a number of different angles,” says Ducros. “There are two typical approaches in terms of refit. You have the full-service refit facility, through which infrastructure, project managers and subcontractors are all provided and managed, as well as being liable for time, quality and cost. Alternatively, you have the model through which a client rents space in a shipyard and bears far greater responsibility for the project. Monaco Marine is the former. After this distinction, there is another axis of positioning that relates to whether or not the facility provides only refit or both refit and new-build services.”

When considering the first distinction between a full-service shipyard and a facility for hire, Ducros is quick to point out that the latter model can be effective in the right location, such as STP Palma, while making it clear that he believes this model to be generally inferior. With the greater responsibility taken on by full-service refit yards, guarantees related to time, quality and cost are more realistic.

“I don’t think that I’m a professional captain but in the same vein I don’t think captains are professional project managers and, as such, they should not necessarily be leading refits. It’s a different job, simple as that,” adds Ducros. “When I see a captain, for instance, going into a shipyard to supervise the work themselves, they have excellent technical and operational knowledge but it is not their core business. What then are the advantages of using a full-service shipyard? I would simply say that there are no disadvantages.”

Ducros explains that without the additional amenities provided by fullservice refit facilities, owners are leaving themselves open to additional costs in the event of errors. With the full-service model, any additional costs due to an

“The difference between the refit specialists and the new-build shipyards that do refit is that we are not trying to sell the owner another boat, simple.”

error on the part of the yard will have to be met by the yard in some instances. This is not the case where the ownership has total control of a build from start to finish. Indeed, Ducros believes that while the initial cost of using a fullservice shipyard may be higher (if only marginally), cost savings will be made over the medium and long term.

“I am still trying to rack my brain and understand why, when an owner has a superyacht worth €15 to €30 million, that they wouldn’t go to a full-service shipyard. It makes absolutely no sense from my perspective,” says Ducros. “Only when location and capacity come into play can I understand perhaps taking the riskier approach, or in the event that the works are minor and easily managed by even the most rudimentary facilities.”

At this juncture it’s important to make the distinction between ‘maintenance’ and ‘refit’. Over the years, the two terms have been, at times, used interchangeably or at least with a grey area between them. However, Ducros is clear about the differences between the two. Maintenance, he explains, keeps the boat like for like; it only fixes or updates existing systems, including paintwork. Refit, by contrast, denotes significant changes to the superyacht, whether that be new systems, extensions, layout changes, interior changes and all other types of works that go beyond merely fixing or maintaining. Maintenance, aside from paintwork, can be carried out by facilities the world over while refit, according to Ducros, should be left to the specialists.

“The difference between the refit specialists and the new-build shipyards that do refit is that we are not trying to sell the owner another boat, simple,” says Ducros. “The new-build/refit model has been designed to encourage owners to buy new superyachts and, in this regard, I believe there is a conflict of interest. The best service is only on offer until a new superyacht is off the cards.”

Competition between refit-only shipyards and those that do both new build and refit is entirely understandable. This competition, until relatively recently, was non-existent because the possibilities of refit were little understood and one can appreciate the grievance on the part of some specialist yards in so far as they worked tirelessly to make refit a legitimate alternative to new build and show the market what the possibilities of refit are, at which point some new-build yards decided to step into the market.

Grievances aside, it must be said that focusing on refit as well as new build has proved to be successful for some shipyards. At the very least, this transition into a more competitive market is testament to the evolution of the refit market over the past 10 years.

“The refit market is almost unrecognisable from where it was 10 years ago. In people’s minds they had a fixed and unshakable idea of maintenance, but today we are seeing so many more high-value refits with significant changes,” explains Ducros. “The vessels can be completely changed and what the client is left with is almost an entirely new boat.

“This transition is inextricably tied to the professionalisation of the refit market. Quite simply, 10 years ago the contractors were not at the level that they are today, and the technology and systems to manage projects was night and day from where it is now. The old way of thinking concluded that it was just easier to just build a new boat. That is no longer considered to be the case.”

As ever, the discussion around how to get the most out of a refit persists, especially where pre-planning, yard and team selection are concerned. However, the arguments can be neatly summarised by that well-used adage ‘fail to prepare, prepare to fail’. This will continue to be the case until owners, captains and any other engaged stakeholders hear the message loud and clear. In fact, with more high-quality work expected in shorter periods of time, this admittedly cheesy expression is becoming even more important for the superyacht community.

When speaking about the levels of preparedness within the refit industry, and indeed the wider superyacht market, Ducros points to an all too often overlooked fact about the industry – it’s underfunded. “If the industry were to be perfect, then significantly higher degrees of investment would be needed at all stages. The proper investment in refit preparation, for instance, to ensure that absolutely nothing unexpected would be found during the process itself, would be many times higher than it is now.

“Let me put the problem in context. The R&D that goes into a new production superyacht from one of the major brands is around €100,000. By contrast, the R&D investment for only the lights in the newest Ferrari was around €50 million. This number stretches into the billions when you start looking at the aviation market. If you put the same level of investment from these industries into superyachts, you could add a zero to the price of every boat, but the market is not elastic enough to support it. Thus, while the assets are complex and already high in value, we are not in an R&D-friendly environment.”

While the superyacht world may continue to struggle to meet the levels of R&D required to perfect the model, Ducros believes that, at times, the superyacht industry is a little harsh on itself. Rightly or wrongly, the industry often looks at itself in isolation. There are, of course, a variety of valid reasons for this, whether it’s a size boundary for the sake of analysis or a qualitative boundary that ensures distinctions can be drawn between the best products and those that aren’t so super.

However, while we often repeat the statistic that only around two per cent of UHNWIs own superyachts, are we being a little too ‘woe is me’ with regards to the broader view of yachting and boating,

“The refit market is almost unrecognisable from where it was 10 years ago ... The vessels can be completely changed and what the client is left with is almost an entirely new boat.”

Tanguy Ducros.

“Perhaps when speaking with UHNWIs we should be less concerned about whether or not they own a superyacht and more concerned with whether or not they own a boat.”

given that superyachts are a niche within this much-loved pastime?

“Superyachts are a small but incredible part of a much wider market. It takes a particular type of client to want a superyacht and, contrary to what some might think, the cost is not the only boundary,” says Ducros. “In our marina, we have yachts that are below 30 metres and owned by billionaires simply because they do not want crew.

“They want the experience of being on board to be completely private and family-orientated and, furthermore, the owners don’t want to feel like they are the boss while they are on their boat because it is downtime away from their commercial interests. However, if a UHNWI or billionaire chooses not to buy a superyacht, people often assume that this means they don’t like yachting or boating full stop, which is an oversimplification.”

Ducros lays out a hypothetical situation. If a wealthy individual doesn’t own a Ferrari, it doesn’t mean that they don’t like cars. Indeed, this scenario could be stretched even further, with the wealthy person in question owning a whole collection of cars.

“Superyachts carry a particular size, cost and status, but the utility of any boating experience is really in the emotional value that it carries, whether it’s a superyacht or a much smaller boat,” adds Ducros. “Perhaps when speaking with UHNWIs we should be less concerned about whether or not they own a superyacht and more concerned with whether or not they own a boat. Whether they have a small boat on Lake Como or a yacht that doesn’t meet the dizzying dimensions of the superyacht fleet, I believe that the two per cent statistic provides an unbalanced view of UHNWI interests.”

There are reasons aplenty to own a superyacht but it’s undeniable that as far as assets go, superyachts can be one of the more complicated and costlier. For some people, it’s just too difficult to swallow the cost and complexity, but this doesn’t mean that they don’t choose to engage with the wider boating market in some shape or form, and the superyacht industry should take solace from that.

Yes, superyachts are expensive and complex, but the market is reaching a level of professionalism where many of the headaches associated with them are being mitigated or removed and, consequently, issues of cost are being resolved as fewer errors and poor decisions are made. Nevertheless, leading shipyards are available to provide high-quality refits where necessary.

Superyachting will never be for everyone – it’s a niche market, after all, that requires obscene levels of wealth to be a part of. However, as the difficulties are gradually reduced, it will be better placed than ever before to attract new ownership from the vast pools of individuals who already love boating in its various forms. n

M a n y f a c i l i t i e s . O n e b r a i n . L Ü R S S E N r e f i t .

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