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  1. #76

    Re: Origin boats??? Gone????

    Despite common perception it is actually quite rare for small (1-4 man) plate builders to go bankrupt. A reasonable number close the doors when they realise that living the dream isn't as lucrative as expected but few actually end up in the hands of receivers, leaving unfinished projects. The plate companies that go broke are the medium-large ones (visible in the market place so you notice when they go broke).

    A small yard has very small overheads (particularly if the owner is still on the tools) and as addressed up thread can be basically run debt free. When yards get bigger than about 4 people the guy who used to build the boats now spends his time managing staff and making sure they're doing what they need to do in terms of work load and quality. He (or she) will end up rarely contributing to the companies turnover so his income has to go on top of the hourly rate of the floor staff. The company now has rent on a large shed and a team of 5 to keep paid. While most company owners are willing to go a few weeks without pay until a boat is finished, staff aren't so the company takes out an overdraft (or sources funds from elsewhere) in order to level out cash flow. Cash flow now becomes king and a sales manager gets employed to chase turnover and a marketing budget is created. Now on top of each trademan's wage you have to add the owner's 25% income, 25% marketers income, 25% rent and overheads. This results in expensive boats, so the company either has to scale up further allowing the markup on each trademen's work to be smaller or reduce size back down. Assuming they've kept scaling up to say 10 people they now have a payroll between $750 000 and $1M. That requires charging out $70 000 in labour every month. At these rates any hickup in production be it loss of a key person, supply issues, cancellation of orders can quickly get the company into trouble.

  2. #77

    Re: Origin boats??? Gone????

    I guess there is a lot of side issues here, and we can't compare to (say) buying a Quintrex, where more than likely the boat is in stock, and all you have to decide is what motor and accessories you want, you pay some sort of deposit and pick your boat up a few days later, in the custom world, there is nothing at all to look at (kind of) the builder buys in materials, and uses paid workers to actually build the boat, this process takes weeks to months to complete, not exactly sure it is fair to expect the builder to carry the load of wages and materials for such a long period without progress payments? Just like building a house, or doing extensions, progress payments are made along the way, the issue as I see it, is the lack of some kind of uniform laws to protect deposits paid, and also the reverse, if the buyer changes his mind after materials are purchased and work started, that's the true issue, in any business there will be honest traders, fair work deals and so on, just as there is shonky fly by nighters who spring up here and there, a common legal contract might help sort out the riff raff?

  3. #78

    Re: Origin boats??? Gone????

    The 3 posts above have certainly make really good contributions to this thread....

    Moonlighter and Noel, that's very true and fine when buying thru a dealer with wholesale finance. Or secondly buying thru a builder who produces a mostly production type of boat.
    In both those cases, this involves less production time and more regular type of cash flow. Plus less management time with the Customer, as opposed to a completely new one-off custom build.

    Chris, one area I would like to add towards Your post is that often when the owner gets off the tools they tend to focus on customers, instead of their building staff, and this leads to multiple issues and rework throughout the build. Their builders don't get enough Supervision and guidance.

    It doesn't send them bankrupt but certainly adds to frustrations and delays from their and their contractors operations, and obviously also their Customers point of view.
    A Proud Member of
    "The Rebel Alliance"

  4. #79

    Re: Origin boats??? Gone????

    Any custom boat builder would be a fool to build a custom boat for a client with only a 10% deposit in this day and age. If you only want to pay a 10% deposit and the rest on pick up go to a dealer that sells mass produced boats and has them on a floor plan. If you want something that is different and you cant buy off the shelf you are going to have to do with progressive payments, Its no different to getting your local builder to build your dream home, you pay an architect to design it and then pay your builder progressive payments as the build progresses. From what I have found researching builders for my boat is they are all flat out with at least a 8 to 12 month waiting list so weather you like it or not you are going to have to work to their terms.

  5. #80

    Re: Origin boats??? Gone????

    Quote Originally Posted by KingyKing View Post
    Any custom boat builder would be a fool to build a custom boat for a client with only a 10% deposit in this day and age. If you only want to pay a 10% deposit and the rest on pick up go to a dealer that sells mass produced boats and has them on a floor plan. If you want something that is different and you cant buy off the shelf you are going to have to do with progressive payments, Its no different to getting your local builder to build your dream home, you pay an architect to design it and then pay your builder progressive payments as the build progresses. From what I have found researching builders for my boat is they are all flat out with at least a 8 to 12 month waiting list so weather you like it or not you are going to have to work to their terms.
    I think that is key to the conversation. A lot of people think they're buying a custom boat when they're actually buying a semi-production boat with their choice of options. If the payment schedule doesn't give it away the lead time will. Your custom boat has to be designed, cut (assuming a plate boat), kit delivered and then built. None of these jobs are quick and the good people won't be able to start straight away because they're booked up. If you're shopping for a custom boat now and the builder can even start before xmas, then I'd be asking questions.

  6. #81

    Re: Origin boats??? Gone????

    Yep, that's what we are getting at, now, how a uniform contract could ever been written and implemented that protected all parties involved is anyone's guess. Mostly the problem appears to be custom builders taking orders and deposits when they are walking a very fine line between being put into administration, and fully operational with bills paid and boats going out the door! I personally would have no problems with progress payments, but I can tell you I would be MEGA pissed if during the build I found out the company had vanished/gone broke!

  7. #82

    Re: Origin boats??? Gone????

    I guess in a strange way, I had similar (good) dealings with a very reputable builder, during my house renovations, I had some major work done, the builder in question provided a competive quote, asked for a minimal "starting deposit" and ordered the materials, when the materials were delivered on site (my house) the builder asked for a progress payment, and on his written contract, after I paid the payment, the materials were my property (good or bad, I'm not sure) and in the unlikely event he folded over night, I had all the materials to complete the job. Next he turned up with his team and started work, after about a week or so, he asked for the next progress payment which in this case amounted to about eighty percent of the total quote, the final amount was written to be paid on full completion to my satisfaction (which it was) I paid the final amount, he was happy, I was happy, maybe a similar setup might work for custom boats??

  8. #83

    Re: Origin boats??? Gone????

    The difference is though, that the partly completed hull isn't at your place. And no-one is going to ring telling you to come and get it as the liquidators are also on their way. And once the liquidators get there, you will have as much luck getting your part built boat as you will getting your deposit that you paid for a build that wasn't expected to start for another 6 months.

  9. #84

    Re: Origin boats??? Gone????

    Quote Originally Posted by Noelm View Post
    I guess in a strange way, I had similar (good) dealings with a very reputable builder, during my house renovations, I had some major work done, the builder in question provided a competive quote, asked for a minimal "starting deposit" and ordered the materials, when the materials were delivered on site (my house) the builder asked for a progress payment, and on his written contract, after I paid the payment, the materials were my property (good or bad, I'm not sure) and in the unlikely event he folded over night, I had all the materials to complete the job. Next he turned up with his team and started work, after about a week or so, he asked for the next progress payment which in this case amounted to about eighty percent of the total quote, the final amount was written to be paid on full completion to my satisfaction (which it was) I paid the final amount, he was happy, I was happy, maybe a similar setup might work for custom boats??
    That's the exact sort of contract I was getting at earlier Noelm. The liquidators cant flog off what they don't own. If you can prove ownership they have to release the goods - just like consignment stock at a yard that goes under. No legal eagle but would equate to theft I would assume if they don't. Sure you have a half finished boat and a pile of aluminium but at least you can find another welder/builder and go forward rather than having to start again. Worth getting advise on at least.
    "I soak the worms in rum. The fish love em and the worms die happy"
    "Alcohol is not the solution to your problems...................but then again, neither is milk"

  10. #85

    Re: Origin boats??? Gone????

    Quote Originally Posted by Noelm View Post
    I guess there is a lot of side issues here, and we can't compare to (say) buying a Quintrex, where more than likely the boat is in stock, and all you have to decide is what motor and accessories you want, you pay some sort of deposit and pick your boat up a few days later, in the custom world, there is nothing at all to look at (kind of) the builder buys in materials, and uses paid workers to actually build the boat, this process takes weeks to months to complete, not exactly sure it is fair to expect the builder to carry the load of wages and materials for such a long period without progress payments? Just like building a house, or doing extensions, progress payments are made along the way, the issue as I see it, is the lack of some kind of uniform laws to protect deposits paid, and also the reverse, if the buyer changes his mind after materials are purchased and work started, that's the true issue, in any business there will be honest traders, fair work deals and so on, just as there is shonky fly by nighters who spring up here and there, a common legal contract might help sort out the riff raff?
    Well actually not really. Maybe Quintrex is a bad example but if you're comparing say any off the larger plate boat builders that are production boats and a custom builder there is not a lot in it.

    A production boat builder still has the same overheads to get say a 6.5m production boat off the floor as a custom builder bar maybe a little bit slower production rate due to the custom modifications. The production boat builder has to be able to cover the cost of the materials, engines, trailer labour and fit out the whole way through the process and most likely then has to cover the time that boat sits in a yard before the punter comes along, has a look and buys it. That could be 6 months or more.

    For the large majority of a custom build the builder is using their standard production line for the lions share of the boat. Only the mods off of their standard boat design slows down that process.

    I can understand the significance of building say an Alchemy where inboard Diesel engines were customised to go into an original design of an outboard hull and in that case you can understand a builder not wanting to cover the costs of what could potentially be a long process of getting the set up right.

    But for the rest of the time the only time a consumer should be at risk is the period between when they pay the initial instalment (which comes well after the design and fit out is agreed upon) and the time it takes for the ally to be laser cut and delivered. If a boat builder manages to go into liquidation in that short period then they were obviously knowingly trading insolvent and criminal charges should be laid.

    If the customer owns the hull, engines, electronics and or trailer when the liquidators come in then in theory they should be better off as they wouldn't have paid a cent of the salaries up to that point.
    Democracy: Simply a system that allows the 51% to steal from the other 49%.

  11. #86

    Re: Origin boats??? Gone????

    Yeah, so do you think some sort starting deposit, then a written contract when materials are delivered, to state you own them, then as progress is made, some sort of HIN is established and ownership of that then passes to you as well, so as progress is made, you own more and more of the boat.

  12. #87

    Re: Origin boats??? Gone????

    Quote Originally Posted by Noelm View Post
    Yeah, so do you think some sort starting deposit, then a written contract when materials are delivered, to state you own them, then as progress is made, some sort of HIN is established and ownership of that then passes to you as well, so as progress is made, you own more and more of the boat.
    I think a contract should be made once design and what the finished product should look like is decided upon. For each hull size/design there should be a pretty standard estimate of what the allly is going to cost to get landed at the factory. The customer pays the first instalment for that amount the same day the contract is signed. A little extra on top of that to cover welding wire and consumables required to get the hull welded together is acceptable in this first installment.

    In the contract should be the provision that the builder must take the transom out of the packaging on the same day as delivery and a H.I.N. Stamped into it and a receipt given to the customer proving ownership of that hull. The contract should state that any reasonable ongoing costs such as Labour remain the liability of the builder until the whole boat is complete, water tested and a final payment is handed over to the builder on completion.

    In between the first payment and the last payment the customer should be expected to cough up only for Engines,electronics and major hardware like anchor winches etc. Engine numbers are recorded on receipts for such items and handed to the customer on the day of delivery. The same H.I.N. Number could be engraved on the electronics to identify the ownership based on the receipts. If the customer supplies engines it's not so much of an issue or electronics the customer is liable for engraving what he wants on them to identify they are his/hers in the event of a liquidation.

    If a customer wishes for his boat to be painted then an arrangement can be made between the builder, the customer and the painter for the painter to be paid directly on finishing the boat by the customer......after all he owns the boat at this stage.

    the builder should be able to cover all the rest of the hardware and labour as any production boat builder has to do until the final payment is made. The onus is on the builder to get a top quality product out the door, water tested to the customers satisfaction so that he can relieve himself of that liability and make his profit.
    Democracy: Simply a system that allows the 51% to steal from the other 49%.

  13. #88

    Re: Origin boats??? Gone????

    That's fine provided the client is happy to cover the costs incurred due to any financing - much the same as any production boat in a yard would have a component built in to cover the dealers floor plan finance costs. Personally I think it unrealistic that payments shouldn't be made inline with the completion of various stages of work to at least cover the manufacturers out of pockets - wages etc. As such there is no risk to all parties involved - can't get fairer than that.
    "I soak the worms in rum. The fish love em and the worms die happy"
    "Alcohol is not the solution to your problems...................but then again, neither is milk"

  14. #89

    Re: Origin boats??? Gone????

    Quote Originally Posted by scottar View Post
    That's fine provided the client is happy to cover the costs incurred due to any financing - much the same as any production boat in a yard would have a component built in to cover the dealers floor plan finance costs. Personally I think it unrealistic that payments shouldn't be made inline with the completion of various stages of work to at least cover the manufacturers out of pockets - wages etc. As such there is no risk to all parties involved - can't get fairer than that.
    Why unrealistic? It's simply the cost of doing business as would any production boat builder would have to deal with if not more greatly. The manufacturer needs to be able to cover out of pockets because if he is the one that goes broke, the customer is the one that is going to have huge out of pockets in getting someone else to finish the build. Think transport costs if the trailer isn't finished. Storage costs if he doesn't have somewhere to store the untrailerable boat until someone else can finish it. The new builder is going to take longer than normal to finish off outside of the original builders production line and that will cost more.

    The extra costs involved in the builders business model where the customer is protected would be rolled into the business model and then an eyes wide open market assessment by the builder needs to be done to see if the price of his product will meet the market. That's the risk in capitalism-profit AND loss. It's also why I advocate against progressive taxes. You put your capital at risk to make a profit not anyone else so you shouldn't have to pay any more tax than anyone else.

    The out of pockets a builder has put into a boat at the point of liquidation would at least be compensatory for the massive worry and stuff around of having to get someone else to finish your boat. The consumer is the one that needs to be protected that currently isn't. There is plenty of protections for a business under standard contract law if a customer signs a contract and walks away. There are avenues to sue and the builder would also then have a product he could sell to cover that event. Currently, contract law becomes nil and void once a builder gets liquidated if ownership isn't cleary defined.
    Democracy: Simply a system that allows the 51% to steal from the other 49%.

  15. #90

    Re: Origin boats??? Gone????

    When you look at the sort of operations most of the custom builders are, I would hazard a guess that most wouldn't be able to cover a typical build period without some form of cash flow - it's the nature of the beast. His staff are going to want to be paid, his rent is going to need to be paid, a whole host of other stuff is going to need to be paid. He can either add a large amount of profit into the initial material payment (customer pays in advance), ask for it along the way(just like building a house) or finance it (customer pays more at the end). Sure it would be great to think that your builder has enough money behind him to carry the whole build. The other way to look at that is he is making more profit if he can - guess where that comes from. The progress payment model is as much about keeping costs lower for the consumer as the builder paying his bills. Cold hard facts are for a business to survive - costs of doing business are passed on to the consumer - cant happen any other way.
    "I soak the worms in rum. The fish love em and the worms die happy"
    "Alcohol is not the solution to your problems...................but then again, neither is milk"

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