Lead Line — November 2004
By Richard Thiel
|You can’t help but conclude that yacht building is tailor-made for the Chinese.|
Browse “America’s 100 Largest Yachts” in this issue, and you’ll see builders from many countries represented: Germany, Holland, the United States, Denmark, Australia—even Japan. But there’s one country you won’t see: China. While commercial shipbuilding is well established there, yacht building is in its infancy. That’s not surprising, for while the Chinese excel in mass producing (and copying) inexpensive merchandise, they’ve never done well at high-end goods. But that’s changing. BMW is assembling automobiles there, and Mercedes and Cadillac also plan to do so.
The Chinese know how to build fine hulls and superstructures, and they can purchase major mechanical components like engines from the west. The problem is fit and finish. They have neither the qwd nor the tradition that produces craftsmen through apprenticeship programs.
Yet it’s hard not to see China as a future power in yacht building. After all, building yachts is unbelievably labor intensive—you rack up a lot of man-hours in 18 to 24 months—and no one has cheaper skilled labor than China. Even in its nascent yacht industry, the resulting advantage is striking. Referring to a 33-meter (102-foot) yacht that Kingship is building in Zhongshan, a yacht broker told The New York Times, “What would normally be a $10-million boat is $7 million.” He does admit problems with curtains, carpets, cleats, and handrails but claims the yard always cheerfully rectifies them. He also claims to have lined up “20 to 25 potential customers.” Still, it’s hard to imagine Feadship or Amels quaking in their boots. Happily fixing a job is one thing; getting it right the first time is quite another.
But cheap labor can cover a multitude of sins. Take the Chinese car builder Wanfeng, which builds versions of a popular $30,000 American SUV and sells them to Middle Eastern customers for around $9,000. Its factories have no automation or robots; everything is done manually by workers who make $160 a month at best. With that kind of advantage, you can do a job over a few times and still make a profit.
Besides, the fit and finish deficit isn’t permanent. Chinese workers have already proven themselves to be bright, motivated, and adaptable. According to BMW, vehicles built in its Chinese factory are close in quality to those built in Germany and the United States. True, close supervision is required to achieve that level, but in ever more cases, the supervision is by other Chinese.
The supply of skilled Chinese labor is mind-blowing. According to The New York Times Magazine, China currently has 17 million university and vocational students (a 300-percent increase over the last five years) and will graduate 325,000 engineers this year, five times the number in the United States. They will be paid salaries that are between one-sixth and one-tenth of their American counterparts.
Add it up, and you can’t help but conclude that yacht building is tailor-made for the Chinese, and vice versa. Soon, China may be the supplier to the world, and just wait until the Chinese can buy the yachts themselves.
This article originally appeared in the October 2004 issue of Power & Motoryacht magazine.