p024 syb mar bean-bsdo-pd - fine focus ltd · 2009. 3. 9. · 26 superyacht business | march 2008...

24 Superyacht Business | March 2008

’m just a simple shipbuilder,” says Peter Lürssen, fourth generation of the family whose name is now associated with the world’s biggest yachts.

My opportunity to meet with him came on a cold Monday morning in January, in his office which overlooks the River Weser and ironically Abeking & Rasmussen on the other side.

The appointment had already been moved from Tuesday to Monday for 09:00, but then on the Sunday afternoon before, as I was flying down the Autobahn in my rented Ford between Hamburg and Bremen, Lürssen’s assistant interrupted my white-knuckle grip on the steering wheel with a call to ask if I could make it earlier at 07:45.

Early for some, perhaps, but not for an American like me and, as I was to about confirm, certainly not for Lürssen either, who likes early morning starts as well.

Arriving at Lürssen’s Vegesack headquarters to a dark and still empty parking lot, the elevator took me to the top floor to be greeted by Peter Lürssen personally, clearly very much a morning person in business suit and tie in contrast to my boat shoes and pullover.

Driven by engineering excellence and family traditions Lürssen continues to hold its position at the forefront of superyacht construction. Bransom Bean meets Peter Lürssen, a man whose fate and passion have conspired to ensure the legacy continues.

tall orders

P26

and, as I was to about confirm, certainly not for Lürssen either, who likes early morning starts as well.

Arriving at Lürssen’s Vegesack headquarters

Bean There: Lürssen

Superyacht Business | March 2008 25



“No one’s here yet to open up, so we’ll have to go through the kitchen; it’s the most efficient two hours of the day,” he smiles as he turns off the classical music, serves the coffee and settles down to begin our chat. He wants me to call him Peter.

Almost immediately, though, we’re not discussing superyachts but the Navy and submarines — especially German submarines — though not because Lürssen has ever built submarines, although 50 per cent of Lürssen’s current turnover comes from defence (ie warships).

Submarines are relevant to our chat because the superyacht world might be a little different today had his father, a submarine officer in the last World War, forgotten his training.

Sunk in 40m (131ft) of water, his family legacy might have ended in his Type VIIC U-Boat, U-79, on the bottom off Egypt. But Lürssen’s equipment and training worked. Surviving the free ascent that all submariners are trained in, he was then lucky enough to be captured and become a prisoner of war in Canada rather than one of the 80 per cent casualties of Admiral Dönitz’s Submarine Service, which, by the way, included Dönitz’s own son.

“There were no fences, the country was so big there was just no place he could go, he told me,” Peter recalls.

When the war ended, Fritz-Otto Lürssen returned from that Alberta POW camp to rejoin his mother and brother Gert, who had spent the war building high-speed S-Boats — which, for some reason, the Allies called ‘E-Boats’ — for the German Navy.

To someone who hasn’t been in the situation, being the fourth generation of any very successful family business, particularly one that has your name on it, could be both a blessing and a curse. Peter sees it as a personal responsibility with which he has been entrusted — and that means qualifications not just lineage.

The importance of training“Why put your kids in charge without proper training?” Peter asks. “Families sometimes don’t realise you can’t have unqualified family people tell smart people how to run a business. The test should always be: can you be as good as any outsider?”

So when it was time, Peter Lürssen dutifully went off to advanced studies in naval architecture and engineering, an MBA from Cornell University in the US; and then spent time working as a supervisor in a Japanese shipyard in order to prepare himself.

It turns out Peter is very much a people person and so, not surprisingly, rather than elaborating on the business credentials he gained from his studies, he tends to talk instead about his German roommates and the many good friends he still has from Cornell.

Studies done, in 1987 when he came back home and settled into his birthright — first in a staff position before going technical in charge of production and technical design — it wasn’t long before Peter ‘resigned’.

“Sorry, this is not me. I told my cousin. I can’t do the job; my brain doesn’t work

Superyacht construction

and major re-fits take place

in Germany but on-site

upgrades can be arranged

anywhere in the world.

P28

Bean there: Lürssen Yachts


that way. It was my Peter Principle,” Peter recalls with a smile. “And it was the one smart moment in my life.”

Peter says that, as far as having a positive effect on his life, this decision remains second only to his decision to marry and have children.

“So, now my job is to sell yachts,” he says.

The ‘Spirit of Lürssen’Having found his niche, Peter Lürssen today sits with his cousin Friedrich atop his family’s company, Fr Lürssen Werft GmbH & Co KG, acknowledged leader of superyacht builders, certainly in terms of size of vessels like Al Salamah, Octopus and, of course, Rising Sun.

After a couple of hours chatting, Peter would send me out on a most enlightening tour of three Lürssen yards in the area that would prove the point.

As darkness gave way to a drab, overcast morning, Peter poured a second cup of coffee for me as other staff began arriving. He points out that the company also has three ‘non-family’ directors.

“And they do a better job than I could do,” he smiles.

To manage the company the five directors, he says, meet regularly.

“But our meetings are very informal. As a company we’re very big on personal relationships. It is most important that people talk to each other. We don’t use video conferencing — you must meet face-to-face to communicate.”

And this focus on open communication extends up and down the Lürssen chain-of-command.

Peter refers to the ‘Spirit of Lürssen’ within the corporate Lürssen family. While he is fourth generation, many of the ‘team’, as the employees are known, are second or third generation family members.

“My father and uncle were more directly involved in the operations,” he says, “but it’s still very important for me to know the workers.”

He observes that there is a severe shortage of skilled people in every aspect of production within the superyacht industry — and that poaching people is rampant. Staff are valued.

“The biggest threat to our company is that we cannot promote all of our good people.”

Now run by the fourth

generation of the family,

Lürssen is associated with

the some of the world’s

biggest yachts. This is

Kismet (67.5m), launched

in 2006.

“We’re very big on personal

relationships. It’s important

people talk to each other. We

don’t use video conferencing

— you must meet face-to-face

to communicate.”

Superyacht Business | March 2008 29


It turns out that the two Lürssen cousins’ personal involvement is also sometimes extremely important to prospective Lürssen owners as well — starting before they even sign the contract for a new yacht.

“After all, we own the place, we’re not employees,” Peter says. “People say they ‘want Peter and his cousin’ available, and the bigger the yacht the more they insist. Some actually put it in the contract; and when the lawyers start arguing, ‘what if he dies?’; that’s always a bit unsettling.”

Investing in the futureI ask which companies he sees as his competition — who he hopes his prospective owner doesn’t meet before the contract with Lürssen is signed?

“Actually, we believe that prospective owners should talk to everyone they can find to be sure. We pride ourselves in delivering the customer’s idea of a boat, so they should make an easy and happy decision to build with us. It’s no good if they say: ‘I would have built, a whatever, instead of a Lürssen, but…’,” he pauses to reflect.

“No, the owner should have a convincing reason why he or she buys a Lürssen, because if an owner feels cornered into a decision it can be a tough construction time for the people involved.”

So why do people buy a yacht?“It’s freedom. It’s a great holiday. It’s fun. It’s a

great way to relax,” he says, warming to the subject. “Ever tried to book a hotel room in St Barts for

Christmas? The people who buy these boats aren’t planners; they have just a short time to relax. With a private yacht you have your own clothes on board and your own staff with you — it’s personal. Then the only worry becomes getting the table at that special restaurant.”

Accepting that, bottom-line, it’s all about fun, I point out that with yachts appreciating in value, some people are actually making a business case for investing in a yacht.

“Yes, you might make some money and of course

a business case depends on demand outstripping supply as it is now and I admit that our recent owners have made a handsome profit,” he agrees.

“But I hope no one ever hears me say: ‘If you sign here you will make a fortune’. So far it has always been good, but nothing is guaranteed. So again the most important thing is when an owner can turn around and say ‘we had fun’.”

Peter clearly believes that the people who buy his yachts are different in other ways.

“Yacht owners tend to be great people,” he says, “but they’re also very smart and they know how to negotiate.”

This leads us nicely to the ‘supposed’ bane of all yacht builders and refitters: changes. I point out that some people believe, perhaps uncharitably, that the truth really is that yards actually like changes because they make more money. Peter fires right back.

“Look, every change to the design is a disaster; you’ll never be able to recover the true cost. Don’t forget you have to schedule capacity.” It becomes obvious Peter feels pretty strongly about this. “It has a knock-on effect on everything, especially on other projects that follow in the production.

“Of course we sign a good contract but changes happen; that’s the business and we’re committed to building the boat the owner wants. How can you charge for things like the building insurance and time in the dock?”

Adding the Lürssen touchThis brings us back to his personal involvement.

“You’d be surprised: take a E25,000 change order on a E60 million boat, for example; some want to discuss it with me personally. On 60-metre boats you can work with the owners directly,” Peter observes.“Over 60 metres you don’t, you’re negotiating with the project manager, a supervisor, an advisor or the lawyer; then when you think you have it all settled, the owner comes in and says to me: ‘so, they tell me you tried to rip me off...’

“Owners are smart and we hate losing money when it’s out of our own pocket,” Peter repeats with another smile. “But what would you say when the owner tells you: ‘I thought that I was buying a Lürssen’?”

Another problem is the price of equipment, materials and labour over the long build-time associated with yachts in general.

“Prices are not static, certainly not over a three or four year build-time, but it’s the risk we run,” he comments. “In the last couple of years, some in the industry have under-estimated prices.”

Then there’s the situation when you can’t get the things you need to build a yacht — big things, like engines for example.

“Take Caterpillar,” he says with a little frustration. “They’re not so interested anymore because they’re making more money in mining; we used to be able to get a firm price with a definite shipment date.”

So wouldn’t cost-plus contracts be the answer?“Yes, but again owners are smart; they’ll never go

for that.” “Fortunately we’re not a public company, so we’re

more flexible. We have the freedom to agree to do something just to do it; that’s our competitive edge,” he says. “Think of the pressure we’d have

Despite being a naval

architect, and having an

MBA from Cornell, Peter

Lürssen quickly realised

his people skills were

best suited to sales and

customer care.

P30



with outside shareholders when the only way we could justify a decision we made was because, ‘she’s a nice client; he’s a tough negotiator or that’s what they would expect from Lürssen’.”

Needless to say then, Peter doesn’t see an IPO or a merger on the company’s horizon.

“We would never merge; that’s been a family philosophy, a long-standing company philosophy; that completely changes the structure of the business. We’ll buy perhaps, but we won’t merge; some shipyards are up for sale, you know?”

I didn’t ask if, by any chance, he was referring to ThyssenKrupp’s Nobiskrug.

Tradition and family philosophy seem woven into every aspect of our conversation.

Repeating the family mantraThe company was founded in 1875 by great grandfather Friedrich, who later built the first motorboat REMS in 1886 with motor legends Gottlieb Daimler and Wilhelm Maybach. His mantra then remains the company’s now, and Peter repeats it several times as we chat. “My firm shall be known as a leader in both quality and performance.” This has now been expanded with, “If nobody builds what you want, Lürssen does”.

Looking back on Lürssen’s 130 years of history, which began with small

pleasure boats, you’ll see 13,000 vessels built, some quite commercial, including cargo ships and tankers. But today, Lürssen concentrates on yachts and naval vessels along with SAR vessels for a longstanding customer, the German Lifeboat Institution.

“You do what you know; why be in a field when you can’t be number one or two? That’s the successful ‘family’ philosophy,” says Peter.

I point out that there must be some ‘synergy’ between the warships and yachts. Indeed, it has often been said that, except for the décor, a destroyer is a lot like a superyacht. In fact, two Lürssen yachts, Skat and Izanami, emerged from their docks with

a striking genetic resemblance to their grey relations.

Learning from warships“There’s really not much overlap, but what is common is reliability and good engineering,” Peter says. And he believes there are lessons for yachts in naval vessels. “You learn from both. For example, the technology used to make a mine-hunter more quiet can help with a yacht.

We apply the same engineering philosophy to both — different design team, same production team.” Not surprising therefore that Lürssen employs more than 300 engineers.

Then Peter reveals a stereotypically German trait.“We tend to over-engineer and so many of our

yachts stay with the same owner for years.

Today Lürssen continues to

build naval vessels as well

as search and rescue craft

— but it remains a major

player in the world of motor

superyachts.

P32



Take the car analogy — Cadillac is not a bad car, but it’s not a Mercedes,” he says, and suddenly — with my American accent — I feel the need to point out that I drive a 15-year-old Mercedes G-Wagen, not stylish but solid German four-wheel-drive engineering with lots and lots of steel.

“We can give our clients the look they want together with very solid engineering.”

And so it should not seem surprising that Lürssen keeps many of the things in-house that other builders might prefer to subcontract out. “For example, I’ll pitch my electrical team against Siemens any day, says Peter Lürssen. “We do our own electrical panels, we save space and weight, get better quality and we get it on time.”

And in support of that, on the tour later in the day, I stumble into what many may consider an anachronism for a modern builder of the world’s biggest, state-of-the-art yachts using the latest in computer-assisted design.

In a small room, smelling distinctly of glue, four Lürssen craftsmen are building models. Sylke auf dem Graben, Lürssen’s PR and marketing manager, observes: “In the age of computers, sometimes nothing is better than putting a model on the desk to see what it’s really going to look like.”

Fears for the futureSo where does Peter Lürssen see the superyacht industry going?

“Part of my job is to worry about the future, two to 10 years out. To me it feels now like it’s slowing down — of course, no one has hard figures — but then someone told me very recently the number of private jets for sale is up 10 times over what it was,” Peter muses. “But then I’ve had the same feeling before and it didn’t happen.”

In response to my suggestion that two potential caps on the industry are a shortage of moorings and lack of crew, Peter discounts the first.

“The question is: ‘Why do yachts need to moor?’ Yachts have perfect communications, so you’re really in touch,” he says. I point out that some have suggested that with dynamic positioning and helicopters, yachts almost don’t need anchors, let alone a berth along side.

“We call it ‘dynamic anchoring’ and with every yacht having zero-speed stabilisers eventually, why not? But mixing helicopters and yachts is complicated, even if the deck isn’t rolling much,” he observes. “Helicopters are noisy; just

The 2002 Lürssen Skat

(71.1m) provides a striking

example of the superyacht

builder exploiting synergies

with its naval portfolio

— sharp angles (or no

arbitrary curves as her

mathematician owner is

said to have requested) and

battleship grey.

P34

“I’ll pitch my electrical team against

Siemens any day — we save space

and weight, get better quality and

we get it on time.”



because you have a pad, it doesn’t mean you can use them everywhere... But for owners themselves, moorings won’t be a problem. The real problem is that you can’t keep the crew offshore. Fortunately many commercial harbours are happy to provide this, like MB 92 in Barcelona.”

Peter sees a lack of trained crew as the real threat to the industry. “Crew is probably the biggest source of grief for owners. We are facing fierce competition

with commercial vessels as yachts get bigger, especially for the 3,000GT-plus licence.”

So where will yacht crews come from?

“Simple, we need training: training to compete with the commercial side.”

And who is going to pay for that training — besides the crew themselves?

The eastern outlook“If they have only one yacht, it’s unlikely an owner will pay,” he says. “But owners will have to pay in the end. In fact our owners, with their much bigger yachts, already are.”

And speaking of big yachts, how much bigger are they likely to get?

“Someone might build a 170-metre, but frankly I think yachts are about as big as they are going to get,” he replies.

Of course, one way to get more space out of a yacht without making her bigger is to move off all the toys. So what about shadowboats?

“Shadowboats? No one has done it right yet; one day perhaps, but not yet,” says Peter. Remember, they have to leave last and arrive first, so they can’t be slow, but most of them so far are. I’d like to sit

with an owner one day to work one out properly.”

As to whether the current dominance of European yacht

builders will continue or be eclipsed by builders in India or China, Peter Lürssen doesn’t see a big change — yet.

“The vast majority of builders will be US and European which

is where most of the owners are, although Indians are starting to

buy yachts. But the Chinese aren’t buying,” he observes. “People from India

move into Europe, mix with Europeans and adopt what they see so they get inspired to buy.”

As a builder, I asked his opinion on flags. “The Cayman Islands is very sensible, they make

a very positive effort to understand the owner and shipyard, while maintaining a very high standard. They also have the experience and have spent a lot of money to know where they can compromise.”

Alas, Peter Lürssen’s next meeting is about to begin, so wrapping up our chat I ask him: “If you weren’t doing this job, what would you do instead?”

Without so much as a pause: “I never wanted to do anything else. I’ve been a shareholder since I was 14. So no, I can’t remember wanting to do anything else. It’s a great responsibility; remember every yacht that goes out of our yard has my name on her.”

threat to the industry. “Crew is probably the biggest source of grief for owners.

commercial side.”And who is going

with an owner one day to work one out properly.”

buy yachts. But the Chinese aren’t buying,” he observes. “People from India

Since it was founded in 1875

by Peter’s great grandfather,

Friedrich, Lürssen has built

more than 13,000 vessels

including cargo ships,

tankers and lifeboats — as

well as yachts.

’80s’70s’60s

’00s

’90s



The Lürssen Group

Today Lürssen works across five different sites:

◗ Lürssen Lemwerder (main yard) new construction of yachts from 80m-100m (262ft-328ft), as well as the building of navel vessels — total facility area including Lürssen-Aumund: 350,000m2

◗ Lürssen Bremen-Aumund, new construction of yachts from 100m-200m (328ft-656ft)

◗ Lürssen Bardenfleth (formerly Schweers Werft. Joined the Lürssen group in 2001) new construction of yachts up to 60m (197ft) — total facility area: 22,000m2

◗ Lürssen Rendsburg (formerly Krögerwerft. Joined the Lürssen group in 1987), new construction of yachts from 60m-80m (197ft-262ft) — total facility area: 140,000m2

◗ Lürssen Wilhelmshaven (formerly Jadewerft. Joined the Lürssen group in 2004), refit and repair — total facility area: 45,000m2

For more go to: www.lurssen.com

1960 – 48.7m El Chris (ex-Lina III)

1962 – 54.8mPlatinum (ex-Pegasus II)

1965 – 32.8m Allahou (ex Seebär)

1973 – 71.0mThe One (ex-Carinthia VI)

1983 – 46.6m Shergar

1986 – 36.5m Kalamoun

1987 – 33.6m Allegra(ex Falco, ex Tauro, ex Isis)

1992 – 46.0m Ontario(ex-Falco, ex-Maalana)

1991 – 40.0m Leonora (ex-Be Mine)

1993 – 58.5m Ronin (ex-Izanami)

1993 – 40.5m Twirlybird V

1995 – 40.9m Blind Date (ex-Xenia, ex-Xania)

1999 – 139.0m Al Salamah

2002 – 70.7m Skat

2002 – 97.2m Carinthia VII

2003 – 115.0m Pelorus2

003

– 58

.5m

Cap

ri

200

3 –

126.

2m

Oct

opus

200

4 –

61.0

m P

hoen

ix

2004 – 138.4m Rising Sun

2004 – 72.6mQueen K (ex Queen M)

2005 – 63.0m Polar Star(ex Northern Star)

2005 – 90.0m Ice (ex-Air)

2006 60.0m Linda Lou

2006 – 59.4m Oasis

2006 – 67.0m Apoise

2007 – 68.15m Kismet

2006 – 93m Eos

2007 – 70.2m St Nicholas

2008 – 70.2m Martha Ann

2008 – 155m Sunflower

2008 – 59.4m Vive la Vie(project name is Bounty Hunter)

2008 – 77m Bermuda

1971 – 67.9m Carinthia V

1994 – 72.0m Coral Island

1997 – 96.3m Limitless

200

3 –

126.

2m

Oct

opus

200

4 –

61.0

m P

hoen

ix

2004 – 138.4m Rising Sun

2004 – 72.6mQueen K (ex Queen M)

2005 – 63.0m Polar Star2005 – 63.0m Polar Star(ex Northern Star)(ex Northern Star)

2005 – 90.0m Ice (ex-Air)

2006 60.0m Linda Lou

p024 syb mar bean-bsdo-pd - fine focus ltd · 2009. 3. 9. · 26 superyacht business | march 2008...

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