FEATURE - Riviera-On The Rebound

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  • Trade-A-Boat

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When Australia’s biggest boatbuilder went into receivership roughly a year ago, it seemed the end of the world was nigh. But Riviera, a household name in pleasureboating circles, is still very much in demand despite the foundering world economy. DAVID LOCKWOOD interviews Riviera CEO John Anderson about the big Australian’s future….

FEATURE - Riviera-On The Rebound
FEATURE - Riviera-On The Rebound

DL: Welcome to the 400th anniversary edition of Trade-a-Boat. We think it’s quite an achievement. Trade-a-Boat like Riviera is a very strong brand and this 400th edition is concentrating on brand power. In that sense, Riviera is a key player in the Australian boatbuilding seascape, so we have some questions to ask if that’s okay?"
JA:
Thankyou David; it’s a pleasure to be here, especially for your milestone 400th special edition. Congratulations to you and the team. Trade-a-Boat is still very much the boater’s bible even after all these years.

1. DL: This time last year the end of the world was nigh. Adding to the world’s woes, you announced Riviera had gone into receivership shortly before Sanctuary Cove International Boat Show (SCIBS). How many boats have you sold since then? JA: It’s almost 10 months since the company was placed in receivership. In this period we have sold just over 100 new Rivieras globally. Thus our sales run-rate has been around two-and-a-half new boats a week. This is beyond our original forecast and expectations. These sales do not include brokerage boats sold through our R Marine network.

2. DL: Surely, this only underscores the fact that brand is everything and Australians have a real affinity for Riv’. Why is the Riviera brand so strong? JA: Riviera is certainly the dominant and aspirational large-powerboat brand in Australia. This is a position that we do not take lightly. We have built almost 5000 boats over the last 30 years. Literally generations of people have entered the world of larger powerboats via our brand. Our after-sales service and warranty back-up offered by the best dealer network in Australia assists re-sale expediency and value. Of course, all of our owners benefit of being part of the Riviera boating family.

3. DL: So why do you think there is such a strong affinity for the Riviera? JA: Today, we are so much more than just a boat company. We offer a unique lifestyle opportunity that is a rewarding experience in quality to a group of likeminded people. Our dealerships are more like clubs and our owners are more like family. Family look after each other in the good times and the bad. We have been humbled by the support that we have received from our owners over the last 10 months and we have clearly demonstrated to the market that we will do whatever it takes to make our owners boating dreams come true. You cannot buy loyalty. It has to be earned, over a long period of time.

4. DL: In America you were famous for resurrecting Four Winns from dire circumstances, of making it a really big brand, and here we are again with Riviera. Is there a lot more integrity in a Riviera compared with some boats, you know, that just roll of the production line? JA: Absolutely. Many overseas-built boats are designed for protected waterways. Our boats are designed to go to sea. We build the boater’s bluewater boat. If you want to travel any distance by boat in Australia you have to run offshore. Often there are long stretches of unprotected coastline and sometimes few safe harbours to hide. This often harsh environment leads to the design and structural integrity of every one of our boats.


DL: Maybe that’s why there are so many Rivieras on the second-hand market after so many years. They’re not like cars —
they seem to have a long life!
JA: Our boats truly stand the test of time from a construction, engineering and aesthetics viewpoint. You can buy a 38 open flybridge model that we built back in 1980 for more money today than when the boat was new. Resale value and the peace of mind knowing that you can always sell your second-hand Riviera is a very reassuring thing. We often say to clients when you buy a new boat, always think about selling it. In 2009, our R Marine network sold around 140 second-hand Riviera’s. The average period of time that a second-hand Riviera is on the market with R Marine is only 30 days. Even in this market.

5. DL: Talking about buyers… going into the boat-show season I'm sure Trade-a-Boat readers would like to know what is the status of Riviera? JA: It’s all good news. We are in the exciting rebuilding phase of the business. We have 400 people onsite right now building boats and we are actively recruiting new staff. Our global sales for the first quarter of 2010 are up 150 per cent over the same period last year having sold 29 new boats up to March 22 and the month is not over yet. These sales are coming from Europe, the USA, New Zealand and Australia, and are certainly ahead of our plans and expectations. The global inventory (stock) held by our dealers is the lowest it has been in over two years and we are now building selected boats for stock to meet growing global demand.

6. DL: Can you tell our readers when Riviera will be out of administration and then receivership? JA: We are in the process of completing the Deed of Company Arrangement, which we see Riviera come out of administration as soon as all of the former staff are paid their entitlements and creditors receive their dividend payments. This should be as early as next month. The next phase of our rebuilding will be to take the company out of receivership as soon as possible.

7. DL: So you will out of receivership by Sydney International Boat Show (opening late-July)? JA: We are doing all we can to expedite this process. It is certainly our key objective but at this point I cannot pinpoint an exact timeframe. Rest assured Trade-a-Boat will be the first to know when we are in a position to officially announce this positive news.

8. DL: So, is there now a shortlist of interested parties for the purchase of Riviera? JA: No. The sale process of the business has now been officially closed with no potential buyer meeting the banks’ criteria. The banks have said as of today that they will hold the business for the medium term with the focus now firmly on growing and developing the business. So our focus is not selling the business, it is rebuilding the business and making it stronger.

9. DL: So you’ve moved on. So where does funding come from in the future? Do you get refunded by the banks? JA: The banks have previously set aside funding for working capital and a floor-plan to support our current business plan. In reality, we have used very little of this funding because the company is tracking ahead of our plan and thus has been self-sufficient from a cash perspective. Now that the market is slowly recovering, the banks (ANZ and the Bank of the Scotland) realise that taking the business out of receivership will only help us to sell more new boats.

10. DL: I have heard expectations of increased sales by as much as 30 per cent for Riviera if it’s out of receivership. Would that be inline with your expectations? JA: Since May 8 last year, when we went into receivership, we have sold 100 new Riviera up to today’s (March 10’s) date. Given the global market conditions we have endured in this period and our receivership position, this is a remarkable achievement and truly attests to our brand loyalty and our world-class quality. The impact on our sales when we come out of receivership will only have a significantly positive effect given our track record over the last 10 months. I would not want to speculate on what percentage impact this will have. Suffice to say that we will be ready with our ramp-up in production to meet even greater demand.

11. DL: So it’s quite remarkable for a company in receivership to 10-months later be selling more boats then it thought possible. A lot of companies would have been kaput. And the whole idea of luxury boating has been something far removed from the forefront of people’s thinking. Why has the company done so well? JA: Listening to our owners and looking after them for life is the Riviera promise. Riviera has always had a philosophy that a new model is designed to stand the test of time. For us the investment in the development of a new model is substantial. For our owners, the purchase of a new model is just as a considered investment. Being as close as we are to our owners means that our new-model development plans are inline with our client’s needs and wants. This continual flow of information assists us with our model enhancements as much as it does our new-model development. Whether an owner’s boat is 20 days or 20 years-old, we have always had the philosophy that they are equal members of the Riviera family. That is why it is not uncommon to find people that have owned seven or eight Rivieras over the years. We have one owner that has owned 12 Rivs!

12. DL: An American once told me that Riviera is Australian for boat. Surely part of Riviera’s attraction is the fact that it’s Australian-owned and made? Is it likely to stay that way? JA: There is no plan to alter this. We’re Coomera, Australia-based, and proud of it. We have an extremely well equipped, world-class waterfront manufacturing facility, a very loyal, skilled and dedicated workforce and a network of key local suppliers supporting us. There has never been a discussion that Riviera wouldn’t be here.


13. DL: Australian-made product. That’s sort of integral to the brand in some people’s minds. JA: I agree. Because of who we are and where we are I think Riviera tends to over engineer our boats. We build them to take the rough with the smooth and as the pages of Trade-a-Boat attest; our boats stand the test of time. They stand up to our climate, our high-usage rates and the way Aussies like to boat. We have as you know announced a new Motor Yacht line initiative. These are much larger boats running out to 85 feet and potentially larger. These boats will be built in Taiwan simply because our facility is not physically large enough to build this size of craft.

13. DL: Back in the good old days, half of production used to be sold overseas. These days, what sort of percentage is it? JA: Over the last 12 to 18 months, because of the impact of the GFC on Europe and the US, the bulk of our sales have been in Australia and New Zealand. This is now starting to turn with orders and build lists being received from both Europe and the US. Over the last few weeks we have had many international dealers here with their client’s sea-trialling new models and we have secured multiple overseas sales. We have also just signed several new international dealers this calendar year, which is a very encouraging sign for us and the global industry sees us as a force that is on the return. It will take some time for the ratio to return to around 50 per cent of our production being sold internationally, however, international sales are on their way to being around 20 per cent of production this year.

14. DL: It’s great to know that we’ve got some Australian-made and designed boats with universal appeal. Do you think there is more competition than ever coming through for Riviera, especially in the size brackets that you make and build? How do you plan to stay ahead? JA: For 25 years we have been competing on the world market. Every time you go to the US or Europe for boat shows you are constantly reminded of the competition. This is what has made Riviera the global brand and boat that it is today. We exported our first boat to the US in 1983 and our first boat to Europe in 1985. We were not truly competitive at that point, but competition makes you hungry to evolve and innovate to the point that in 2003 we built 421 new boats, around 50 per cent of which were exported. Our latest new model, the 5800 Sport Yacht launched under a year ago has achieved sales in the US, Europe and Australia in some numbers. The reaction from the market and the media was overwhelming to the design and quality of this model. People see the 5800 as a real step-change for Riviera. If that is how you judge competitive advantage, we certainly are competing and succeeding on the global stage.


15. DL: Is it possible going forward that you could make boats less costly by using new technologies and more efficient construction methods? JA: We started lean-manufacturing principles about three years ago and we have made some real saving gains over this time. We track methodically the exact labour and materials that go into each boat. And we have the measurements in place to continually monitor and improve efficiencies. There are also new technologies that we have embraced to aid efficiency, such as our robotic varnishing machine, infusing hulls, and producing GRP small parts in RTM (resin-transfer moulding or enclosed moulding), which lets you produce parts in far fewer hours. Efficiency gains come from right across the business, not just in manufacturing. Our new-product development team use the latest software to predict outcomes before any materials or labour are expended. Our purchasing people continually comb the globe for the best quality components with the best price. Holding or reducing costs is part of our daily mantra.


16. DL: Boats are terribly time-consuming things to create. Take the Riviera 45, for example. Would you know off the top of your head how many hours this Riv’ takes to make? JA: For competitive reasons, I really would rather not divulge the precise number of man-hours involved in creating this model. However, let me say the production time on say a 45 flybridge is around a three-and-a-half-month process from spraying the gelcoat to final delivery of the completed boat.

17. DL: Do you look at that and constantly try and make it three-and-a-half months less one day? JA: Yes. Every day we come to work we are all actively thinking about how we can do what we do better. This is part of the Riviera ethos. We are continually reviewing processes and procedures and brainstorming with our manufacturing teams possible improvements — that’s basically Lean manufacturing in a nutshell. We’ve had a lot of our people go through the Lean process and a lot of our people understand that ‘change’ is very good for our business.

17. DL: You mentioned RTM before. One of the things about a closed mould is there’s less product and emissions and therefore it’s more environmentally friendly. Environmental issues are a challenge for pleasureboating. How do you plan to deal with these issues in the future? JA: Many environmental care initiatives have been implemented at Riviera over the years. These include zoned heating-and-cooling ventilation systems in our lamination department for improved OH&S and environmental controls. Other initiatives are waste minimisation, recycling of all timber waste, acetone, paper, cardboard, metals, resins, oils, emission reductions and stormwater filtering. These, coupled with the gains made from infusion and closed moulding techniques, highlight our willingness to embrace green initiatives.


18. DL: A Riviera Prius is in the pipeline? JA: No, not yet. However, our continual focus is on enhancing economy and cost of ownership. We like to embrace new, proven technology, so we are continually evaluating all opportunities.

19. DL: Fuel hits $4 a litre on the waterfront. What do you do? JA: There are already significant fuel savings using pod-propulsion systems of up to 20 to 30 per cent. Other gains are being continually made in efficiency by infusing hulls, using lighter-weight materials and RTM GRP parts. But we are taking a very hard look at hybrid propulsion, because it’s reaching a point now where it’s becoming more commercially viable. I can see people on Sydney Harbour or the Gold Coast’s Broadwater never really needing to run the diesel part of their propulsion system until they’re ready to go out to sea or they want to get somewhere fast.

20. DL: In respect of boating’s future, do you fund anything at grassroots level? JA: I don’t think any one boat company can seed the industry alone. The industry needs to do that. Marine Queensland has made some steps to set up a manufacturing group to focus on these issues, however, our governments, whether Local, State or Federal don’t want to understand our industry nor understand the value of supporting Australian jobs in the boat-manufacturing industry.

21. DL: Even the waterways, or lack thereof, around the Gold Coast are a big issue these days, right? JA: Absolutely. If you can’t navigate a pleasureboat safely in such waters without the risk of running aground, this is a major threat to our entire industry.

22. DL: They need to address a lot of issues here, right? JA: I have met with around 17 different Government departments to not just talk about Riviera but about the manufacturing of boats in general in this country. You can only grow a business so much with the local market (and we have certainly succeeded here). But if you really want to grow the business exponentially, you have to export.
But trying to get somebody in Government to really give a dam about this industry and what it needs to be successful and competitive, the jobs that it creates and its direct injection into the Australian economy is a real challenge.


23. DL: What new models can you tell our readers about in this 400th edition and before our impending behind-the-scenes tour? JA: As you were first with the news in issue 399, we will hold the world release of our new 43 Open Flybridge at SCIBS. This new model is a significant step for Riviera and will employ IPS propulsion and embrace a new style of design for our flybridge boats. The cockpit and saloon now open out to connect as one-level living space thanks to an all glass and stainless steel hopper window and sliding door. The large 9.3m² cockpit, with transom-located barbecue centre and aft-facing mezzanine seating, flows effortlessly inside to a generous, sweeping lounge and dinning area to starboard, while to port is the bar and entertainment centre. Also to port is an additional lounge that moves forward and separates to create two dining chairs. Further forward, an open-plan galley keeps the chef involved with the whole party. Below decks are two very generous staterooms and two bathrooms with sleeping for up to six. We are very excited about this new model and we have already received several deposits from dealers off the plan. The 43 Open Flybridge is the first in a series of new models that we will release over the next 12 months. We have a fantastic product plan that takes us forward for the next five years that we are now implementing. Stay tuned.

23. DL: The 43 is going to be driven by Volvo Penta IPS drives, like the 51 we were on today. How big a role will pod-drives play going forward? JA: We still build and offer shaft-drive boats, because that is what some of our owners want. However, we are listening to our owners and always want to bring to market something that’s new to inspire our owners. We need to make boating as easy as possible. The pod system certainly ticks all of these boxes, in addition, it is quiet, and the underwater exhausts control any engine fumes when at the marina. The pod system also gives you more internal cabin space to work with and allows easy service and maintenance of engines courtesy of a large opening hatch in the cockpit.


24. DL: Last but not least, what does Trade-a-Boat mean to Riviera? Do you value our boat tests, editorial and see it as more than just publicity? JA: Absolutely. Your role is to help educate and motivate the market as to what to look for in a new boat. Integrity is our ethos. Our boats are built with integrity and all of our people act with integrity. I think your editorial approach fits our morals. Trade-a-Boat provides the truthfulness the market needs. Because you are all boaters in your own right, you can take a very tough and objective look at a boat because of your experience and expectations. That’s invaluable. There are a lot of similarities between our two brands and where Trade-a-Boat sits in its media class versus where Riviera is in the global boatbuilding industry.

DL: That’s great. On that note, thanks very much for joining us in the 400th edition of Trade-a-Boat and let’s go check out that 43.

Riviera Model Pricing
(March 2010, Australian Base Prices)

FLYBRIDGE
70 Enclosed Flybridge
$4,876,110
61 Open Flybridge
$2,272,815
61 Enclosed Flybridge
$2,362,161
56 Open Flybridge
$2,048,404
56 Enclosed Flybridge
$2,135,158
51 Open Flybridge
$1,429,983
51 Enclosed Flybridge
$1,467,779
51 Open Flybridge with IPS
$1,504,983
51 Enclosed Flybridge with IPS
$1,542,779
47 Open Flybridge
$1,173,089
47 Enclosed Flybridge
$1,221,454
45 Open Flybridge
$949,483
43 Open Flybridge with IPS
$812,809
38 Open Flybridge
$553,196


SPORT YACHT
5800 Sport Yacht with IPS
$1,850,000

5000 Sport Yacht with Zeus
$1,095,000
4400 Sport Yacht with IPS
$856,565
3600 Sport Yacht with IPS
$519,000

OFFSHORE EXPRESS
48 Offshore Express
$1,016,766
43 Offshore Express
$775,754


Photos: Riviera CEO John Anderson; Sportyachts, headed by the stunning 5800 in the foreground, trusty open and enclosed flybridge
cruisers form the backbone of Riviera; Neil McCabe, ex-auto industry in Europe, and the latest CAD systems have played an instrumental role in crafting better Rivieras, with greater symmetry, better ergonomics, and improved function; The new Riviera 43, debuting at the 2010 Sanctuary Cove International Boat Show, takes shape; Side profile of the new Riviera 43 with IPS 600 435hp
diesel engines; The Riviera 4400 Sport Yacht introduced Volvo Penta IPS pod drives to the fold; Gary Dalton, head lamination man, has been with Riviera since 1981.

 


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