Rod Davis
Now for Google…
The big news in the sailmaking world a couple of months ago was ‘Big Blue’ (as in North Tech- nology Group) acquiring, swallowing up really, Quantum and Doyle Sails. That brings 90 per cent of the racing sail market under the Blue umbrella. To say that caught everyone off-guard would
be an understatement. The deal was done at the highest level, secretly, and in the end quickly enough that even the employees on the floors of Doyle, North and Quantum found out from the press releases. Normal procedure I would think as it’s the kind of business deal where ‘loose lips could well sink ships’. All that begs the question that we are going to have a shot at
answering here: what happens now, and how does that affect the lofts, customers and employees? I am very comfortable talking about the effects on the sailmakers
and customers, but I needed help with the company acquisition side. So I asked the best guy you’ve probably never heard of – Doug Rastello. Doug has sailed with me in the America’s Cup and has been a lifelong friend. He has done this type of work for 40 years, while also racing sailboats around the world. J70s are his passion right now. Doug knows his stuff on both fronts. The press releases of Big Blue and the three companies talk of
running independently, without change to current operations or employees. Kinda business as usual. That sounds great, but is simply dumb in a business and profit sense. Thus the looming challenges and pressures that the three companies will have to address in the next few years. North Technology Group is owned by Oakley Capital Private Equity.
Private equity groups buy and restructure companies to increase their income and value. Cut fat and increase profits. Often to then sell on. Been going on for hundreds of years. It’s not personal, it’s business. In time the private equity code will struggle to justify the duplication of resources and excess capacity that come with all three ‘independent’ companies operating under one blue umbrella. Bleeding money is bad. The process of stopping the bleeding is
often done through ‘synergy’ meetings. This is where the top brass ask everyone to determine which functions are duplicated, what can be consolidated and what can simply be cut out altogether. Normal everyday stuff for a sail loft (or whatever business you wish to talk about) but this time three sailmaking companies have just been bought by one entity, so it’s next level.
34 SEAHORSE Why would you have two manufacturing lofts in the same area
when you have excess capacity and duplication of personnel, loft space and machinery? You wouldn’t. Or two service lofts in the same city? Can we bleed less if we consolidate our customer service at regattas? Sure. How does that affect the balance of profitability vs, potentially, customer service? These are challenges for all involved, with possible variations of
priorities and agendas, to sort out before the right balance will eventually be found. Good news is the different design teams can learn from each
other and maybe produce an even better product. The competition between North, Doyle and Quantum over the last two decades has inspired sail development that is breathtaking. Reminiscent of the North vs Hood battles that brought in Kevlar and Mylar. The Doyle, Quantum and North battles have produced 3DL,
Stratis, structured luffs, carbon cloth and IQ technology, all created and pushed by competition between three companies. Giving them a combined share of the racing market of probably 90+ per cent. The 30-130ft racing market is dominated by these big three.
Totally. Will there still be the same intensity to ‘one-up’ the others now? Challenges, always challenges. All three sailmakers are invested in making their sails in the Far
East. Malaysia and Sri Lanka specifically. Why? Simple… labour and overhead costs are a fraction of what they are in Europe, North America and New Zealand. Or just about anywhere else in the world. The end-profit of building sails in Asia is much higher, as much
as 30-40 per cent higher. Clothing, shoes and golf clubs are all made in the Far East. Mind you, that saving does not always seem to get shared with the customers. But then it’s ‘nothing personal, just business’. However, getting a world-class repeatable product built halfway
around the world is no easy feat. When it comes to such a wide range of one-off products the difficulty escalates to another level. In one day your Far East production loft is producing a new RC44 main, three TP52 jibs for three different costumers, two Cape 31 mains and a custom Maxi jib. Standardisation is key. At least with shoes and golf clubs you
can do large production runs. I guess one-design sails, where you can do a bit of a run of sails at the same time, suit. To a point. Lasers, 49ers and FXs all mean one-design sails done on pro-
duction runs. In theory, you just have to get one and ‘it’s the same as the others’, but it’s not! Not when you ask an Olympic sailor who
MAX RANCHI
INGRID ABERY
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