Strategy & Finance

FRANCE | GRAND LARGE YACHTING

59International Boat Industry | FEBRUARY – MARCH 2014www.ibi-plus.com

SPOTTING AN OPENING IN THE MARKET FOR ALUMINIUM SAILING CRUISERS, TWO ENTREPRENEURS EMBARKED ON SETTING UP THEIR OWN BOATBUILDING OPERATION. A DECADE ON AND GRAND LARGE YACHTING COMPRISES FOUR BRANDS, ALL IN GROWTH MODE

WORDS: OLIVIER VOITURIEZ

Full speed ahead

Grand Large Yachting is proof that even in these tough times a shipyard can start up from scratch in Europe, and in a relatively

short period become a success story. Founded under the Allures Yachting brand in 2003 by Stéphan Constance and Xavier Desmarest, the Groupe is expecting consolidated turnover to hit $14m for 2013 after year-on-year growth of 40%. Today Allures is joined by three other yards – Outremer, Garcia and Alumarine – making up a Grand Large portfolio of cruising boats offered in sail and motor, mono and multihull, and in aluminium and composite.

It was a chance to sail the globe during a sabbatical year from their jobs as strategy consultants at Boston Consulting Group, that the seeds for Grand Large were sown in the minds of Constance and Desmarest, two fellow graduates and friends from Ecole Centrale in Lyon. The two engineers looked at all the boats that would fit their specific needs – but found nothing that suited.

They noted that they were not alone. Their frustration was shared by many leisure boat sailors and ocean travellers. Ever the consultants, the two men spotted a business opportunity – to develop the ultimate sailing cruiser.

They sat down at their desks. They needed to define a product, it would be an aluminium centreboarder. The lengthy process then began of bringing on board the right specialists and sub-contractors that could turn the dream into a reality.

ALLURES YACHTING Constance and Desmarest contacted CMN (Constructions Mécaniques de Normandie) in Cherbourg, Normandy. The boatyard, run by Jean-Pierre Balmer, had a staff of 400 and since 1945 had built over 350 boats and luxury yachts. Now the yard was on hand to help the young entrepreneurs launch their project. CMN took them under their wing, made the aluminium hull, assembled the first Allures 45, found and managed the subcontractors:

2B composite for the deck and James for the cabinet work. In exchange, CMN was charging for hours in architecture and the manufacture of the hulls.

“We were extremely lucky at the outset to have been helped by a boatyard of the stature of CMN. They took us in hand, explained how to make a boat,” remembers Stéphan Constance. “The fact that they were behind us reassured the customers. We were able to use the CMN Alliance partnership to full advantage.” But the clock was ticking and it would take a mammoth effort to present the first prototype at September’s Grand Pavois de La Rochelle, just eight months after the brand was officially launched. They made it, just, and the boat was sold.

“Allures was born from scratch. There was nothing at the beginning. Not a product, nor a tool, nor the funds. But our success proves that an industrial start-up was possible in France in the year 2000,” adds Constance. To start off the two entrepreneurs put down $20,000 and raised $2m in venture capital from their families, friends and business contacts, as well as ‘love money’ from business angels who believed in the project.

Reaction to the boat was good. The two entrepreneurs firmly believed that there was a place for a new product in the under-exploited market of

COUNTRY

REPORT

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founders Stéphan

Constance (left)

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60 FEBRUARY – MARCH 2014 | International Boat Industry www.ibi-plus.com

Strategy & Finance

FRANCE | GROUPE GRAND LARGE YACHTING

aluminium centerboarders. The key to Allures’ success was to

associate the freedom offered by this type of boat, the safety guaranteed by aluminium hulls, the performance of composite superstructures and a good level of comfort for on-board living. The coupling of an aluminium hull with a composite deck was not new in naval architecture,

but what was innovative was using the technology CMN had for superyachts on smaller leisure boats. “We wondered why this procedure hadn’t been used before for sailing boats,” says Xavier Desmarest, attributing this to the cottage-industry way of building of yachts, where one boatyard specialised in one type of product and a standard size. “We patented the technological procedure of assembling hull and deck.”

With its offer of boats that were “better thought out, and less expensive than the others”, Allures saw rapid growth. Three sailing boats were sold in 2004, six in 2005 and 12 in 2006, when the company moved to its own workshops in Tourlaville, near Cherbourg. Twenty units were marketed in 2007. From nothing, the turnover of the boatyard had reached $6m. And then... Lehmann Brothers threw a spanner in the works.

CAT CHALLENGEAlthough Allures suffered from the downturn in the market, the crisis was offset by an opportunity for growth elsewhere. In October 2007, Constance and Desmarest bought out the Outremer boatyard that was in receivership at the Commercial courts of Montpellier. Outremer, founded in 1984 at La Grande Motte (on the Mediterranean coast), specialised in large composite cruising cats from 45ft-60ft. The company had had financial difficulties following a difficult handover and poor management. “We very quickly saw Outremer’s potential and the good drivers it had for growth. The boatyard was similar to ours. They had the same problems as us (aftersales servicing, tools, etc),” says Constance. “It was intrepid on our part, a challenge, but it was an opportunity for us to enter the catamaran market which was then very promising. In 2000 it was a niche market, today it’s a market full stop.”

Allures’ managers attribute the catamaran boom to a new generation of sailing enthusiasts who like this type of boat, and this new generation included women. Their role

and choices were also important. As was the rental market which was introducing the boat to a much larger public. Outremer was to benefit from this niche market, a rare growth sector in yachting. When the company changed hands in 2007, the boatyard’s turnover was $1.7m. It has since grown fourfold and in 2013 reached $8.5m. The workforce has doubled over the same period, from a staff of 30 to the present 60. It is largely thanks to Outremer’s success – they have built over 200 catamarans since 1984 – that Grand Large has had such strong overall growth.

PROFITABLE SINCE 2006At the time of Outremer’s acquisition, Allures Yachting had to cut back its own production on account of the downturn. “But our profits went up during the contraction,” Desmarest points out. The boatyard has been profitable since 2006. “Small profits, that’s life in the nautical world.” Allures had a staff of 30 and a turnover of $4.3m in 2013. Five models – the Allures 44, 40, 51, 45 and this year’s

Allures 39.9 – have been launched; a total of 100 boats have been built by the Norman yard.

Since the boatyard started in 2003, all profits have been ploughed back, giving the Group a strong equity of approximately $2m.

Astute management has produced an average and approximate 40% annual growth since 2004. The two founders hold

the majority of the ownership of the group, together with “patient” shareholders who have received no dividends on their initial investment. “Our investors are able to both take risks and wait 10 to 20 years before getting anything back, as “reasonable capitalism dictates,” Constance acknowledges.

NEW GROWTH WITH GARCIAA new opportunity for external growth came in spring 2010 in the form of Garcia boatyard. It was another good brand, also in receivership. Specialising in 50-110ft aluminium custom-built sailing cruisers, the Normandy boatyard had carved a strong reputation for itself since 1974. When Grand Large took over, they re-launched production, and came up with the new Garcia Trawler 54, the group’s first motorboat, diversifying its product base still further. They will soon be launching the Garcia Exploration, a 45ft sailing cruiser made for global sailor Jimmy Cornell.

Garcia boatyard is located at Condé-sur-Noireau in Normandy, and is now an integral part of Groupe

It is madness to start up a

boatyard in France today. We were so lucky with Allures...

S�Grand Large

is forecasting

sales of ¤14 in

2013

61International Boat Industry | FEBRUARY – MARCH 2014www.ibi-plus.com

\�Staff: 125 people\��Turnover 2013: ¤14m (estimate)

Allures Yachting, run by Stéphan Constance, is based in Tourlaville, near Cherbourg. It builds ocean-going aluminium centerboard monohulls from 40ft-52ft.Outremer Yachting, directed by Xavier Desmarest, is based at La Grande Motte (Languedoc). It has specialised in ocean-going catamarans for almost 30 years, with a range from 45ft-59ft.

Garcia Yachting, directed by Benoît Lebizay, builds 45ft-115ft custom aluminium boats. The boatyard is located in Condé-sur-Noireau.Alumarine Shipyard in Couëron, near Nantes, has been building commericial boats and aluminium ocean-going catamarans since 1986. Grand Large Services handles aftersales, maintenance, repair, refit, delivery, training, brokerage and other services for Groupe Grand Large Yachting’s customers.

Grand Large. The yards builds 15-20 aluminium hulls a year for Allures models from 40-50ft. “We gave our orders to Garcia as our usual provider had to be replaced at exactly that time”, says Constance, who confirms that he is totally committed to the boatyard and its remaining staff who “turned their backs on advantageous redundancy packages during the receivership period and preferred to work and earn their living with dignity.” To meet new orders, 10 new welders were hired. The turnover of the boatyard run by Benoît Le Bizay with a staff of 15 is expected to be $1.5-$2m next year.

Constance acknowledges in hindsight that it is much easier to take over a boatyard than to start from scratch. “It’s madness to start up a boatyard in France today. We were so lucky with Allures. At the time, we never dreamt of expanding externally.”

The acquisition of Outremer and then of Garcia were unexpected, but as things worked well, the entrepreneurs started looking at other available companies. But with a golden rule: existing teams at the yards should be favourable to re-structuring plans put forward by Grand Large. In 2010, the group made a bid for the Alliage boatyard that was rejected in favour of one from Alubat. They were the two French builders specialising in aluminium sailing cruisers. Alliage subsequently went bankrupt in 2011. Alubat, in receivership in autumn 2013, was acquired by a private investor at the end of the year.

COMPLETE PRODUCT RANGEGrand Large’s last push for external growth was in October 2013 with the successful acquisition of AluMarine, a Nantes boatyard focusing on aluminium work and leisure boats. The yard was also in receivership. “Synergy and common equipment between Grand Large and AluMarine meant we were interested in making a bid,” Desmarest explains. AluMarine builds large (40ft-100ft) custom leisure power and sailing cats, as well as commercial barges and service vessels. The rescue plan ensured jobs

for 14 of the staff of 20 and turnover for next year is expected to be between $1.5 and $2m.

CAREFUL ORGANISATIONDesmarest and Constance put extremely careful organisation and a focus on immediate profitability as core to their success. An Enterprise Resource Planning and computer assisted production management tool is shared by all the yards and is the pilot for all departments, including production. All the boat models are designed on this ERP, which manages building, timing and traceability.

Controlling quality of production methods is also vital. Grand Large has control tools that were designed by a former quality manager at the Institut Pasteur.

Computer Aided Design (CAD) means production issues are resolved at design stage and not on the prototype. “These are very expensive tools that soon pay their way, and they are vital. They mean that teams in the different boatyards can work at the same time on cross-Group projects,” says Constance. Sharing common tools means that the design teams at the four boatyards can back each other up for rush jobs, and it also means rigorous cost control and global accounting.

EXPORT MARKETSSeventy per cent of Grand Large Yachting’s production is for the export market. There is an active international sales team in some 15 countries, including Northern Europe, the US and New Zealand. Each brand has its own territory; Allures the colder climes, Outremer the warm seas.

With its undisputed industrial and commercial success, service is the new focus of strategic development for this very dynamic group who feel that they should offer “more than one product”. Describing themselves as a ‘one stop shop’, Grand Large Services wants to be the ‘portal’ for ocean-going vessels, global project management for the Group’s customers, from aftersales service to brokerage, and including refit, coaching and boat delivery.

At a glance: Grand Large Yachting