New York Times - Hinckley Story

[neelie]

Lorenzo, I have no knowledge of your Mr Khan nor your Mr NotSoGood - where they boat builders by passion or merely money men.?

In my sad experience in another industry, neither the likes of Mr. Khan nor Mr Notsogood would have ever had any intention of running a boat building business for the long term. Their aim was to get in, reorganize along their cookie cutter business school lines, talk the company up and maybe, just maybe sell a few boats along the way. To them Hinckley was nothing more than an evocative and valuable brand name upon which they could leverage their stake.

Mr. Notsogood's business plan would have revolved around finding a Mr. EvenLessGood to buy the business for $80M allowing Mr. NSG to walk away with $40M and the cycle could continue.

In this instance, Mr NSG ran out of money, ideas and a ready supply of Mr ELGs all at the same time.

If it were just a few rich guys losing a bundle of money, I'd find the above utterly hilarious. Sadly, this game resulted in the loss of the livelihoods of innocent, decent, hardworking people at Hinkleys and that is an abject tragedy.

[Highlander40]

The sad thing here is that all the properties that Hinckley bought, would be fine operating on there own. I have witnessed the last ten years of the RI facility. Formerly Little Harbor. My boat was one of the last whisperjets started under Ted Hoods era. At that time the service people were all profesionals with experience building the boats. After a few years they hired kids to be "service managers" who did not have a clue.

Just like the Hinckley family when they ran the company, Ted Hood built a fantastic service center. A boaters paradise with every service right there and the attitude geared towards customer satisfaction.

The silver lining in this decline is that my current service manager, is the foreman of the crew that built my boat. The guy knows the boats very well.

Just like our whole economy, It was not messed up by the working man.
People and huge companys stuck thier necks out way to far without any concern for the rest of us.

[Sandero]

I don't see what this has to do with capitalism, except that capital screwed labor as they tried to BS their way to trade something which THEY did little to add value to.

The $20MM value for Hinkley seems low on the face of it. But even that valuation seems rather arbitrary and made from some accountancy formuli.

Pity the workers whose jobs depends on the whims of the high rollers who buy their exquisite product as bling to display their wealth and the new business owners whose only concern was milking the brand for profits, believing it was recession proof because the wealthy won't ever stop spending.

When did one of the leveraged buyouts or mergers and acquisitions benefit the workers?

[Soundbounder]

The essence of your argument is that Capitalism is evil

I am not so sure his argument is that capitalism is evil.
He is defending both of the private equity firms. That doesn't sound very anti capitalistic to me.

[TaoJones]

It appeared to me that he was placing the blame for the plight of the poor, innocent private equity firms on the heads of the wily, greedy Hinckleys for following the standard Capitalist formula: Charge what the market will bear.

TaoJones

[Soundbounder]

Just like our whole economy, It was not messed up by the working man.
People and huge companys stuck thier necks out way to far without any concern for the rest of us.

Yet there are people on talk radio, blogs, financial TV shows etc that will imply that it was the greedy workers who brought down the company.

It is really disgraceful!

[Sahara]

Here is what I said at another forum:

Thanks for that link. I think the debt is probably more due to their expansion - buying boatyards down the coast, slapping on a Hinckley sign, voila! Hinckley Service! There was also the (now abandoned, I think) swing into coastal condo development in Wiscasset - a Hinckley Village with Hinckley Marina, for your total Hinckley Lifestyle. Good grief.

The MBA Masters of the Universe who bought the company wanted a franchise, Hinckley everywhere, not a sleepy boatbuilder. Oh well, the best laid plans of mice and men.....

The hands at the service yard in SW Hbr, to a man or woman, are interested only in making the customer happy. They've always gone the extra mile for us to make sure our summer cruises are trouble free. I think this is still a great company, from the neck down.

But last year they sent out a "Hey, deadbeat" letter to every customer. I usually pay my bill the day I get it, I don't believe I have ever taken more than 5 days, unless I was off cruising or skiing. I laughed about it with the folks at the yard, but I could tell they had some customers who didn't think it was very funny. The letter came from some a**h*** at Corporate, and the yard was ordered to send it.

I still love the way they take care of my boat, and I have a real affection for the hands. The electricans, carpenters, mechanics, service managers who have taken care of us for years are great, and really care. But I am starting to wonder if their sort of service is simply incompatible with private equity, bottom-line-is-the-only-thing ownership. There is no longer anyone in ownership whose name goes on the boat, and I think that makes a difference.

I also think the Picnic Boat thing, which fueled their growth, is pretty played out. I don't think the guys who buy those are as committed to boating as sailors, many of whom spend months at a time aboard. It's just another trophy, and something they do in the evening, after golf. To sailors, it's a consuming obsession. Hinckley has largely ceded that market to Morris and Lyman-Morse.

It's a sad state for the hands who build motor boats, that's done in Trenton, not at the SW Hbr yard. For the hands at Portsmouth and Southwest Harbor, those jobs are pretty much secured by all of the boats in for winter storage and work. SW Hbr has somewhere around 125 boats, all of which get a greater or lesser amount of varnish, paint, mechanical work, electrical work. The owners vary, but a lot of them expect their boats to be very, very well cared for, and are willing to pay for that. I live nearly 2000 miles from my boat, and without a FULL service yard, I really couldn't have a boat.

The question is whether management really understands the needs and expectations of these owners, and will give the local yards the autonomy required to meet their exacting standards. If management learns to truly understand and care about the sailboat customer, the business will be OK. If not, then perhaps gradually, perhaps faster, these customers will move their boats to other boatyards offering superior service, and the company will die.

[speakeasy]

It's an old Fraud Street story, LBO specialists are corporate raiders who buy high intending to sell higher. They leverage up the acquisition, skim off the cash cream while cutting costs (jobs & quality most often), and if they can't unload it higher they let it fall into bankruptcy. They don't care what the business is, and often turn it into a hedge fund to go after other properties or "investments" in a purely financial game. Eddie Lambert did it to Sears. The result is that we, in the USA, make very few things anymore. The LBO guys don't want to make anything but money!

Sociopaths rise to the top in the last phase of the cycle. It appears that we will have to have a systemic failure to get back to making stuff we need to sell at a reasonable profit. Of course, the workforce gets sacrificed, but, who cares about the little people. This crap really got legs under the Ronnie Raygun supply side revolution. They ran against tax and spend liberals, but when in power they showed themselves to be borrow and spend raiders. There are no conservatives left in power as near as I can see. The result of 29 years of this philosophy has been the transfer of wealth from the bottom 90% to the top 1% and the dismantling of our industrial base with the transfer of those jobs overseas. This will end badly.

I agree that the best result for Hinckley would be for the original family of fine yacht builders to resume leadership of the company and again focus on building a good boat.

[lorenzo b]

Before someone jumps in here and shuts this thread down let me just say;
I love capitalism
I love America
I love money
I'm happy the Hinckleys got their 19 mil
I'm happy Genghis and his charming wife Sylvia Khan got to spin 20 mil for themselves out of this

Live the dream, dudes

[Bash]

...keep an eye on the news. Another major American boat manufacturer is about to declare bankruptcy.

[Chief Engineer]

That kinda what happened to Fawcetts/Oceana in Annapolis.

But I hear they are coming back

[anotherT34C]

I think it's hard to be a fan of "capitalism" when the evolved incentives cause a downward debt spiral and eventual liquidation of an admired product label, one that is more than a product label to many of us, but a part of sailing culture.

Capitalism is a jungle of memes. The environment evolves, memes appear, and others go extinct. Often violently. It's nature and nature is often miserable. I prefer civilization.

[lorenzo b]

Very well said. You cut right to the heart of the matter.

[Highlander40]

Capitalism, whats right or wrong, buyouts etc. Thats all a bunch of baloney.
The fact is, for a company to survive through a change in ownership, even within a family is rare. The further the new owners are from the core buisiness, the more likely the whole thing will go down the tubes.

There is nothing wrong with the system. It's just entropy , the course of humanity and stupidity.

[David_Old_Jersey]

Capitalism is a (IMO brilliant) tool to be used for the benefit of mankind, but not (yet another ) god to worship slavishly, and make sacrifices to.

FWIW I don't see what the family did wrong, as Tao_Jones explained - especially as I doubt they simply sold to the highest bidder without being sure that the buyer could run / sustain the business.............leaving aside any thought for the workers / community (which I don't discount) - they simply would have wanted to ensure their original IOU was going to be paid!

In any event, could well have been in the best interests of the workers / community for the family to sell - business acumen is not inherited, or simply that in a family business generational change can result in too many chiefs / cooks that prevent the business from prospering (or surviving).

But IMO the subsequent sale (and arguably the original sale also) are emblomatic of the how the rules governing the UK/US capitalist system has been skewed too far towards the short term results.........to the long term disadvantage of everyone. Maybe the recent events will create some rebalancing? or not