Hinckley: The iconic, semi-customized yacht

Hinckley is an iconic luxury brand with an intensely loyal (and wealthy) following. An illustration of that loyalty: After Hinckley lost a significant amount of business during the financial crisis, 94-year old David Rockefeller Sr. ordered a $3 million, 55-foot powerboat, just to keep them afloat.

The Hinckley Company, based in Trenton, Maine, has been making semi-customized yachts since 1928. Their sailboats and powerboats are known for their classic aesthetic and craftsmanship, superior performance, and Hinckley’s customer service. Hinckley is an iconic luxury brand with an intensely loyal (and wealthy) following. An illustration of that loyalty: After Hinckley lost a significant amount of business during the financial crisis, 94-year old David Rockefeller Sr. ordered a $3 million, 55-foot powerboat, just to keep them afloat. To put that into perspective, a typical powerboat can take up to two years to complete.

 

getImage

 

The Business Model

A boat can be both an emotional purchase for someone who truly loves boating, but also a purchase that is meant to show off someone’s wealth and status. Hinckley hits all the right notes when it comes to this significant acquisition:

  1. Every one of their boats is designed with a historical reference. Although boaters know a Hinckley when they see one, they have a classic, non-ostentatious aesthetic that is highly valued in high net worth boating communities.set_3-5
  2. They have a well-deserved reputation for power and safety. A pioneer of the fiberglass hull, Hinckley stands out for its technological innovation. They were the first semi-custom yacht company to use jet-propulsion engines, which they developed in a partnership with former Navy engineers. When it comes to the open ocean, the safest boat for your family is the most powerful one.
  3. Your boat won’t look like anyone else’s. No two Hinckleys look exactly alike, since the interior of each boat is designed to its customer’s specifications.
  4. Once you’re a Hinckley customer, you’re in for life. Hinckley creates the most value though its dedication to customer service. It also helps that its 8 service yards account for 65% of the company’s revenue. When your “accessibly-priced” T34 Picnic Boat costs upwards of $500,000, you certainly want to maintain it in perfect condition. Ensuring customer satisfaction in that regard is paramount for Hinckley. Tellingly, most Hinckley buyers are repeat customers who are upgrading or just want another boat.

 

The Operating Model

A Rebound and Refocus on Customer Service

Hinckley suffered during the economic downturn and accumulated significant debt – and lost half of its 635 employees. In 2011, it was acquired by the private equity firm Scout Partners. And, thanks to its strong name and customers, it was able to rebound and rehire almost its entire workforce by 2012.

Unlike many other yacht companies, Hinckley maintains its tight link to its customers by only doing built-to-order, rather than working with dealers – an important coup for their brand equity. At any given time, there are only ~30 boats in production, and almost all of them have been purchased by an individual. Rather than focusing on volume, Hinckley focuses on the quality of each stage of a customer’s ownership experience.

Hinckley maintains a very close working relationship with a customer as her boat is built. Typically, a customer (or her representative) works directly with a sales director on the boat design. Everything is customizable, down to the alignment of the screws. After the boat’s completion, the customer picks it up at one of Hinckley’s eight eastern seaboard service yards, where she is introduced to her dedicated service manager, as well as an app that helps her track the condition and status of her boat should it ever go into storage. As one manager put it, his job is to make sure that “Customers feel taken care of, that this is their boatyard of choice, and that they wouldn’t consider going anywhere else.”

Each yard feeds off of each other. Boats can travel north during the summer and south during the winter, allowing for a consistent, quality customer service experience.

And to close the loop, when a Hinckley owner wants to trade in her boat after a good run of several years, she can resell it to a Hinckley brokerage.

 

Craftsmanship, customized

serviceNetwork

The production yard is the biggest employer in Trenton, ME, and the workers take ownership in the success of the company as well as each boat that they build. The factory operates as a classic job shop. Most of the hardware is made by Hinckley, with the exception of the hydraulics, electrical, and electronics. Hinckley works closely with its OEMs to train its production team in state-of-the-art mechanics.

Many of the production crew employees are akin to artisans, and they can spend years working on a single boat. A $2 million boat upgrade project could occupy a team of 25 for two years, customizing every aspect of the boat.

In this market segment, it is impractical and prohibitively expensive to build prototypes. Hinckley depends on Computer Aided Design software for the hull design, and then does a full sized mockup of the deck and interior layouts. This allows the designers to get a sense of how to get the space of the boat just right for their discerning customers.

Hinckley’s product, customer base, business strategy, and marketing are all perfectly aligned to create timeless, beautiful boats for decades to come.

References:

http://www.tradeonlytoday.com/columns/general/qa-with-jim-mcmanus-ceo-of-the-hinckley-co/

http://bangordailynews.com/2012/07/02/business/hinckley-launches-new-model-of-power-yacht/

http://www.plm.automation.siemens.com/en_us/about_us/success/case_study.cfm?Component=30184&ComponentTemplate=1481

http://me.usharbors.com/image-gallery/family-ties-new-model-completes-hinckley-luxury-line

http://www.nytimes.com/2009/10/10/business/10hinckley.html

http://me.usharbors.com/image-gallery/hinckley-companys-maine-yards-hit-new-milestones

http://www.bymnews.com/news/newsDetails.php?id=9613

http://www.hinckleyyachts.com/Service/Stuart/Specialties2.php

https://www.youtube.com/watch?v=RSF7fMOHRmQ

http://www.hinckleyyachts.com/pdfs/Hinckley-All-Power-Brochure.pdf

 

 

Previous:

Carnegie Steel: Building a Modern America

Next:

Instacart

8 thoughts on “Hinckley: The iconic, semi-customized yacht

  1. Very interesting post! One question I have is, given their limited capacity, are they constantly at 100% utilization in their Trenton facility (aside from during the recession)? If so, what would the costs/benefits be of potentially expanding their facility to allow for more boats to be produced or serviced at any given time? Also, given the enormous percentage of their revenue that comes from servicing boats – what drives Hinckley customers to use the manufacturer to service? Do new boat buyers sign service contracts, or do they simply return to Hinckley for service because of brand equity and their desire to keep their boats as “purely Hinckley” as possible? Either way, an extremely interesting company!!

    1. Hi Leigha! Boat buyers don’t sign service contracts – they return to Hinckley because it’s easy and part of what they’re buying when they purchase a Hinckley is the service itself.

      They are at 100% utilization. Their production backlog is as long as 2 years for some of their models. I don’t know exactly what the exact monetary cost or benefit would be to expand their facility, but I do know that after they were acquired by the new private equity firm, they made a conscious decision to keep their labor and production costs as lean as possible.

  2. How have they thought about marketing and it’s role in maintaining, changing the business and operating models? Customization and customer service seem to be core pillars, which would put it at odds with traditional mass marketing. Do you see this as a challenge to expansion?

    1. Since the boats are so expensive, their marketing efforts are very targeted. Also, half of their business is repeat customers and many of their new customers come via word of mouth. While they do do some traditional print and digital campaigns, a typical marketing campaign for them looks like a jointly hosted party with a private jet company. They’re a luxury good – I don’t see the fact that their business model is at odds with mass marketing as a challenge to expansion. I DO think that they are very American east-coast focused, and that if they want to reach a wider market they will need to establish service yards on the west coast and internationally, which might be very difficult for them to do from an operations perspective.

  3. Kate, great post. I was really excited to see a post about Hinkley, as I love their yachts. I’m curious, do you know how their manufacturing process flows? Do they have those 30 or less boats in some sort of assembly line, or do they have a team for each new boat, like a job shop? I would be curious, and would love to tour their operations someday.

    1. Thanks, Steve! They are like a job shop and have a team for each new boat. Those teams are usually working on 2-3 boats at any given time. I want to visit, too!

  4. Great post! Hinckley reminds me of Sunseeker – a leading UK luxury yacht company which went through similar struggles during the recession and ended up being purchased by Wanda Group. A growing portion of Sunseeker’s customers are now wealthy Chinese – I wonder if Hinckley’s customer base is likely to shift towards China too and if they’re well placed to capture the growing luxury Chinese market.

    I would also be interested to know what the PE owner changed operationally to help turn the company around.

  5. Great post. This is a remarkable piece of work. The thing that most impressed me about the post is probably the optimism of David Rockefeller Sr. buying a boat at 97.

Leave a comment