Costing of a production boat? Help?

[jim lee]

So we did all the easy bits, we developed a really cool sailboat. All the tooling everything. Now we have to figure out how much it costs to build. And how much we can charge for it.


I'm totally out of my yard on this one. We have a pretty good idea for material costs. But labor? And how much will labor change after building a few? Figuring out a reasonable shop rate?

Anyone have experience here that can shed some light on how these things work in the real production world?

I'm all ears!

Thanks!

-jim lee

[souljour2000]

Would you mind showing more pics if possible.....as far as labor..I dunno...I'd pay each person what he is worth...if they happen to be a skilled lay-up person or finisher with good skills and work ethic..pay them more...pay them what they are worth...if they are people who just want a paycheck or happen to be dregs...get rid of them or pay them less...pay them what they are worth... or let them go work for a Wellcraft or Chriscraft.. et al.... companies who have pretty much died from treating their employees like crap...and making crappy boats after trashing an earlier established reputation for quality.. .no matter how good the design of your sailboat is...you have to pay people what they are worth..they may see your vision..or not..if they do see it then their work is very valuable...as valuable as anything that you do as CEO or whatever... honestly you sound a bit haggard and stressed...you probably need a vacation at this point...book a flight out...to somewhere where you can look at mountains or ponder a desert landscape or something completely alien to boats...and maybe then think about your company without being in the mix of all your activities you have probably been engaged in for the last year...maybe even contemplate what sort of reputation you want to have in the industry when you are 60 years old...things like that...good luck...

[TeddyDiver]

Originally Posted by jim lee

Now we have to figure out how much it costs to build. And how much we can charge for it.

As a rough estimate you can double the material costs to get total costs. How much you can charge depends how much the closest "alike" competitors does...
my 2 c

[Tad]

This is why 99 out of 100 start-up boat builders fail....usually with the first few hulls. First boats are sold at a loss....so you sell more (also at loss) to buy materials to build the first few....eventually the bank says forget it....

As I know nothing about your product or market I can only make some general comments here. I have been involved in a number of start-ups, each one unique....but also the same in many respects. This experience means I can charge a reasonable fee for advice....if you are serious and want to succeed at this you need to employ someone with experience.

Unfortunately it's already a bit late to make this work. You have done just what many do....I've got a neat boat....I'll build some and sell them....maybe?

First thing you should have done was identify your market....go to shows and survey folks...what don't they like about what's available....who is your competition and are they selling any boats? Why not?

Then establish a community of potential buyers and find out what they will pay for a given set of features and characteristics. Your picture appears to be a small sport boat? The Flying Tiger example of the past few years is public record on Sailing Anarchy....read it!

Then.....and only then....do you design and build your product....right from the start it's designed to be built in a certain number of man hours, with particular materials and processes...so the buyers cost is known and the profit is known before the first boat is sailing.

Successful builders are continuously tweaking design, materials, and processes to adjust man hours and costs. Again much of this is known to experienced people....but in this world you will need to pay for real experience.

As a general rule a decent crew will lay up roughly 10 pounds of boat per man hour...that's for 10 or more identical parts....vacuum bagging will take longer, but you can charge more for it.

You will pay the crew something between $10 and $20 hr., and the lead hand will make a lot more than this. Your shop rate will be 2.5 or 3 times what you pay employees.

[jim lee]

Sorry, I asked my question poorly. I'm not looking for marketing/what can I charge information. I'm looking for.. Well, the end of Tad's post is a perfect example:

Originally Posted by Tad

As a general rule a decent crew will lay up roughly 10 pounds of boat per man hour...that's for 10 or more identical parts....vacuum bagging will take longer, but you can charge more for it.

You will pay the crew something between $10 and $20 hr., and the lead hand will make a lot more than this. Your shop rate will be 2.5 or 3 times what you pay employees.

We've gone through the design phase. I've been through design phases a lot over the years. We have no idea what's ahead for production.I was just hoping that people, with production experience, could shed a little light on this area before we jump in with our eyes closed.

Thanks.

P.S. Its not really a sport boat per se. Its more a "Sport Cruiser". Its very light with a deep bulb keel like a sport boat, but it also has a minimal camping interior. Sleeps four etc..


-jim lee

[TollyWally]

Off the top of my head based on numbers given here. Let's say a crew of 3, 12.00-25.00/hr maybe 50.00 - 60.00 per hour for the crew, say 10 grand a month payroll with the misc. additions and that might be underestimating it.

That's 4000-5000# of boat a month @10 g's for payroll, say 2 bucks a pound.
Now we have to pay for the building, the investment for the tooling, tools, trucks, insurance, materials, etc.and somehow squeeze out some money for management and a little profit for the principles. Both the state and the Fed are going to want a piece of the action. There is going to be a cost attached to finding actual qualified customers.

So how much does your boat weigh? How many can you crank out and sell in the next 3 years to give this thing a fair shot at success?

It's important to understand I only know generalities not specifics about the manufacturing biz and am using fuzzy numbers. It would be interesting to get Apex's input although I fear he may have been another casualty of that dumb ass with the skiff who cost us some valuable members.

[rasorinc]

Plug in Social Security and Workmans Comp. Insuance to your payroll + a general policy of liability if a flaw in design or workmanship or material flaw kills someone. Your workers will cost you almost an additional 100% of payroll. And that does not cover Obama Care. When you add it all up including profit, then add your state sales tax. BLEAK isn't it????
HOWEVER, IT CAN BE DONE.......................................................................YES IT CAN WITH THE RIGHT PRODUCT.

[jim lee]

The boat's 2,200 lbs. At least that's the design weight. We've not had a chance to weigh it. Rent for the building is about $2k / month when its all added up...

What rasorinc is saying is also something I've been unable to tie down. What does a worker actually coast as a function of his/her pay/hour. Is it 2x pay? Things in this area always seem really fuzzy.

-jim lee

[TollyWally]

I figure roughly 100% plus for my crew, and truth be told I cheat as much as possible with plausible deniability. LOL Did I say cheat? I mean that's what I've heard other guys do! Another rough, crude, rule of thumb is 50% material 50% labor.

Using Tad's productivity numbers that's 2 boats a month or so with the hypothetical crew I've taken the liberty of virtually hiring for you. Which is 25 a year or 75 for the 3 years I figure you need to put in to test the viability of your venture.
What do you figure you've got in materials per boat? Hull first then turn key.

What do you figure your margins are? What are the common industry margins? How many management guys are the floor crew carrying? What's normal?

Tad's productivity numbers need to be adjusted perhaps, he was talking about modest but efficient volume production. Again I must point out I'm speaking in generalities not specifics.

You need a bit of wisdom and insight from some old guy who has retired from management of a small boat company that is still in business. At a certain level you're selling a commodity and it's unlikely you'll be able to produce the same at a rate much lower than comprobably situated concerns. I don't mean to be denigrating calling your boat a commodity, just speaking in fuzzy generalities rather than crisp specifics.

[u4ea32]

I would suggest, as a business strategy, that you outsource construction.

Currently, there is SUBSTANTIAL over capacity in the boat building industry. Therefore, almost every single boat builder would be happy to have their existing and experienced crew (including office support and management) and capital investment (facilities) and processes (including payroll, purchasing, ...) working on something that generates cash flow.

Call around, EVERYONE will be happy to talk and give you real numbers.

That way, you "only" need to focus on the high value parts of a business: marketing and sales.

[TollyWally]

Now that's a damn good idea for any number of reasons.

[jim lee]

Contracting someone else to build these was actually our original plan. Seeing there are a lot of boat builders around here, and the market is soft as jello.. But we discovered that contracting someone else opens up yet another can of worms.

Anyway. We trudge forward..

Thanks all!

-jim lee

[welder/fitter]

Jim,
I'd suggest that the wage considerations seem a bit low, here. Over the past 10 years, for every hour that I worked, the companies would pay me $25 to $35 per hour, yet charge in the range of $100 to $140 per hour. Although that seems like quite a cushion, when you add worker benefits & overtime to the equation, it is not unreasonable. Consumables are another area which require significant $ padding & a watchful eye. Best of luck with your venture!
Mike

[jim lee]

After pondering on and off all this time I've come up with this.

What it all boils down to is hours. I've got about 530 hours calculated for this thing, I'm thinking its going to go up by the time we get all the numbers in the system. Any way you cut it, 530 hours is a lot of hours for a 26' boat.

-jim lee

[TollyWally]

Nothing's easy, 13-14 manweeks per boat. Time comes down with practice to a point. As I've said previously I figure 3 years to give it a chance. Less than that isn't really a fair test of your concept.

Sadly building's the easy part. Sales are the engines from which all else flows.