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-   -   Prout Catamarans Went Bankrupt (http://www.sailnet.com/forums/boat-review-purchase-forum/3077-prout-catamarans-went-bankrupt.html)

Constantin 01-19-2002 11:54 AM

Prout Catamarans Went Bankrupt
 
Looks like Prout Catamarans went bankrupt back in September 2001. It didn''t make the papers here, nor did I expect it to, since the manufacturer''s market share has shriveled for years in the States.

Prout is still owned by Quest Marine and was re-invented as Prout something or other from the ashes. Naturally, the debtors are not very amused, since they were left holding the bag. Rob Underwood used to be the managing director before Quest Marine bought the company about 1.5 years ago. Mr. Underwood then got demoted to sales director and decided to leave the company in October 2001.

All this according to Yachting Monthly and online news sources. Pretty funny to think that Prout was still winning prizes for best company just a few years ago...

Anyway, I guess if I was in the market for a Prout I would be very careful about sending them any kind of money (i.e. also become a debtor) without being sure that the money I sent is actually used to build my boat.

In other words, use an agent and make it the agents responsibility to furnish the boat at the stated price. Furthermore, I would insist on the agent posting a bond to cover the purchase of the boat and make the purchase acceptance conditional on a acceptable survey result.

If the boat does not meet minimum specs, let it be the agents problem to deal with. Our Escale has been nothing but a headache 90% of the time due to manufacturing defects.

Constantin
<a href=http://www.vonwentzel.net> www.vonwentzel.net</a>

Constantin 01-26-2002 06:37 AM

Prout Catamarans Went Bankrupt
 
A couple more details from the articles:

All 11 boat projects under way continue to be built, so current owners-in-waiting are not in trouble. The suppliers to Prout, on the other hand, are hopping mad. I''d like to learn more about this sort of bankruptcy since the company was apparently reborn almost instantly with the same owners but no obligations...

Interestingly, the demise was blamed in part on bad exchange rates and a wide range of models. Larroux (sp?), a Quest rep claimed that Prout did not retire older boat varieties quickly enough as new models became available.

I guess this is another way of saying that the price hikes for newer models were hard to pass on? Another problem was the number of manhours required to finish a boat, 2x over plan on average (~5,000 instead of 2,500 man-hours)...

To think that we''ll probably spend close to 750 manhours fixing OEM defects on our Escale makes me laugh at this figure.

Anyway, Prout has already found one buyer for its new 70'' catamaran. Since the new construction facility is in Thailand I suppose labor overruns will no longer be as relevant as they were in England.

Constantin
<a href=http://www.vonwentzel.net> www.vonwentzel.net</a>

halyardz 01-29-2002 12:44 AM

Prout Catamarans Went Bankrupt
 
Well, you''ve posed a number of issues. What do you think the main reason for the Prout-fall is? Bad product? Bad management? Too much multihull competition?

Constantin 01-30-2002 03:05 PM

Prout Catamarans Went Bankrupt
 
Without having a look at the books and a couple of pointed interviews, I can speculate a lot... But I think Mr. Underwood, the former managing director summed it up best with his quote to Yachting Monthly:"I can''t make any comment or I''ll be shot."

Here are a couple of possibilities:

1) The Innovator doesn''t always prevail:
Prout is the innovator but someone else hatched the egg. While Prout has built over 4,200 boats, they did not manage to keep the leadership position as soon as the market for multihulls really took off. In Sailing Today, another possibility mentioned was the recent recession and the strength of the pound. Hmmm.

2) Quality:
If our experience is any indication for the average Prout ownership experience, the huge and lucrative charter market would have turned its back on Prout a long time ago. People like standardized, KISS auxiliary systems that are available/repairable all over the globe. Systems ought to be bullet-proof, reliable.

For example, Prout installed non-stainless stay pin substitutes into our mast head in a rush to get the boat presentable for the Miami boat show. These pins are rusting... an inquiry to Prout was a no-show. Gail Monk accused Z-Spar of delivering the defective pins (impossible IMHO) and told me it''s my problem, not theirs.

Ditto for their installation of a cockpit drain that drained into a sealed engine compartment. The drain was not attached to anything! The hydraulic pumps, the starter, and the alternator were for us to fix (after all, such a brain-dead mistake only cost us $5,000 or so, plus labor). We then discovered the source of the leak and installed a new drain so that cockpit water drains overboard, not onto the back of our engine.

How about the poor family in Florida that discovered the hard way that Prout had installed a copper gas line in the bilge of their boat? Besides obliterating the boat, several occupants got burned severely (one child over most of its body). Prout tried to blame the owner (as if *he* installed a corrible copper pipe line in an area that reasonable people would expect to get wet). The courts ruled against Prout... but then the plaintiffs discoverd that Prout carried only 2M liability insurance...not nearly enough to carry the 10.5M health insurance costs.

3) Customer Service:
The above examples are perhaps reason enough for Moody to stop Prout building private label Moody catamarans. Moody cited the current management/owners Quest as the principal reason for not renewing the contract. Since the new Prout UK is a still a subsidiary of Quest, this problem is unlikely to go away.

4)Design:
The design while very functional for owners, is less ideal for charters. Prout doesn''t cram quite as many people into the boat but has functional areas (for example, the navigation areas for some cats I saw at the Düsseldorf boat show were laughable). Charter fleets don''t care so much about large chart tables, etc. as their boats keep cruising the same happy cruising grounds over and over. Besides, who asked the cook on these boats for opinions?

5)Cash Crunch:
They got on the financial escalator and started spiralling down. If in fact they were not able to finish boats on plan, then the money to pay the labor to finish them had to come from somewhere:

Yes, suppliers! Some of these poor folks were allegedly not paid for years - I have no way of verifying this claim. But I can imagine how the operation of the company would become increasingly erratic as cash shortfalls cause management to react in ways non-consistent with normal business operations.

But where do we go from here? As reported in the Dec 2001 issue of Sailing Today, the "new" Prout will only build the 38'', 43'' and 46'' sailboats. The powercats and the new 70'' cats will be built by Quest subsidiary Concordia in Thailand. Looks like a shift to the luxury market. So much for a recession!

Consider however, that the more expensive the boat, the more "features" it will have. These "features" increase manufacturing complexity by an exponential factor. Now ask yourself: So far, do you get the impression that quality is a core competence of Prout?

Thus, does this shift make sense?

Time will tell.

Constantin

PS: Have a look at <a href=http://www.vonwentzel.net/Prout/index.html>some more war stories on my web-site</a> by clicking on the link to the left or pointing manually to www.vonwentzel.net/Prout/

Constantin 02-05-2002 04:46 AM

Prout Catamarans Went Bankrupt
 
Some more digging brought up the following tidbits in Yachting Monthly and BoatingIndustry.com. Apparently, the 5,000 manhours Prout Catamarans needs to finish a 38 footer cut into profits.

"According to Larroux... every boat sold in the past two years...sold at a loss."

Ooops. I guess we can''t make up that shortfall via increased production.

The Yachting Monthly article went on to state that Prout UK is going to "take delivery of two hanger buildings which should help increase capacity: "With the two semi-permanent hangers we hope to up production to about 50-60 boats a year"

OK, the company just went bankrupt, now they''re expanding into new hangars? Something doesn''t smell right in the state of Denmark. Besides this expansion and the retrenchement on the number of models they''re building, Prout Catamarans apparently will no longer offer kit boats.

Best of all, Prout Catamarans US owners Quest are looking for additional US dealers besides Advanced Yachts. Perhaps having a dealer actually survey boats on arrival AND hold Prout Catamarans to ABYC standards is a bit too much of a pain in the rear? Too bad AY wasn''t on watch when our boat was delivered (whistful smile).

Best of all, Prout Catamarans claimed to be on solid ground as late as July 2000 before being bought by Quest in August. While payment difficulties were denied as early as 1999, suppliers were praised for standing by the company by Mr. Underwood when the deal was announced. All of the articles seem to point to payment difficulties in 1999, when a Liquidator called Pullig and Co was apparently appointed to Prout Catamarans in Canvey Island 15/09/99... Yikes!

Cheers!

Constantin von Wentzel
www.vonwentzel.net/Prout/

Constantin 03-30-2002 05:55 AM

Prout Catamarans Went Bankrupt
 
So I dug some more and bought a credit report. Here are some general findings, assuming the report is correct. FY refers to Fiscal Year, which the report usually ended in 30 of April. So when I state FY98, it means I am referring to the year that ended on April 30, 1998.

1) Prout Catamarans'' sales collapsed much earlier than ''99. From FY97 to FY99 they were halved. However, the significant drop came in FY98 when they went from £6MM (FY97) to £4MM. Since then, they have been about £3MM p.a.

2) The payroll was fairly steady: 30-40 people. Considering that sales just collapsed, that seemed kind of odd. Furthermore, there are plans to expand production in new facilities built nearby. Either people are expected to sit around or it took a lot longer to finish boats than planned. The latter is more likely.

3) Operating profits were slim until FY97, then went ever-faster into the red. Every boat was sold at a gross profit but a net loss. That''s what happens when COGS reach 97%.

4) My best estimate for actual production volume given the number of people employed and revenue is between 10-12 boats per year. That''s not much, probably less than the annual production of just the Lagoon 38 alone.

5) Meanwhile, Prout was depending to the tune of 30% of sales on current liabilities (accounts payable). Judging by the number of successful court cases taken out against Prout in the three months prior to the receivership declaration, a number of them had gotten fed up.

For more analysis, see my <a href= http://www.vonwentzel.net/Prout/Bankruptcy.html>Prout Bankruptcy web-page</a>. It has slightly more information.


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