WEBVTT - Sailing in Style With Fraser CEO

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Earlier today,

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<v Speaker 1>we saw shares of some luxury brands, such as Todd's,

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<v Speaker 1>Berbery Montclair drop after China reported weaker than expected retail

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<v Speaker 1>sales for September, even as the world's second largest economy expanded.

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<v Speaker 1>We're really worried about that important luxury market called China. Um,

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<v Speaker 1>We've got another check on the luxury market because in

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<v Speaker 1>a couple of days, the Fort Lauderdale International Book Show

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<v Speaker 1>gets underway. We've got Raphael Solo, chief executive officer of

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<v Speaker 1>Fraser Yachts, joining us via zoom from Florida this afternoon. Raphael,

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<v Speaker 1>how are you? Yeah? Very well, call it and Jim,

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<v Speaker 1>very nice to be back with you today. It's good

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<v Speaker 1>to have you back with us. It's interesting. We've been

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<v Speaker 1>talking a lot about the pressure that the consumer is

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<v Speaker 1>feeling price hikes, but my understanding is that, well, yacht

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<v Speaker 1>sales have really never been better. Is that right? Look,

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<v Speaker 1>we've been going through some tremendous years the last couple

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<v Speaker 1>of years, despite the pandem we well being through. Was

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<v Speaker 1>that absolutely outstanding. We've never seen a number of cells.

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<v Speaker 1>I have to say the twenty two is a little

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<v Speaker 1>bit slower. We are so far seeing a drop of

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<v Speaker 1>in the cells of second end boats. But you know

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<v Speaker 1>this is probably due to many factors. One probably the

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<v Speaker 1>lack of inventory so many boats were sold last year

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<v Speaker 1>and yes, but more also probably some of our potential

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<v Speaker 1>buyers who are wanted to see what's coming next. But

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<v Speaker 1>you know, as you rightly said that you think industry

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<v Speaker 1>has never been so so so doing so well, So

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<v Speaker 1>we're very fortunate, Rafael. Did you say down thirty two

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<v Speaker 1>thirty two? That's right for the cells Segonden without in

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<v Speaker 1>twenty one and two. Sorry, however, were still ahead of

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<v Speaker 1>sixty nine percent on the average of the last thirteen years.

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<v Speaker 1>So this is a very very strong industry still going

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<v Speaker 1>for for your team, Pfael, there's yachts in their yachts

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<v Speaker 1>and were are super Yes, a y is anything you

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<v Speaker 1>use for pleasure? Is that true definition? But tell us

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<v Speaker 1>we go ahead were we are We are talking about

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<v Speaker 1>the adds over thirty feet here. You know, so the

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<v Speaker 1>numbers have just gave you refer to the industry of

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<v Speaker 1>what we would call the super yachts effectively. Uh, and

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<v Speaker 1>I can ensue, yes, this is a lot of a

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<v Speaker 1>lot of pleasure on body yacht. So tell us who

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<v Speaker 1>is your like, what's the typical yachta cells that the

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<v Speaker 1>majority of your sales give us an idea of what

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<v Speaker 1>they are, how long they are, how much they go for,

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<v Speaker 1>and who's typically buying. Well, you know this is this

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<v Speaker 1>is a very large subject. We we sell you adds

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<v Speaker 1>between thirty feet up two three hundred plus feet, you know,

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<v Speaker 1>So it really depends on on what you are your

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<v Speaker 1>customers are looking for. But the average cells today in

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<v Speaker 1>your thing industry is about eighty to ninety feet of

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<v Speaker 1>an average price of seven million. But obviously we also

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<v Speaker 1>have bigger sells over you know, one hundred meter and

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<v Speaker 1>and and a few hundred million dollars. So it really

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<v Speaker 1>depends the wide range of products which we have available

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<v Speaker 1>in now industry. Now when it comes to the customers

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<v Speaker 1>there again, you know, the American market leads a charge

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<v Speaker 1>to the ad, say, for more than fifty percent of

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<v Speaker 1>our own serves at fraz yad we are leading with

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<v Speaker 1>American best customers and they've always been very, very strong

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<v Speaker 1>in the market. I have to say, we even have

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<v Speaker 1>an additional probably ten percent in twenty two from the

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<v Speaker 1>American market, So we are close to fifty in twenty two.

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<v Speaker 1>And you will not only see this with the sales market,

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<v Speaker 1>but also with the shater market. The US market is

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<v Speaker 1>very strong and they surely like their yachts. Who is

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<v Speaker 1>buying these yachts right now, because my understanding is you're

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<v Speaker 1>seeing a lot of Americans by them. Yes, absolutely, and

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<v Speaker 1>one one trend or so something which is new, if

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<v Speaker 1>I may say, over the last couple of years, we've

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<v Speaker 1>seen younger, younger customers coming to the market. So sorry,

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<v Speaker 1>how do they need their money? Is it been in

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<v Speaker 1>the past's crypto? We see where crypto is one way.

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<v Speaker 1>The tech companies obviously, you know, we see of people

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<v Speaker 1>are coming from tech edge funds, finance would and of

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<v Speaker 1>course from a pharmacutical world as well. So we've seen

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<v Speaker 1>a lot of these new newcomers to Utin. I mean

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<v Speaker 1>our company on its own, we have at fourty percent

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<v Speaker 1>newcommers coming to you think is a big number. And

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<v Speaker 1>all these all these people have made our average age

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<v Speaker 1>of customers going from fifty five to sixty five to

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<v Speaker 1>fourty five to fifty five so I mean all these

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<v Speaker 1>numbers are extremely encouraging for you, tink number one new customers,

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<v Speaker 1>younger customers, and a lot of American bias. So this

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<v Speaker 1>I would say, You know, as we say in my

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<v Speaker 1>in my country in French, you know, all lights are

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<v Speaker 1>green for the uting industry. We're talking about Raphael so

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<v Speaker 1>though he is the CEO of Fraser Yacht. As we mentioned,

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<v Speaker 1>they've got seventeen officers around the world are They've been

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<v Speaker 1>around for decades and really have a great global perspective

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<v Speaker 1>when it comes to the yard industry. He is via

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<v Speaker 1>zoom U in Fort Lauderdale, Florida, where the and just

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<v Speaker 1>a couple of days the Fort Lauderdale International bo gets underway. Raphael,

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<v Speaker 1>we ended our last segment with you talking about American consumers,

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<v Speaker 1>but since you have such a global presence, really eager

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<v Speaker 1>to hear what you're seeing around the world. We spent

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<v Speaker 1>so much of our program today talking about China. What

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<v Speaker 1>are you seeing from Chinese consumers right now and how

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<v Speaker 1>is that different from what you've seen over the last

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<v Speaker 1>few years. You know, do your thing industry has been

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<v Speaker 1>trying to break through China, and we're talking again large

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<v Speaker 1>yats and you know, it never it's never been successful

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<v Speaker 1>for many reasons before you know, even the economics and

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<v Speaker 1>and and the luxury goods, et cetera. One of the

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<v Speaker 1>most reason, it's the most important reason, is the fact

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<v Speaker 1>that this is not really in their dna to be

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<v Speaker 1>at sea on the yat, you know, the Chinese in general,

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<v Speaker 1>in Chinese and then all, they don't necessarily like the sun.

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<v Speaker 1>We don't necessarily like the sea. And for them to

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<v Speaker 1>be on the yacht for seven, six, eight days, it

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<v Speaker 1>can get very boring very fast. So this is a

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<v Speaker 1>market which has not been very very successful for the

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<v Speaker 1>industry overall. You have some few exceptions obviously, you know,

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<v Speaker 1>like you know, lots of bios can come from Hong Kong,

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<v Speaker 1>but mainland China you have a very few customers today.

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<v Speaker 1>I would I think that maybe the future generation a

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<v Speaker 1>lot of a lot of Chinese are putting the children

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<v Speaker 1>in you know, occidental school as well, say, and some

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<v Speaker 1>of them are maybe more accustomed to the uttin you

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<v Speaker 1>think a bits and what can provide you with So

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<v Speaker 1>we may see a development in the Communists, but I

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<v Speaker 1>would not bet too much money on that market so far.

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<v Speaker 1>And as you see, also because of the regime is

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<v Speaker 1>not necessarily very well seen to to have a yacht

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<v Speaker 1>and have being since spending your money in in such

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<v Speaker 1>a type of good. So the market itself in China,

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<v Speaker 1>we've seen some few openings, mainly for in vidual based

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<v Speaker 1>in Hong Kong, not many from mainland China. And this

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<v Speaker 1>is not a very strong market as we speak today,

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<v Speaker 1>um in terms of Hong Kong, though maybe not a

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<v Speaker 1>massive market for you guys, but hasn't changed too as

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<v Speaker 1>rule there has changed dramatically over the last year, it

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<v Speaker 1>does not affected yet a few buios whom we have

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<v Speaker 1>in Hong Kong. The they still are buying boats, and

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<v Speaker 1>there's a culture of your thinking on obviously by its

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<v Speaker 1>proximity to the sea and its magistrates albor so and

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<v Speaker 1>the fact that they want the British regime in the past,

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<v Speaker 1>so they have a kind of a youth team culture,

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<v Speaker 1>if I may say so, This market remains. But again

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<v Speaker 1>for our own market over the eight feet boats, it's

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<v Speaker 1>it's not a big, big, big game change to day

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<v Speaker 1>at least. What about when it comes to Russians. I mean,

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<v Speaker 1>we know that Russian aligarchs were big buyers of yachts,

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<v Speaker 1>we've been tracking for the last six plus months about

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<v Speaker 1>what actually happens to those yachts and different parts of

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<v Speaker 1>the world. What are you seeing from that market? Well,

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<v Speaker 1>you know that what we've seen about obviously the oligards

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<v Speaker 1>they met the airlines because most of them at the

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<v Speaker 1>largest boasts in the world. If you if you now

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<v Speaker 1>put things into perspective, you know, the the Russian market

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<v Speaker 1>for the what we call the mega at the biggest

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<v Speaker 1>yachts in the world is about seventeen. However, if you

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<v Speaker 1>look at the U team market overall, the Russian market

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<v Speaker 1>is done to seven eight, so of co it has

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<v Speaker 1>been a bit of an impact on our whole industry.

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<v Speaker 1>But from what we said earlier and the influx of

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<v Speaker 1>new customers, mainly from America, we've been able to compensate

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<v Speaker 1>a little bit the loss of the of the Russian

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<v Speaker 1>market by the ole of these new customers. The biggest

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<v Speaker 1>impact is indeed with the larger yachts, where you are

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<v Speaker 1>obviously a man impact the bigger shipyards which were building

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<v Speaker 1>the two hundred three feet um Now when it comes

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<v Speaker 1>to the existing yards, but as you know, some have

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<v Speaker 1>been frozen if you have been seized, and we really

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<v Speaker 1>don't know what's gonna happen to these yeard's going forward.

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<v Speaker 1>M hm, that is interesting. Um okay, so what are

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<v Speaker 1>kind of some of the interesting big trends when it

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<v Speaker 1>comes to yarding? And I think about one helicopter path

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<v Speaker 1>or being greener, being greener and sorry but I'm just laughing, Yeah,

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<v Speaker 1>bio Diesel to put in that, Yeah, right, well, you know,

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<v Speaker 1>I mean there's also a trend which we see developing

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<v Speaker 1>and that is really I think very true after COVID

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<v Speaker 1>where people see the pursas of a yat as being like,

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<v Speaker 1>you know, a second or third home. So you see

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<v Speaker 1>a little changer as well, you know, because of the

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<v Speaker 1>technology and people realize and it also not so difficult

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<v Speaker 1>to work remotely, so some of our customers, you know,

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<v Speaker 1>they are not trying to go away for six months

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<v Speaker 1>on their yat and walk from there yet. So we

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<v Speaker 1>have we have seen that shift as well, which I

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<v Speaker 1>think played a big role into the your booms which

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<v Speaker 1>we've experience the last couple of us. Now, going back

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<v Speaker 1>to your question about green, you know, I'm not I'm

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<v Speaker 1>not a liar, and I think it would take us

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<v Speaker 1>for you think to be super green obviously that's so

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<v Speaker 1>much she can do with a yacht. However, our industry

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<v Speaker 1>is really at the forefront of trying to find new

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<v Speaker 1>technology and new west to make you think greener than

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<v Speaker 1>it is today. So the shipyard as are spending a

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<v Speaker 1>lot of money together with the owners. You know, we

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<v Speaker 1>have our owners building new boats who are actually very

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<v Speaker 1>very keen to make a difference. So they are coming

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<v Speaker 1>up we with new ideas and plans and new technology.

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<v Speaker 1>So today you have a you have several yards which

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<v Speaker 1>are so called hybrid, so like their name states, you know,

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<v Speaker 1>they are both which can remain without without proportion for

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<v Speaker 1>about eight to nine hours, and that makes a huge difference.

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<v Speaker 1>You know, eight to nine hours without burning fuel is

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<v Speaker 1>already eight and nine hours. And not only it allows

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<v Speaker 1>you to have agree in the yard, but also it

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<v Speaker 1>allows you to really enjoy you in your different manner,

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<v Speaker 1>no more nos normal vibration. So I have to say,

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<v Speaker 1>you know, there's so much we can do, but we

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<v Speaker 1>can see that the industry and its wall is making

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<v Speaker 1>a huge effort and spend a lot of monetorying to

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<v Speaker 1>make you think more green, no normalise today, hey, Raphael.

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<v Speaker 1>Our producer Paul Brandon that shared on our Planning car

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<v Speaker 1>that there is a six year waitlist at shipyards for yacht.

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<v Speaker 1>Is that that's really the case that you know today

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<v Speaker 1>go ahead, Yes, today you can go up to almost

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<v Speaker 1>almost five years, that's right. Is that typical or is

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<v Speaker 1>that historically high? No, it's historically why we're in that

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<v Speaker 1>villays for the very simple reason that the last two years,

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<v Speaker 1>especially twenty one, have been just incredible, meaning that we

0:11:08.559 --> 0:11:10.600
<v Speaker 1>have had so many others, so all the ship yards

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<v Speaker 1>are just fool. There are no more space to build

0:11:12.520 --> 0:11:14.680
<v Speaker 1>a new boats. So whenever you want to come in

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<v Speaker 1>some certain shipyards, you've gotta have to wait, yes, four

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<v Speaker 1>to five years to get your boat delivered. And that's

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<v Speaker 1>the reason why. Also the second end market has been

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<v Speaker 1>so strong because a lot of people don't want to

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<v Speaker 1>wait five six years. You know, you have that Carpim

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<v Speaker 1>factor after COVID, so they decided, okay, you're gonna take

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<v Speaker 1>me four to five years to build a new boat.

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<v Speaker 1>I'm gonna buy a second end boat for now. And

0:11:35.000 --> 0:11:37.920
<v Speaker 1>this is where we've seen that that that boom in

0:11:37.960 --> 0:11:40.880
<v Speaker 1>the s Woland market. Now you have some yards which

0:11:40.920 --> 0:11:43.920
<v Speaker 1>have been smart enough to build on speculation. As we said,

0:11:43.960 --> 0:11:46.240
<v Speaker 1>so you can find a few a few boats which

0:11:46.280 --> 0:11:49.360
<v Speaker 1>will be available in twenty three summer and in twenty four.

0:11:49.880 --> 0:11:51.520
<v Speaker 1>But in some other yards, if you want to build

0:11:51.520 --> 0:11:53.319
<v Speaker 1>a new boat, yes you have to wait four years.

0:11:53.360 --> 0:11:55.320
<v Speaker 1>It's a very long time to get a new yard.

0:11:55.480 --> 0:11:57.199
<v Speaker 1>But if you, you know, make it big enough off,

0:11:57.320 --> 0:12:03.240
<v Speaker 1>can you cut the line? No? Oay, come on, I

0:12:03.280 --> 0:12:06.840
<v Speaker 1>mean you hear right, like if you're waiting for an airliner.

0:12:07.120 --> 0:12:09.480
<v Speaker 1>I don't know. You know why because you signed a

0:12:09.559 --> 0:12:12.840
<v Speaker 1>contract with a customer, and the customer has been obviously

0:12:12.920 --> 0:12:14.920
<v Speaker 1>very good to get his boats. So now you obviously

0:12:14.960 --> 0:12:18.000
<v Speaker 1>have a few exceptions in the customer said, okay, maybe

0:12:18.000 --> 0:12:19.920
<v Speaker 1>I'm gonna flip my boat, and I'm autament and I

0:12:19.960 --> 0:12:22.240
<v Speaker 1>did value on the resell of my new build. In

0:12:22.280 --> 0:12:24.160
<v Speaker 1>that instance, you may get lucky, but you pay more

0:12:24.160 --> 0:12:27.000
<v Speaker 1>money than you will have bet then. So that's that's

0:12:27.000 --> 0:12:29.360
<v Speaker 1>a chow's and a decision. But I can't tell you

0:12:29.760 --> 0:12:31.920
<v Speaker 1>you owners. We're dealing with a building the new book.

0:12:31.920 --> 0:12:34.000
<v Speaker 1>They are so eager to get their boots and I'm

0:12:34.000 --> 0:12:37.120
<v Speaker 1>not ready to sell it. Ah, that is funny. Um. Listen,

0:12:37.160 --> 0:12:39.439
<v Speaker 1>great to check in with you. Good luck at the

0:12:39.520 --> 0:12:42.800
<v Speaker 1>international yacht coming up in for Australia. Yeah, let's go,

0:12:43.160 --> 0:12:48.160
<v Speaker 1>let's go now, Rafael So, the chief executive officer Frazier Yachts,

0:12:48.160 --> 0:12:50.920
<v Speaker 1>thank you so much. This has been perk business Week