Hard times are here

Official figures have confirmed what many I am sure had already surmised. The Office for National Statistics has reported that the UK’s economy fell by 20.4 per cent in the second quarter of 2020; making it the worst-performing of all advanced economies. However, be in no doubt that there are tough times ahead for all.

Throughout the COVID-19 pandemic, acceptance that the world was in the midst of an extremely trying time was underpinned, at least within the superyacht industry, by a sense of cautious optimism.

Where first there were fears over cancelled new build contracts and force majeure clauses, there followed the realisation that owners, by and large, were in fact, as human as the rest of us, and determined to take delivery of their projects. Where first there was an almost total collapse of the charter market, there followed a period of rearrangement and determination to make the most of a diminished summer charter season. However, to what extent has the skin of our teeth and government aid held our fragile optimism together?

“Today’s figures show that hard times are here,” says Rishi Sunak, Chancellor of the Exchequer for the British government. “Hundreds of thousands of people have already lost their jobs, and sadly, many more will. But, I will say to people, although tough decisions lie ahead for all of us, no one will be left without hope or opportunity.”

When times are tough, as a journalist you half expect the businesses and individuals that you engage with to try and find a silver lining amongst even the dreariest of skies and, depending on the severity subject matter, sometimes you will allow, or even encourage, them to believe it. Indeed, while various government schemes continue to support businesses of myriad shapes and sizes, it still remains just about possible to catch a glimmer of silver out the corner of your eye. However, these schemes will not last forever and many are already looking to 2021 in order to ascertain where the real damage will be done.

As is often the case, small independent businesses and one-man-bands will most likely be the first to feel the pinch and, for an industry that produces such large, complex and expensive assets, these niche businesses cater for large sections of the market. It will not, however, just be the layman that bears the impact. Be in no doubt that for all of the market’s rhetoric and optimism, there will be a large contingent of buyers and charter guests who are determining to tighten their purse strings.

After months of geographical and financial restrictions, there is suddenly a boom in tourism activity as people look to break free of their shackles and governments look to cash in on cabin fever. Indeed, I doubt there were many people that weren’t plotting an escape of sorts throughout lockdown. And yet, our desire to fly, swim and spend has been underpinned by the knowledge that there are currently safety nets in place. How many, I wonder, will regret their actions come the new year?

The same, I imagine, will be true of UHNWIs. Where many businesses should have failed, they survived and thus the purses have remained partially open in a limited capacity for a limited period of time. But, how freely will the spending remain when the full impact of the global recession reaches fever pitch?

In the years that followed the Global Financial Crisis the new-build delivery figures remained solid, until the point that legacy projects had either been delivered or sold. In fact, 2008 remains the industry’s most productive year in terms of unitary output.

If there is a lesson we can learn from 2008, it is that we shouldn’t be looking at this year’s performance to determine how impactful this recession will be. With the global slowdown in manufacturing, we can safely assume that a number of deliveries will have been pushed to 2021, on top of the 30 per cent that tends to carry over annually. We may even find that 2021 is a bumper year for the yachting industry if we remain myopic. But, in order to ascertain how resilient the market truly is, we should be looking at new orders…or the lack thereof.

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