Q&A with Ferretti Group America president and CEO James Henderson

Posted on Written by Reagan Haynes

henderson1James Henderson joined the Ferretti Group as chief marketing officer for the Americas in 2010 as the company was going through a restructuring. After two years he was named CEO/president of Ferretti Group America.

The British-born Henderson has lived and worked in seven countries on four continents. His background is in general management, strategy, corporate development and marketing, working with premium brands and services. He started his career in strategy consulting and has held a series of senior roles in business development, brand management and operations as both CEO and chief marketing officer of several businesses, with responsibility for more than $200 million in revenue.

Henderson is responsible for the Ferretti Group’s interests and operations in North American and Latin America. During the past two years he has restructured the American organization, established a new factory-direct distribution model and enhanced the dealer network. These initiatives have resulted in record sales for Ferretti Group and its brands in the American markets. He also played a key role in restructuring the Bertram Yacht organization, developing a new operating plan, repositioning the brand, recruiting a new team and relocating the manufacturing operations.

Before Henderson joined Ferretti he was CEO of Synchrony Yachts, CEO of Elixir Beverages and was responsible for business development and marketing at Red Bull Sauber Petronas Formula One. He earned an M.B.A. at IMD, the International Institute of Management Development, in Lausanne, Switzerland.

Soundings Trade Only asked Henderson to talk about how he has changed the focus of Ferretti Group America and where he sees the company heading in the near- and long-term future.

Q: What brought you to your role at Ferretti?

A: I’ve been with the Ferretti Group for just over three years. Prior to that I was CEO of a business in California. My background is a in a range of general management activities. I’ve worked in the luxury goods industry for a number of years, and I’ve always been involved in companies that were either restructuring or undergoing significant growth. I’ve lived and worked in a number of different countries. I started in the U.K. — I’m from the U.K. originally — and then lived and worked in Australia, Hong Kong, Singapore, Malaysia and then Switzerland. I ended up in California in 2003 helping to restructure a consumer goods company and came to Florida to work on a project in the yachting industry. As I was working on that project I got approached by the Ferretti Group. Ferretti at the time was going through a restructuring with new management back in 2009 and 2010, and they were looking at the American organization and trying to determine how we could build and develop those markets.

I joined Ferretti in the capacity of chief marketing officer, which was kind of a funny role because, in reality, I probably spent about 25 percent of my time on pure marketing activities, and the balance of that was spent focusing on reorganizing the American operation. The mandate at the beginning of those three years was to do three things: One was to look at how we could build Ferretti’s brands more effectively in America. So how could we build Ferretti, Pershing, Riva and Ferretti Custom Line primarily in the American market? The second mandate was to look at our entire distribution infrastructure in the Americas and see how we could rethink that strategy. The third mandate was to really look at Bertram Yachts because at the time Bertram was built in Miami in a facility that was almost 50 years old. Bertram needed to have a new strategy and a new direction in the organization. I worked on those three mandates until the end of 2012. At that point my boss, who was CEO of North America, was promoted to Group CEO. I went to Italy to help him with some strategic planning and business planning for the entire group and spent some time there as group chief marketing officer. I was then promoted to come back to become president and CEO for the Americas in January 2013.

Q: What are some of your main goals as CEO?

henderson2A: Within the last year Ferretti obtained a new shareholder [Weichai Holding Group, which has a 75 percent stake] that is a very financially strong organization, which means that we’re probably today one of the best-capitalized yacht manufacturers in the world. They have an aggressive strategy to build every business that they’re involved with to be No. 1 or No. 2 in its sector, and that’s their goal for Ferretti Group. Part of that is to grow and expand our international footprint from a distribution perspective. The group has always been more about product and innovation, and the Italian-made element. Of course, we have Bertram Yachts in North America, which is a very iconic brand. But for all the group’s brands, we have been looking at how we can continue the expansion into international markets. What we’ve done is set up three regionalized distribution and service structures. One is our European operation; the other is our American operation, and we just opened an office in Hong Kong in January to build the Asia Pacific operations — today we have offices in Hong Kong and Shanghai for Asia Pacific. I have responsibility for all of the group’s organizations in the Americas. I’m responsible for sales, marketing and service operations. I also have oversight for the Bertram Yacht business and oversee the American manufacturing operations. The third area I have responsibility for is Allied Marine, which is our brokerage and charter business.

One of the things we’ve spent a lot of time on in the last three years is reorganizing our distribution approach. I think if you look at what’s happened in the yachting industry over the last five years, there’s been a significant change in the distribution model. Before the financial crisis in 2008, most of the business in the American markets was characterized by dealerships and third-party distribution. After the financial crisis, many dealers were not able to carry floorplan.

Our buyers are very global people. If clients are going to spend more than $1 million on a purchase, they’re certainly willing to travel to do that. We realized that most of our buyers were willing to travel, and we also felt it was more productive for us to really create a factory-direct presence in the American market. Having bought Allied Marine in 2008, we decided to reorganize the American structure, and we transitioned the Allied Marine brand to become our brokerage and charter business. Today Allied Marine, which is a brand that’s been around since 1945, focuses very exclusively on yacht brokerage and charter.

Ferretti Group America is our direct distribution vehicle for the American markets. Within that infrastructure we have a facility in Fort Lauderdale, which is where my office is. We have about a 45,000-square-foot covered retail marina facility where we house all our central inventory. This is a hub for us, where at any one time we’ll carry anywhere, plus or minus, $60 million of inventory that will serve the North American and Latin American markets. In Florida we have a direct sales force operating under Ferretti Group America. In the Northeast we have a direct sales force which operates under Ferretti Group America, and then outside of that we have a network of partners and dealers, and they work with us to expand our footprint. One of my goals at the moment is to continue expanding that distribution footprint. We’re looking at opportunities in the Great Lakes, Canada and California. We’re also looking at really strengthening and expanding our presence in Latin America. We’ve also reduced the size of our direct sales organization. The idea is to have a sales organization composed of fewer people, but well-trained people who really understand the product and are very knowledgeable about selling new boats. I believe selling new boats and selling brokerage boats require a very different approach. We have a group that specializes primarily in selling our new inventory. We have another group that specializes primarily in brokerage.

Q: I understand Ferretti is making a big push in the U.S. market. Can you speak to that and talk about the continued challenges in the European market?

A: We’ve tried to rethink the traditional dealer model a little bit. Last year we opened up our first retail concept store in Palm Beach on Worth Avenue. It’s an interesting concept because what we’ve done is taken our retail offering into a high street retail environment. Palm Beach is one of the wealthier ZIP codes in America and Worth Avenue is probably one of the most prestigious shopping streets in the U.S. It has brands like Gucci and Louis Vuitton, and Saks Fifth Avenue and Neiman Marcus. We’ve built a Ferretti retail store in the heart of Worth Avenue, which is about 2,500 square feet. We’ve put an Aquariva inside the store. People walk down Worth Avenue and expect to find jewelry stores and fashion houses, and then they find a luxury yacht brand with a million dollar Aquariva sitting inside the store. So we’re trying to find innovative ways to get our product in front of potential clients in a casual environment and where they can get more of an idea of what we do as a group.

In the last 12 months we’ve gone through a fairly significant reorganization at Bertram Yachts. We’ve hired a new management team. We have brought on board Robert Ullberg, who is one of the best-known sportfish designers in the American industry. We’ve relocated the factory from Miami to Cape Canaveral, Fla. And we’ve hired a brand new team. We brought some of our existing employees to Cape Canaveral, but we also brought a lot of new people on board.

Q: Where are your primary areas of focus within the United States, and how are you reaching them?

henderson3A: The Northeast is a great market for us. The Florida market is also very strong. A lot of that comes from our investment in the direct sales presence that we have, and the focus on really building the brands. We have eight different brands in the group, and every single one of them has a very unique story behind it. This year Riva is 170 years old. It’s an extraordinary story and an extraordinary product. Ferretti Yachts has a very particular positioning in terms of being a very refined, extremely well-built and well-engineered motoryacht. Pershing is a product that is all about performance, innovation and speed. Each brand has a very specific DNA. So one of the things we’ve worked hard on is telling the story of each brand, and trying to explain to the market what makes Pershing so unique, or what makes Ferretti so unique, and why there is a premium price to Ferretti Yachts over many of our competitors.

Q: Can you talk a bit more about how your servicing functions without as many traditional dealerships?

A: We have a service organization that we divide broadly between the brands. We have a service manager that looks after Ferretti Custom Line, someone who looks after Pershing and Riva, and we have a Bertram service manager as well. Then we have a team of technicians, and a network of partners throughout the country that we work with on the service side, as well as a series of mobile service providers to support that. If you look across our business, a significant amount of our business is repeat. Probably 40 to 50 percent of our sales come from repeat buyers, and if you think about the fact that we’re growing 30 percent a year, that’s really significant. On average, I’d say most of our clients own a boat about two years, and then they’ll change and come back and buy something else. On that basis, I think … the service support we provide is one of the things that gives us that loyalty.

Q: Are Ferretti, Riva, Pershing and Bertram the brands that you are focused most on selling in the Americas?

A: I would put Bertram to one side a little bit because it’s a brand we’ve only really started to refocus on in the last couple of years. The main focus for us in the Americas is Ferretti, Custom Line, Pershing and also Riva. Bertram as well. But in terms of our sales performance and success, Ferretti and Custom Line because Ferretti is a flybridge motoryacht that goes from 50 to 96 feet and we have an incredible range. Custom Line, with the new model range in the planing line, starts at 100 feet and goes up to 124. And at the semi-displacement we’re up to 24 meters and 33 meters.

Q: Several other companies based in Europe and elsewhere have brought their products to the Americas, or have launched more aggressive campaigns here. What are some of the challenges of doing that? What are some benefits? What does it take for a company to be able to succeed at that?

A: The first answer to that is, if you look at the product in our industry today, there’s a lot of convergence. If you go back a number of years, there were significant differences between the American style of motoryachts and yachting and European style, and in the ways people used the boats and how they spent time on them was very different. I think there’s a little more convergence in that regard now. If you look at some of the styling and designs, a lot of American manufacturers have moved toward a more European styling and a lot of the European manufacturers look more toward the functionality than they have in previous years in boats.

The second thing is, in terms of the success factors in building a presence and brand in the market, a lot of it is down to being present. We really work on building clients and building a reputation with clients for supporting them by building a quality product, servicing them well, and having them come back to buy more product. There’s no quick fix or magic solution for that. We have a very significant investment in the Americas in terms of our infrastructure, our organization and our team here.

Q: A recent press release emphasized the market in Thailand as being very important to the group. Can you speak to some of the Asian markets?

A: I should qualify my comments because I’m responsible specifically for the Americas, but I do speak to colleagues there, and I lived in Asia for a number of years so I know the region fairly well.

When you look at Asia Pacific you have to look at each market a bit differently. China is a very specific and very much a developing market. If you look at Hong Kong and Singapore, those are more developed markets where there is a marine infrastructure and there is a boating environment, but the sizes of those markets are relatively small. China is a country with 1.35 billion people, whereas Hong Kong, which is a part of China now, has 6 million people. Singapore is 24 kilometers across. So in terms of scale compared to China, it’s small but more developed. In Hong Kong and Singapore, the income-per-capita is high, and there’s a concentration of high net worth individuals in those markets who come from very international environments. I think those markets are resilient, but they don’t show anything like the growth potential of China.

henderson4Thailand has amazing coastline and beautiful places for boating, but it will take some time to develop the infrastructure, and I don’t think Thailand has the same incumbent population of ultra-high net worth individuals as somewhere like Hong Kong or Singapore or China. Typically the people we sell to are in the $30 to $50 million-plus range in terms of net worth. A Credit Suisse report said that in the United States last year there were 36,000 people in excess of $50 million in net worth, which I find extraordinary. I believe China has 5,000 people with net worth more than $50 million, but if you look at where China was 10 years ago in terms of its state of development, the fact that there are 5,000 people today who have that kind of net worth is amazing. The appetite for luxury lifestyle has grown tremendously in China and in a lot of developing countries. The other thing is, as the West and Europe have been in decline over the last few years, the Asia Pacific has remained fairly resilient.

I think the thing that’s holding Asia Pacific back is lack of development and infrastructure. I spent two or three weeks last year traveling around China and looking at the infrastructure, and they are aggressively building new marinas. These aren’t just simple marinas; they are state-of-the-art facilities, and that is something that I think will accelerate over the next few years. But at the same time, we have to introduce the Asian market to the yachting culture.

Q: You mentioned Latin America being an area of growth. I know you have a production facility based in Brazil, which provides a huge tax benefit in that country. Can you speak to the Brazilian market, as well as other emerging markets that we may hear less about?

A: Latin America as a region for us is extremely important. The economies in Latin America have also been fairly resilient and haven’t quite had the downturn that the North American and European markets have had the last few years. Those markets are still fairly strong, but again, you have to look at them individually. Brazil’s economy has done extremely well over the last decade or so, but it does have the challenge of import duties. We have a manufacturing operation in Brazil, so we produce six models of Ferretti and two models of Pershing in Brazil, and it’s been very successful for us. We have a solid distribution infrastructure there. By manufacturing there, we’ve had some very strong results.

We’re also seeing strong growth in the Mexico market that has been developing as the economy improves. Colombia is an interesting market because they have resolved a lot of the security issues there. It’s starting to evolve as a boating environment. It’s still very early and is an underdeveloped, immature market, but has some amazing cruising grounds. Panama’s economy seems very strong and we’re seeing that evolve. Within the last eight months we opened a dealership in Lima, Peru. We opened a dealership in Argentina and Uruguay as well, and we’re looking at other markets in Latin America. The markets themselves are strong, but the other thing is, there is a huge Latin American market, as well, in Florida. There’s an awful lot of people in Latin America who have second homes in Miami and southern Florida who buy boats to keep and use when they’re here. I think Miami is becoming an informal hub for Latin America because people travel through Miami when they go to Europe, a lot of the international banks are in Miami, and a lot people from Latin America have second homes in Miami. We’re seeing a lot of clients here that are buying from that market.

Q: Are there many builders with the resources to open factories in Brazil? Is that crucial to a builder’s success in Brazil, or are there other viable models and approaches?

A: A lot of companies have tried and failed with Brazil. I think we are probably one of the most resilient and successful. The factory’s one thing, but it’s way beyond that. I was just there three weeks ago, and our factory there is state-of-the-art, it’s pristine. It’s as good as anything we have in Europe, and the team that runs it is really good at what they do, and the product we build out of there is very strong. But manufacturing is one side of this, and research is the other. We have a local partner there who manages the distribution and he’s been a partner with Ferretti Group for 25 years. I think the longevity of the partnership and the relationship that we have in Brazil, and the team we have there has led to the success of our business. We’ve got an extraordinary reputation there. We have a lot of repeat clients and I think we’re probably the only European manufacturer that has such a strong presence in Brazil. We have a sales location in probably the most prestigious shopping center in Sao Paulo. You go into this building and you have all the fabulous fashion brands like Prada and Louis Vuitton and Chanel. On the top floor, we have a sales showroom — it’s got to be 8,000 or 10,000 square feet — and in the building itself on the fifth floor of the shopping center, we have a 53-foot Ferretti in the retail facility of the dealership. It’s quite a statement. The reason we’ve been successful is consistency, great customer service, and the fact that we’ve built continuously good product that’s appealed to our clients, which is why there’s such a high retention ratio.

I’m not sure there’s a magic formula for Brazil. It’s a lot like North America.It takes the investment and hard work. I think people think they’re going to go into Brazil and find a quick solution if they start building things, and it never really works.

This article originally appeared in the September 2013 issue.

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