Tattoo 26 Production Suspended, factory relocating

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Re: Tattoo 26 Production to Cease

Post by BOAT »

RussMT wrote:
NiceAft wrote:Apparently there is a market in the upper Midwest, but I don't believe that good fortune has spread east and west to where the larger coastliness are.
Historically, it is the cities and coastal communities that feel a recession first and come out of it last. It's probably a bit early for big ticket disposable income purchases. However, I see a light and the 26, priced at under $40k ready to cruise, is in a good spot.

If Tattoo is ceasing production, there is an opportunity for someone. Buy low, sell high. Better opportunity for a proven hull though.

--Russ
Here in California the coastal cities of San Diego and San Francisco did not suffer much at all during the recession - most of the suffering was in the central valley where all the farms are and in Los Angeles where all the manufacturing is (placed like Costa Mesa where they USED to build boats). But San Francisco got BIGGER and RICHER during the recession. San Francisco did not skip a beat during the entire recession - that town continued to grow and was not effected by the recession. Now the people in San Francisco are also running the State, and that's why you see a lot of the things happening here that are happening - it's a change in management. The verdict is out on if it will be good, or bad, but for us middle class people it's definitely BAD. For the rich, it might be good - not sure yet. So far the rich are raking it in here in California, and the poor are getting poorer - it's not a platitude, it's a FACT. The statistics are pretty clear.
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Re: Tattoo 26 Production to Cease

Post by NiceAft »

Not interested in incessant posting. Our opinions differ. That does not mean good or bad, just different. :) Time to move on :wink:

Ray

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Re: Tattoo 26 Production to Cease

Post by kurz »

Cougar wrote:
K9Kampers wrote: I don't think the :tat22: was designed with the European market in mind. The auto market over here is indeed targeted at smaller vehicles, but boat owners wanting to tow their boats across the Alps are not the typical European car buyers. The typical European car will - by far - be insufficient for towing a :tat22: at any serious distance.
Well I did already 3 times crossing the alps with a very european car: My 27 year old 124 Mercedes. Diesel 113 hp...
Here in the photo the last petrol station before the San Gottardo tunnel ;-)
Image

Not a serious distance? One way 600miles...
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Re: Tattoo 26 Production to Cease

Post by vizwhiz »

I think there is, will remain, a solid market for the largest "regular" size trailerable boat one can find that is also sleepable or campable. At 26', lightweight, water ballasted, it makes great sense. It may not remain as strong as it once was, for many reasons, but how many people have posted stories saying their V222 just wasn't big enough? Ask Highlander about the size of his 19 and why he got a bigger boat. How many of your admirals will consider stepping down in size? In practical terms, comfortably carrying two full grown adults for any length of time (provisions), or a family for even a short period of time, and 26-ish is the right length. The big motor was the "aha!" moment that truly set the Mac apart. That formula isn't going to change overnight. It still takes a boat of a certain size to do anything more than daysail comfortably...and to trailer comfortably, 8' beam, about 26' length, and 4000# weight is about the limit. So I don't think the market is actually gone. Hurting. Declining. Re-sizing? But not gone.

I really think that other innovations are going to be what revitalizes this market segment (trailer sailers). For example, wing sails. If Tattoo is going to invest, my first suggestion would be to help lead the market to wing sails...be an innovator as that family always has been, and make the sailboat something different. Next suggestion would be to figure out how to make a 26' trailerable trimaran that does 15 knots and still sleeps four comfortably, and can be sold cheaply like the Mac. Third idea would be to make a pop-up sailboat of sorts, one that has a large cockpit and can be day-sailed, but has some kind of pop-up camper-like cabin on it for sleeping in and getting away from the bugs/weather. Those are innovative directions to take that could separate them from the rest of the market and keep the rest of the market playing catch-up. Just my humble opinion...
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Re: Tattoo 26 Production to Cease

Post by BOAT »

Yes, the 26 I think is the limit on the size but there could be a better boat in store by making it shorter. For one thing if you want to increase the strength of the rigging you need to make it smaller or one person will not be able to rig it. Keep the 8 feet wide and just make it a bit shorter and that makes the mast shorter but you can make it stronger with a real turn block head on it and that gives the water ballast system more leverage to do it's thing also - as Russ said - people like the stiff cruiser feel of a keel boat (me personally I do not mind the big heel angles at all in the MAC - it does not bother me one bit) but Russ is right about MOST people - they do not like the big heel angles. A 23-24 foot boat 8 feet wide with the same size ballast tank would be a good start to creating a real trailer CRUISER that could take a wing sail and remain stiff in blue water weather. (AND the builder can make the inside nice and CHARGE MORE MONEY ie: make more profit) I am thinking along the lines of a Carl Lapworth 24. Something that can take a real storm.

I dunno, it's all speculation - i am just going by what i am always hearing from all the other sailors - you guys know who I'm talking about - all those anarchy guys out there that say the MAC is crap and looks like crap and so forth. I'm always running into those guys and they all feel that REAL sailors do not sail a 26M - they don't consider it a REAL sailboat :( (oh brother).

As for me - well, if I had all the money in the world i would still buy the MAC 70 - that's how much I LIKE the MAC styling and the raccoon stripes and the long narrow shapes of the MAC fleet. I may be the weirdo, I don't care - but I think Tattoo made a HUGE mistake by removing the Raccoon Stripes, I like them and will never get rid of them on my boat. I like them and I STILL think the MAC M and the 70 and 65 are the best looking boats on the water. I really do feel that way, always have.
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Re: Tattoo 26 Production to Cease

Post by tek »

BOAT wrote: I dunno, it's all speculation - i am just going by what i am always hearing from all the other sailors - you guys know who I'm talking about - all those anarchy guys out there that say the MAC is crap and looks like crap and so forth. I'm always running into those guys and they all feel that REAL sailors do not sail a 26M - they don't consider it a REAL sailboat :( (oh brother).

As for me - well, if I had all the money in the world i would still buy the MAC 70 - that's how much I LIKE the MAC styling and the raccoon stripes and the long narrow shapes of the MAC fleet. I may be the weirdo, I don't care - but I think Tattoo made a HUGE mistake by removing the Raccoon Stripes, I like them and will never get rid of them on my boat. I like them and I STILL think the MAC M and the 70 and 65 are the best looking boats on the water. I really do feel that way, always have.
Interesting that I have often sailed right past those "REAL sailboats" on my :macm: without even trying hard. While I see a lot of anti-MAC sentiments online, I've gotten compliments when actually on the water. And occasional questions such as "Did I see that boat planing earlier today?" I haven't run across many representatives of the anti-MacGregor crowd while actually out sailing.

I'm right there with you on the raccoon stripes, I actually think they make the :macm: look better. I've also been shopping larger boats lately and the used MacGregor 65's are in the running. I've often been told a boat is seen as worth taking care of if you love the boat. Which would include liking the aesthetics of it.

We haven't seen the price of the MAC 70, I'm curious about it, but I'm pretty sure they'll be more money than I want to spend at this point.
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Re: Tattoo 26 Production to Cease

Post by mastreb »

Firstly, everything in this post is my speculation, not any kind of insider knowledge. So let's do the numbers:

There have been something like 120 Tattoo 26's made, essentially all of them in 2014. Tattoo MSRPs these boats out to dealers sans options and motor for $24,900. The dealers have at minimum a 20% margin, so for easy numbers let's say Tattoo sells them to the dealerships for $20,000. Yes, they have their own factory dealership, but they also have marketing costs and people to pay to sell those boats, so we'll think of factory sales as a separate thing.

So they made on the order of $2.4M since their startup, which went from March of 2013 through December 2014, or 21 months. We'll say 20 months for margin of error and easy math.

Industrial space in that area goes for a low of $5/sq.ft., and lets assume they had 10,000 sq.ft. which would be a minimum size. That's $50,000 sq.ft. per month, or $1M over a 20 month period (because they had to have the facility during setup). Assuming the boat could be made with 10 employees total, payroll is going to be something like $700K over that 20 months. So there's $1.7M. Now let's assume the boat has a typical cost-of-goods (parts) of 33% of MSRP, or $6600 per boat. Times 120 boats that's $800K. So we're up to $2.5M of $2.4M on just three components of cost alone. Add in marketing & sales, sundry costs like websites, and well, it just gets further under water from there. Yes, they probably actually made even because they are a dealer and they did sell accessories, but they're a long way from taking $1 out of that business for themselves.

They're starting over and taking nothing but the design of the 22 with them. That's because they have to re-price against their operating competition, not against the 4,000 used 26Ms that they're actually competing against right now.

Here's the thing about the new boat market: It's a $600M per year market globally. Everybody. All players. Roger was better than 1% of that with the volumes he was pushing out until the recession. By my estimates, he was averaging $8M per year until 2008, when his sales likely halved. At 240 boats/annum, his 2011 production, he would have been making a little over $4M/annum.

But the used sailboat market is 8 times larger than the new boat market in annual sales. The boating market is absolutely dominated by used inventory. This happens because boats last a long time and because people appreciate them for a long time.

So they have to differentiate. They tried to keep building the 26M, but with move disruption, cashflow disruption, and a facility decision that was too small, they couldn't get to the volume they needed to be profitable. Facing yet another move, it was simplest and cheapest to close shop completely and start over.

The 22 will come out at $50K. It'll be priced to compete against its surviving competitors. It'll have to be better built and higher-end, but that's likely to Laura's taste anyway.

The last old Volkswagen factory has been shut down folks, and the new beetle is going to cost you a hull of a lot more.

Them's the straight facts. It just plain costs more to produce a boat than it used to, and they've finally been priced into it.

BOATs commentary about the shrinking middle-class is also true, but the reason isn't as simple as the easily solved "tax the rich". The problem is that we actually do face an enormous labor surplus, which show as flat wages for the past 15 years because people are willing to take less in job moves, pushing the entire labor market downward.

This is happening not because corporations are squeezing their wage earner's paychecks (they simply adjust up or down to market dynamics), but because automation is eliminating jobs at an unprecedented pace.

There are no more machinists. There are no more carpenters. Those jobs were lost to CNC milling machines and injection molding.

Consider this: The Google car just clocked over 750,000 miles without an accident on public roads. Self-driving cars are here, and they're gong to save 25,000 live a year. They're also going to cost about 20,000,000 jobs. Cab drivers first, long-haul truck drivers second, and then every commercial driver's license in the country third. Better, safer, and cheaper always wins.

And that's just one of the many new technologies coming to bear. Automation in my industry (IT) means that we're handling three times as many clients per employee now than we were fifteen years ago, but we also have had to price down as competition presents. Fortunately IT is a major growth industry but the same 10M IT workers are handling a vastly larger and more complex Internet and networking problem than they were in 2000.

Unlike technological shifts of the past, where new, better jobs replaced jobs lost to technology, this time not only will there not be new jobs to replace them, there will simply be no need. We will literally be able to feed, clothe, shelter, transport, and entertain 90% of the population with just 10% of the population working to do it within 40 years. Efficiency will have risen to the point where autonomous systems really are just taking care of everything. And I'm not talking about living in squalor, I'm talking about to the standard of living that we have now.

Not only will there not be jobs, there won't be any reason for most people to have them.

Those are the facts. I'm not going to pontificate further, because that would be politics, which the board prohibits. But I personally wouldn't be making any short-term bets on the middle market for anything.
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Re: Tattoo 26 Production to Cease

Post by Ixneigh »

So if mastreb is correct, and we take past human performance into account ie the human race, there is just going to be a small population of ultra wealthy, and huge milling masses of poverty stricken people.
Bleh. Human mindset does not allow for Jetson like one hour workday utopia. We could have that now.
But yea it doesn't doesn't speak of much hope for the boat buying middle class. It's just how humanity operates. It's how business operates. Everyone is looking to maximize profits, else you don't survive. That means automation. If I could buy a robot to help me with work I probably would , then the clients eventually buy a robot themselves and download some landscaping programs into it.

Thanks for the breakdown of expenses. Why not just buy some cheap property out in the boondocks and cover the main production area with Quonset huts? 50000 a month rent ??! Forget that !

Targeting the wealthy for any product is always a good idea though. The luxury brands are as strong as ever.

Another factor thst I don't think anyone's mentioned is the changing tastes of younger people. None of my younger relatives really care about boating. I see very few actual young people doing much sailing here. In the place where one can boat year round.
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Re: Tattoo 26 Production to Cease

Post by dlandersson »

Interesting speculation. I found the production numbers to be very interesting. :)

Low-end jobs have suffered from automation. BUT, high-end, high-pay jobs have been created to create, service. monitor and supervise the automation. IT unemployment is under 1%. :wink:

Machinists and carpenters are in short supply around here. Low-end labor is driven by people who will work for low-end wages, "often undocumented" immigrants. McD's used to be entry-level HS employees. Not so much any more. The labor food-chain has been disrupted. 8)

The production numbers make me glad I have my :macx: , because I agree that a overly cautious location decision was made early on.
mastreb wrote:This is happening not because corporations are squeezing their wage earner's paychecks (they simply adjust up or down to market dynamics), but because automation is eliminating jobs at an unprecedented pace.

There are no more machinists. There are no more carpenters. Those jobs were lost to CNC milling machines and injection molding.
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Re: Tattoo 26 Production to Cease

Post by seahouse »

Hey Matt!

Good post. A business plan is a good way, and really the only way, to give you a ball park idea of whether a business if feasible. And as you point out its accuracy is only as good as the numbers you have to plug into it. Nice over view.

One thing I noticed, I think you meant commercial/industrial space is $5 per sq ft per year, not per month. That would make the cost around $84,000 over 20 months, not $1 million. (?) A larger facility (10,000 ft^2 sounds small to me) would make that number larger of course.

I'm not fully convinced that we've seen the last of the 26's in the longer term. It's on the back burner for a while.

-B. :wink:
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Re: Tattoo 26 Production to Cease

Post by Russ »

mastreb wrote:So they made on the order of $2.4M since their startup, which went from March of 2013 through December 2014, or 21 months. We'll say 20 months for margin of error and easy math.

Industrial space in that area goes for a low of $5/sq.ft., and lets assume they had 10,000 sq.ft. which would be a minimum size. That's $50,000 sq.ft. per month, or $1M over a 20 month period (because they had to have the facility during setup). Assuming the boat could be made with 10 employees total, payroll is going to be something like $700K over that 20 months. So there's $1.7M. Now let's assume the boat has a typical cost-of-goods (parts) of 33% of MSRP, or $6600 per boat. Times 120 boats that's $800K. So we're up to $2.5M of $2.4M on just three components of cost alone. Add in marketing & sales, sundry costs like websites, and well, it just gets further under water from there. Yes, they probably actually made even because they are a dealer and they did sell accessories, but they're a long way from taking $1 out of that business for themselves.
Interesting analysis and probably accurate. However, startups don't generally make money in their first couple of years anyway. Some tweaking of your numbers and it could easily be very profitable. I've always thought the 26 was underpriced. Roger had demand far exceeding supply. I'm grateful he kept the price low, but could easily have increased it. Laura could as well. You can buy a well outfitted Tattoo 26 for under $35 grand ready to trailer and sail. That's extremely affordable to many first time buyers. My guess is if the price were $10k higher, demand would remain. What other options do you have for a nice starter boat for under $50k. What does that new 38' Beneteau cost ready to sail? The Beneteau First 25 sails for $71k.

We're coming out of one of the worst recessions. I believe NOW is the time to invest. I'm seriously considering building a few spec homes because they are selling like hot cakes out here (hot cakes must sell really well).

Matt is also correct in that markets change with technology. The buggy whip manufacturers had to adjust with technology. Same with farming.
BOAT may also have some good insight. Better tech might make boat building faster and cheaper.

Interesting times. I would love to see this new 22.

--Russ
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Re: Tattoo 26 Production to Cease

Post by vizwhiz »

That was a good basic analysis Matt...and it points out Just what scale of numbers they're working with. And I agree Seahouse, i think they just need something to carry the business along. I could see the 26 becoming a make-to-order offering for those willing to pay a little more for the basic boat, as long as there is a front-runner paying all the bills for the production facility (the 22). Working around the tooling and production gaps become less of an issue that way. Not having this water-ballast 26 trailer sailer dominating that market spot would leave a gaping hole for someone with a big production capability to step into, especially some overseas manufacturer with cheaper labor and production costs. Might happen anyway, but I still think that size/genre is going to be a demand point. A 22' boat will just be too small to fill the top end of the trailerable size market.
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Re: Tattoo 26 Production to Cease

Post by kurz »

RussMT wrote: However, startups don't generally make money in their first couple of years anyway.
--Russ
Well, but to just produce the mac26/Tatoo26 with the excellent dealer network... Is this a so called a "startup".

I mean there were no new technologies on the tatoo26. So just go on ...

Maybee the easiest to improve the situation in Europe: Just deliver the trailer EU-ready. This is so easy, put right brakes an axels and tongue. So the buers here will save much money and hassle at all. WHY they didnt ever???
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Re: Tattoo 26 Production to Cease

Post by Russ »

kurz wrote:
RussMT wrote: However, startups don't generally make money in their first couple of years anyway.
--Russ
Well, but to just produce the mac26/Tatoo26 with the excellent dealer network... Is this a so called a "startup".
That's a good point. How many startups, start up with a built in demand, dealer network and sales history? Tattoo certainly has many benefits they inherited from MacGregor. Nevertheless, it still takes money and time to get momentum. New factory, inspections, hires, training, mistakes, corrections.

I still believe they could sell these boats for more. However, I'm not privy to dealer demand info. I truly believe in the next 1-2 years the demand for an entry level trailer sailor that is safe and family friendly will soar. I'm not seeing the 22 as anything special. I hope I'm wrong.

Tattoo's web site is light years better than the Macgregor site. However, compared to other boat builders, it needs some attention. It's a Wordpress site which I'm not against, however it shouldn't be so obvious. It also erroneously states "Your browser is out-of-date!" In the boat industry, web site presence is huge. Look at some of the other manufacturers. Goodwill and reputation will carry you just so far.



--Russ
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Re: Tattoo 26 Production to Cease

Post by BOAT »

I think Matt makes the numbers speak for themselves. I overheard someone once say the MAC plant in Costa Mesa ran on 3 million a year and that's where I got my 3 million figure. As Matt stated, it's easy to to calculate the number of boats you need to sell every year to pay back the 3 million in expenses. It would seem that even Roger was barley making a million per year at the end - but clearly in his heyday when the market was great guns he was making MANY millions per year (adjusted for 1970 dollars of course) - not a bad business at all. But, again - it was all based on how many boats he could pump out the door.

It would be nice to know what Roger was thinking during those days, I wonder what his driving force was - I know most would say, "it's the money" but I can't help but think there was more to it than that. I guess only you guys that own your own business would understand, I'm not a king like you guys, I'm a king maker - I like being the person in the background helping the guy at the helm because I am always fascinated by what they are thinking. Roger is no exception, I wonder what he was thinking - I wonder if he was envisioning a destiny, because that's what he ended up with.

Oh well, no matter all the speculation about how it's come to this, the bottom line is that it's over - Roger MacGregor started; no, INVENTED the Trailer-able Fiberglass Cabin Cruiser Sailboat Industry. With the loss of the MAC 26M it pretty much caps the Roger MacGregor era and foreshadows the fading away of the trailer-able Fiberglass Cabin-Crusing sailboat. It's over.

It was quite an era indeed.
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