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January 2005

Article selected from our quarterly magazine dedicated to the largest and most luxurious boats with information, interviews, technical articles, images and yachting news



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Interview with Paolo Vitelli, president of the Azimut/Benetti Group, by Fabio Petrone

Azimut/Benetti Fincantieri partnership

The announcement of the partnership agreement between the Azimut/Benetti Group and Fincantieri made during the last edition of the Fort Lauderdale Boat Show, for the setting up of production of a new line of 70-metre-plus pleasure craft, is without doubt the most sensational piece of news for the Italian sailing industry from the last months of 2004 and for this reason, merits further clarification.

We therefore went to Viareggio to meet the president of this Turin-based group, Dott. Paolo Vitelli, there on Benetti premises, with the intention of asking him to explain in greater detail the outlines of this operation. It will see two realities working side by side, each a member of an elite group of leaders in international boat building in its own right, one producing pleasure boats and the other large ships. We meet the president over lunch, in a brief interval "stolen" from the many appointments that characterise his life as manager, which he seems to interpret with an impetus and dynamism that are truly extraordinary. This in fact is our starting point for the interview.

Dott. Vitelli, my question is this: on the one hand you, the perfect example of the figure of entrepreneur, of private business and therefore a hyperactive decision- maker, quick to turn ideas into action, etc. On the other, a reality such as that of Fincantieri, in part State-owned, which to tell the truth I don't know as well but which I would imagine to be colossal, bureaucracy- laden and slower to react, etc. If this is the true picture, how in your opinion will two such different entities with such different ways of working come together?

I must say that I was delighted to discover how little Fincantieri is in effect "State-influenced" from various points of view. We met up for the first time when I decided to acquire an industry they had decided to close down, LIPS Italiana, which was inside the Orlando boatyard, in Livorno port. There was in effect an island, a zone then occupied by this LIPS Italiana, which was right inside our boatyard. We were interested in it and for them it was an unproductive branch. Given that they want to close it down, it will be easy to buy, I thought. How wrong I was! They defended themselves so well, asking and obtaining a price that was way out of proportion that I said to myself: well, they certainly know how to do business, I'd rather have them as friends than enemies. I'm telling you this to show you that there is in any case a managerial mentality within the company, the same that can be found in a private industry. Fincantieri might also have its "pachyderm" aspects, but I can assure you that for us it represents a suitable partner; a yard different from ours, which makes boats different from ours, with which we will collaborate to produce something new, something never seen before.

So, the objective is to become leader also in this "superniche" of the market, that of boats around 100 metres in length.

Personally I want to consolidate the leadership of our Group in the context of super-yachts, of boats measuring over 24 metres, going to work in a sector where Italy and Benetti are not yet present and where the big names are mainly the Dutch and German boatyards. This is a market that is still fairly limited but that is undergoing expansion.

Can you give me an estimate of this sector of over-70- metre pleasure craft?

At the moment around 10 boats a year are being produced and if we consider that each one of these costs a good deal more than 100 million Euros, let's say even 150/180 million, overall business in this sector well exceeds a billion Euros, despite the small numbers involved. A figure that currently is the privilege of two/three top level yards and another two or three that I definitely do not consider top, let's say presences that in my opinion are just temporary.

Can we mention any names in this classification of yours?

For me the number one is Lürssen, then Blohm Voss, again German. Let's say that these two have the monopoly of the over 100-metres. Then there are Feadship and Amels, which however build below that size. After them there are those yards, or rather those commercial brands that are attempting to join the sector but that, in my opinion, to date no reality with these characteristics has been successful. They manage to win an order, maybe two, and then disappear. This really is a sector where improvising is not an option, you need to offer a lot and not everyone can, both from a structures and organisation viewpoint.

The business sounds very interesting.

It certainly is. It doesn't take much to work it out; let's say a billion and a half Euros to be divided up between four/five's a good sum. Therefore this is a decidedly attractive, appealing market and where Italy so far has not been present, even though we obviously have the potential. When we heard that Fincantieri wanted to join this exclusive club of constructors, we said to ourselves: why not together? They have enormous structures and the technology but they find themselves in a more closed off world, more for operators in the sector, while we already know this extra-luxury sector very well, where all those who have approached it have got their fingers burnt. So, we offered them an agreement and they accepted.

What are the terms of this alliance?

The partnership focuses on three points. The first is that Benetti helps Fincantieri to make the best entrance possible into the segment of over-70-metre pleasure craft. In exchange for this, Fincantieri helps Benetti to enter the sector of paramilitary constructions, patrol boats under 45 metres in length. They build frigates and corvettes but they often get requests for smaller boats, which we can certainly produce to their very strict standards and that they, due to how they are structured, don't make. In other words, we will teach them the rules of our game and vice versa.

A real exchange.

Yes, even if both of us would like to seal this agreement by producing something concrete together, something tangible, in other words a boat. This is precisely the third point. The partnership will lead to the construction of a new over-50-metre motoryacht, a boat moving at over 40 knots and therefore the expression of maximum technology, which will not overlap our respective ranges.

Will it be an open?

Thanks to Rodriguez, who is piloting the sector towards ever bigger boats, the market of opens has definitely grown; a look at how many large opens have been launched over the past year will tell you that. By now there is a mature clientele even for boats of this length, for which we will offer a brand that aims to be on the cutting edge of the whole market.

So this 50-metre will be the first model of a range?

Presumably so, but it is too early to say yet. In truth we haven't yet completely defined the design of the first boat yet, but we are studying it and it should be ready soon.

Can you tell me where the various boats will be built?

The over-70-metres will be built in Muggiano, La Spezia, a boatyard where they are used to working to military standards, in practice with the same technology, the same precision, the same care necessary for emerging in the rarefied world of these megayachts. It is highly likely that we will be building the under-40-metre patrol boats in Livorno and as far as the boat to be built together is concerned, this over-50-metre hi-tech boat, as yet we haven't assessed the yard aspect. Even there we are waiting for the definite plans to choose the most suitable premises for production of the boat.

Which will be first project to be completed?

You can imagine how difficult it is to sell an over-70- metre boat. Yet, just a month after making the announcement in Fort Lauderdale, we are very close to concluding our first contract. If all goes well, shortly we hope to start on this one. At this stage we are doing most of the work, reaching the agreements, defining the specifications. Then theirs is the task of affirming themselves as one of the most efficient boatyards in the world, able to build a certain type of boat well and quickly.

How long do you think it will take before we see it sailing?

They manage to build a 100,000 tonnes cruise ship in just 18 months. Maybe they will take a little longer to build a megayacht, especially in the beginning, but they will definitely be much faster than all the other boatyards.

Regarding waterlines, engines, etc. will it be an ex novo project or will something already produced be used?

They have an incredible quantity of very important projects on file and therefore I believe that it is highly probable, also with a view to shortening production time, that they will be using something already tried and tested.

Who, on the other hand, is in charge of the layouts, the shape of the boat? Have you entrusted it to an external architect, chosen from one of those who work with you normally, for example the combination Righini/Zuretti?

I think that above all in this phase the initial input, the paternity of the project should be that of the boatyard, of Benetti, of our own technical office. This is an important base, one that says that this is a true Benetti, which then can be developed also with the help of external architects, probably chosen by the owner but at the moment we are the authors. On the other hand, we have the proven ability of doing well and we have no problem in proposing wonderful boats even in a segment that is new, but not really so new, for us.

Who will sell the boats resulting from your agreement, will you be using for example the sales network of the newly acquired Fraser Yacht?

Fraser Yacht is a business without exclusivity and is therefore an independent broker for our group, carrying out its business independently and not work exclusively for Azimut/Benetti but also for Lürssen, Feadship, etc. Camper & Nicholson also sells Benetti, selling is part of its mission. It is also logical that a broker finds it more natural to deal in a "homemade" product that belongs to its own group, this would seem legitimate and implicit. But the principle is that of selling boats. Whereas the operative arm of this joint venture is an office comprising four people, two from Benetti and two from Fincantieri, where we hold onto our commercial leadership and they keep their technical leadership. This office manages the operation creating the marketing for our products and following up the deals until the contract is signed. Once the signature has been obtained, the project manager comes into play, a Fincantieri manager who however, before starting his job, will have completed some practical work periods in our structures to understand the know-how but also the client's expectations, of a certain type of client. The same will happen for some of our lot who will go to work for a few months at Fincantieri. It will be a true exchange on all levels, also cultural.

This operation is without doubt very important and will probably manage to bring the Italian industry further successes, both in terms of image and of Euros. The President once again seems to have had the right intuition, opening up two new markets for his group with a single move. Two "fronts" that of megayachts and of military craft, offering extremely rich pickings for different reasons, the goal of many but difficult to achieve. This alliance may be the right direction for development of the Azimut/Benetti Group also because it further diversifies its commitment, no longer oriented solely towards pleasure craft. As an added extra to this interview, talking about Benetti production, Dott. Vitelli gave us the anticipated news that they are already thinking of their next undertaking in Viareggio: expanding the range in composite. Their next boat will be a 24-metre classic ship, the new entrance model for this famous brand.