Yacht Yearnings Building Boats for Billionaires

Germany’s Lürssen shipyards is a modest family-owned enterprise that happens to deliver opulent yachts to the world's ultra-rich. Handelsblatt came aboard for a visit.
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Without trying to be vulgar, Peter Lürssen has the talent to turn crap into gold.

A few years ago, the shipbuilder from the German city of Bremen and his marketing director were hoping to be awarded not one, but two orders for huge private yachts. At some point, the two were sitting at a beach when a seagull crapped a huge pile onto Mr. Lürssen's T-shirt.

“As a shipbuilder and inhabitant of a Hanseatic city, I'm superstitious,” he said recently. So he made a bet. If his shipyard got one of the two contracts, he would not wash the shirt until the ship was delivered. If the company got both of them, “I'll hang up the shirt in the office.”

It can be admired there today. The shirt’s framed and non-odorous behind glass, but just as seagull soiled as ever.

It’s an unusual documentation of two orders worth several hundred million euros. The family-owned Lürssen shipbuilding company in the port of Bremen builds some of the world's largest and most luxurious yachts.

The 138-meter (452-foot) Rising Sun, for example, once owned by Oracle boss Larry Ellison and today owned by American media mogul David Geffen, comes from Lürssen. So to do the Carinthia VII (97 meter), belonging to Austrian heiress Heidi Horten, and Microsoft co-founder Paul Allen's Me the Octopus (126 meter).

Potential buyers of such yachts are limited. The traditional rule of thumb, that such a ship costs $1 million per meter of yacht size, is elegantly undermined at Lürssen. A vessel there easily costs half a billion or more. Self-important members of Arab royal families and eastern European oligarchs are regular customers in Bremen’s Vegesack district.

While many specialty magazines distinguish between super-, mega- and giga-yachts, the Lürssen family simply builds “yachts” that have a clearly defined lower limit: 60 meters.

Video: The Northern Star, one of Lürssen's yachts.

The business for smaller vessels is left to a large number of shipbuilders throughout the world who more or less deliver standard-issue yachts. The Lürssen shipyard produces tailor-made wares. In this Grade A-premium class, the competition is as limited as the potential clientele, which can be found only among the approximately 1,300 billionaires spread across the planet.

At the moment, it seems to be in vogue in super-rich circles to have particularly large swimming pools in yachts.

About a hundred of them live in Germany. But the indigenous upper crust is not so concerned with flaunting its money. Most German entrepreneurs or heirs would prefer to travel on crowded, low-fare buses than to be caught in a Rolls-Royce.

So it is all the more surprising that a shipyard in the land of tightwads and bargain-hunters has been so successful. “Among what are currently the 100 longest yachts, 23 ships were built in our dockyards. Of the top 20, seven come from us,” Mr. Lürssen said.

Russian oligarch Roman Abramovich wanted the world’s longest yacht, and the Hamburg shipyard of Blohm & Voss built him the Eclipse. It was a little less than a meter longer than the Blohm & Voss-built Dubai. Mr. Abramovich's yacht’s record for length held for four years until 2013 when Lürssen delivered the Azzam that, at 180 meters long, is the largest private yacht ever built in the world.

The owner of the Azzam is said to the president of United Arab Emirates, but Mr. Lürssen is unwilling to confirm or deny it.

The family firm is managed in the fourth generation by Lürssen cousins Peter and Friedrich. The fact that the company is even allowing journalists on the premises is because 1,800 Lürssen employees this summer will celebrate the 140th anniversary of the shipyard, which has survived various existential crises: World Wars I and II as well as the period of hyper-inflation in between. During the 1970s, the freighter business collapsed. The company eventually divested itself of that sector.

At the end of the 1980s, the family was on the lookout for new commercial fields. Back then, 90 percent of orders came from navies. A dangerous dependency, especially because orders for armaments were declining with the end of the Cold War. The company had a successful yacht business back in the 1920s. “That was my chance,” Peter Lürssen said.

The luxury sector now brings in more than half of the company’s average annual revenues of around €800 million, or $908.4 million. Friedrich Lürssen manages the other sector — the business with patrol boats for Saudi Arabia or frigates for the German Navy. He hobnobs with people such as German Defense Minister Ursula von der Leyen, while Peter rubs shoulders with potentates and the super-rich of all sorts.

The Rising Sun is also too expensive for you.

 

Peter Lürssen said the company values “absolute perfection.” Birch bark currently counts as chic for wall decoration. The company is planning a yacht with a stairway made of white onyx. The detail work on the stone masonry will require instruments used more by dentists than by mechanics.

Mother-of-pearl and jade are also required in large amounts. The company works with hundreds of artists and artisans in Germany and abroad. Only about a fourth of the shipbuilding work is done by Lürssen employees, who do the technical construction and electronics. The rest of the work is performed by subcontractors, refiners and interior experts.

New technical challenges arise constantly, although Mr. Lürssen smiles at the rumors about such things as submarines or air-raid-defense rockets and dismisses them as “dumb talk: everything has to be approved by the government.”

A much more complex task is to minimize noise and vibrations on the yacht, he said. Then there’s the pool issue. At the moment, it seems to be in vogue in super-rich circles to have particularly large swimming pools in ships, said Jonny Giessel, head of Lürssen’s 260-worker yacht construction department. Such pools have to be as long as 25 meters. They require hundreds of tons of water that must not be allowed to make the ship unstable or spill over the pool edge in rough seas.

Glass is also a huge theme. These days, windows can hardly be big enough. They require multi-layered special panes often several centimeters thick. “Provided that they conform to national and international law, wishes and ideas about the yacht's interior have scarcely any limits,” Mr. Lürssen said.

Why do people invest so incredibly much money in a ship?

“Quite frankly, because that is the nicest way to spend a vacation … alone or with friends and family,” he said. “Because for many of our customers, it is also an excellent support for business. And because that sort of asset never loses its value, even in times of crisis.”

No ship is handed over to its owner before being paid for in full. The internal motto: “No cash, no splash.”

In the current economic climate, Russian customers are examining closely whether they can afford such a jewel. The hope in Bremen is the weak euro will bring in more American customers.

Upkeep on this sort of yacht is another expensive proposition. Such a ship requires a permanent crew of 30 to 70 members. The yacht has to be maintained, cared for and cleaned every two days. For the price of filling its tanks with fuel, someone could purchase a single-family house. At least it's possible to charter some of Lürssen's creations. For example, the 70-meter Martha Ann is available for $630,000 per week.

One doesn’t necessarily get rich through the wealth of others. Profit margins of 3 percent are considered to be a solid success in the yacht branch. At Lürssen, employees recognize the value of their work, Harald Pötter said.

“Our products guarantee jobs,” said Mr. Pötter, who has worked at the company for 38 years ago and, as a staunch member of the IG-Metall union, has become the head of the workers' council at Lürssen. Mr. Pötter is less concerned with the excesses of billionaires than with partial retirement and qualification-remuneration contracts. “Above all, everyone here is proud of our products,” he said.

 

Thomas Tuma is Handelsblatt’s deputy editor-in-chief. To contact him: [email protected]