luxury market

Toys for Those Who Made it

Luxury boats are reflecting in the sunglasses of a visitor during the 23rd Monaco Yacht show in Monaco
Luxury boat makers worldwide compete fiercely for the bling buck. Source: Reuters

At Traun Lake in the heart of Austria’s Salzkammergut Lake District, a huge logistics center on the outskirts obscures the Alpine foothills. The highway to Salzburg drones in the distance. At first sight, the Frauscher boatyard has little in the way of romance to recommend it.

Yet inside, the factory makes made-to-measure luxury motorboats. Smooth-hulled toys for the ostentatiously successful. “Whenever I flip through a business magazine, I see many of our clients,” Michael Frauscher says. “But for reasons of discretion, we never reveal names.”

Michael and his brother Stefan are the third generation of his family to run the boatyard. Their grandfather, Engelbert Frauscher, started out modestly in Gmunden, the main town on Traun Lake, building small sailing boats. Nowadays, Frauscher is one of the world’s leading manufacturers of luxury motorboats.

“Since the outbreak of the financial crisis, the industry has gone through a massive phase of consolidation.”

Stefan Frauscher, co-chief, Frauscher Boats

The Frauscher brothers have a complete overview of production from the balcony of their offices. Workers craft their clients’ commissions to a soundtrack of pop music. The floor is spotless – not a stray screw in sight.

“Thanks to Porsche Consulting we have been able to give our manufacturing a systematic industrial focus,” Mr. Frauscher says. The management consultants spent three years at the firm. Since then, the Frauschers build to an intelligent “Lego” principle.

Without this external help, the firm wouldn’t have been able to keep going in this highly competitive worldwide. “Since the outbreak of the financial crisis, the industry has gone through a massive phase of consolidation,” Stefan Frauscher says. “There have been many changes of ownership, for example in Italy.”

Now, the business is flourishing again. “In the business year 2016/17 we will generate a double-digit increase in revenues. Last year’s revenue was around €15 million, or $16.75 million,” says Stefan Frauscher, who handles the commercial side of the business, while boat constructor Michael focuses on production and sales.

15696965_FrauscherBoats_handout
Most of Frauscher Boats' customers are middle-aged men from Central and Eastern Europe. Source: Handout

The company builds around 80 boats per year – and only to order. That saves storage costs and financial reserves. It has a 30 percent share of the electric-boat market. Most clients are between 40 and 60 years old, and 80 percent are men. Four out of five come from Central or Eastern Europe, particularly Germany and Austria. Prices range from €50,000 to €1 million.

The family owns 90 percent of the company’s shares, split between the brothers and their cousin Andrea Frauscher-Oberfrank, who owns 30 percent. The rest is owned by management members or is in free float. The question of succession has also been settled. A fourth generation of Frauschers already works at the firm.

The family puts a lot of emphasis on client service. They go to Majorca, St. Tropez and Miami to deal with owners and potential clients personally. “I sleep in hotels 180 days a year,” Stefan says. Clients are even given the brothers’ cellphone numbers – just in case.

The Frauschers want to become global market leader in their segment. And the sailing boats that got everything started? Stefan pauses briefly and says, “We don’t exclude the possibility that we will build sailing boats again in the future.” After all, families thrive on tradition.

 

Hans-Peter Siebenhaar is Handelsblatt’s correspondent in Vienna and specializes in media and telecommunications coverage. To contact the author: siebenhaar@handelsblatt.com

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!