Wow- illuminating and authoritative piece, Phil. I think I was talking about the "robbing Peter to pay Paul" syndrome just last week. A colleague was doing a routine inspection at a builder's facility and noted how hull numbers weren't matching up and that they were using deposits to finish older builds. The doors were locked inside of a week.
Yes, Jonahthan, it usually begins with taking buyer deposit money to complete a previous build. The theory iis to make it up with the profits realized in subsequent deal. But the catch-up never materializes because the press for cash flow to cover prior losses causes the builder to cut prices (when the builder should be looking to cut costs) in order to close deals and attract up-front deposit money. That builds in new losses -- in an ever accelerating downward spiral info deficits. Until the builder runs out of working capital and new investment funding. Then, adios muchacho! ///thanks for reading and commenting. Cheers!
An interesting, informative, and incredibly useful article, especially for new vessel purchasers, written by an obvious professional in the industry.
Thanks for the effort you put in to write this.
Thank you for reading and commenting, and for the kind words.
Thank you for reading and commenting, and for the kind words. Cheers!
Wow- illuminating and authoritative piece, Phil. I think I was talking about the "robbing Peter to pay Paul" syndrome just last week. A colleague was doing a routine inspection at a builder's facility and noted how hull numbers weren't matching up and that they were using deposits to finish older builds. The doors were locked inside of a week.
Yes, Jonahthan, it usually begins with taking buyer deposit money to complete a previous build. The theory iis to make it up with the profits realized in subsequent deal. But the catch-up never materializes because the press for cash flow to cover prior losses causes the builder to cut prices (when the builder should be looking to cut costs) in order to close deals and attract up-front deposit money. That builds in new losses -- in an ever accelerating downward spiral info deficits. Until the builder runs out of working capital and new investment funding. Then, adios muchacho! ///thanks for reading and commenting. Cheers!