Matthew Yachts, Inc.
Matthew Yachts, located in Montauk, Long Island, manufactured
sailing yachts of all descriptions. The company had begun by building
custom-designed yachts for a largely New York-based clientele. Custom-designed
yachts still accounted for three-fifths of Matthew?s unit sales and four-fifths
of its dollar sales and earnings. Over the years, as Matthew Yachts? reputation
for quality design and workmanship spread, sales broadened to cover all of the
eastern seaboard.
In an effort to capitalize on this increased recognition and to secure a piece
of the fastest growing market in sailing, Matthew Yachts began manufacturing a
new standard, fixed-design craft. Matthew attacked only the high end of this
market, as the boat measured 37 feet long. Nevertheless, even this end of the
market was more price-sensitive and less conscious of performance than Matthew
Yacht?s custom-design customers were.
All of the company?s yachts were manufactured at the Montauk plant and shared
the same equipment and skilled labor force. Custom designs were given priority
in scheduling, and the new boat was rotated into the schedule only when demand
slackened. As sales of the fixed-design boat increased, however, scheduling the
new boat on a regular basis became necessary.
Matthew Yachts were built basically from the bottom up. Fabricating hulls was
the first step. Increasingly, fiberglass hulls were demanded for their speed
and easy maintenance. Afterward came the below-deck woodworking, followed by
the fiberglass and woodworking on the deck itself. The masts were turned and
drilled separately. Masts and hull were then joined and the finish work
completed.
Over the past year, as the fixed-design craft continued its steady increase in
sales, costs and deliveries began to slide precipitously, especially on the
fixed-design yachts. During this period, when push came to shove, construction
of the fixed-design craft always yielded time and resources to the
higher-profit-margin custom designs. As a result, many fixed-design yachts were
strewn around the yard in various stages of construction. Moreover, space in
the existing shipyard was becoming scarce, and a plant expansion of one sort or
another appeared inevitable.
Discussion Question
1. Should Matthew Yachts, Inc. stay in the business of building
standard, fixed-design yachts?
2. If Matthew Yachts does so, how should it continue?
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