Introduction
This paper was originally prepared at the request of the Pacific Northwest Section of the Society of Naval Architects and Marine Engineers.
It was presented on 13 May 2000 in Vancouver, BC at the SNAME Annual
Spring Meeting. The theme for the SNAME Spring Meeting was "Pacific Northwest Designs on the World Stage."
This
article will make particularly valuable reading for anyone considering
having a boat built, whether the intent is to make use of a stock
design or a custom design. Described here is a method for
estimating construction costs both in the US and elsewhere. A
similar method allows one to very approximately estimate the cost of
custom design. The relative economies of building with the
various hull construction materials such as FRP, wood, steel or
aluminum will be considered, along with the advantages of each
material.
Cost saving strategies are presented here, as well as in the companion article, Affordable Boatbuilding.
Abstract
This
essay will focus on a few of the issues surrounding designing boats for
construction offshore. By that, I mean creating a new vessel
design that is intended for construction outside of the US, mainly for
the sake of the possible cost advantages.
I will use New
Zealand as an example venue for building yachts that have been designed
in the US for US clients. I will use two power yachts as example
vessels, a 38' steel and aluminum tug yacht built in the US, and a
smaller aluminum tug yacht built in New Zealand.
With these projects as examples, the following general topics will be discussed:
* Cost effectiveness of building offshore
* Estimating boat building & custom yacht design costs
* Relative cost of different construction materials
* Cost saving strategies
* Design considerations for building offshore
* What standards will apply with regard to stability, structure, safety
* Communicating effectively
* Construction inspections
* Import / Export considerations
* Sea trials and delivery
Cost Effectiveness
What
is our main incentive to consider building a boat offshore to start
with? It should come as no surprise that the primary rationale
for seeking an offshore venue comes down to one basic
consideration: Cost.
So, where are the savings?
Materials
It
seems that among countries where we encounter a familiar business
environment, such as in the US, Canada, Australia, New
Zealand and the EU, that materials are essentially a commodity.
By this I mean that the parts and pieces used to build a yacht such as
steel, aluminum, paint, wiring, plumbing, engines, pumps, electronics,
and so forth will more or less cost the same dollar amount once
translated into US currency. This seems to be approximately so,
with minor variations, regardless of the currency that was used to
purchase the materials, except in regions of high taxation such as the
European Union.
It is interesting to note that in the US, while we may not
officially be able to refer to a yacht built in Canada as having been
built "offshore," the provincial US mind may still think in those terms.
Perhaps we may more properly refer to it as "building foreign."
Labor
Canada
and the US have a varying exchange rate, which has in the past been
favorable to a US client when having a boat built across the
border. Due to the extraordinary depreciation of the US dollar
(2007 & 2008) this is no longer the case. Also, what may not be widely
recognized is that the living standard in Canada is in many places
higher than in the US. For example, Canada's blue collar workers are
better protected against their employers' greed; they have much more
reliable health insurance that is protected from stock holder greed; and in
most of Canada the
base labor rate is higher.
Labor rates in BC are
relatively higher in most trades than for the same
trade in the US. On the West Coast, that phenomenon tends to
diminish the incentive for US clients to build in Canada.
However, from the Great Lakes and eastward into Nova Scotia, the wage
disparity in the past has tended to favor a vessel built in Eastern
Canada for a US client. However with the value of the US dollar at
historic lows (2007 & 2008) this is no longer the case. Of course
these are generalities for which we will always see exceptions.
A
labor cost disparity is seen within the US as well between, say, the
Pacific Northwest and the US Southeast. Labor rates are ordinarily much
lower in the US Southeast than they are in the Pacific Northwest.
South of the US border it is sometimes said, "Poor Mexico,
so far from God, yet so close to the United States." Still,
proximity to the US has not had the same equalizing effect on wages in
Mexico, therefore one would expect a cost advantage when looking south
of the border.
When looking across the water to more distant places, we
tend to gravitate toward countries that have a familiar language and business
environment. There are many good boat building venues outside
North America, in particular we have often looked toward the EU,
Australia and New Zealand.
In recent years we have seen
a severe erosion in the value of the US dollar, and while other venues
may still contain regions of good value, the advantage to a US customer
having a vessel built offshore has been seriously compromised (2007 & 2008).
Then... and Now...!
While I have revised some of the above text
to reflect current conditions (2007 & 2008), I have NOT revised the article that follows,
primarily because it illustrates how quickly the picture can
change over a relatively few years. The world markets are quite different now
(2007 & 2008) than they were in early 2000 when this article was originally
written. It has reached the point that the US dollar is somewhat of an international joke - albeit a tragic one.
In the following article, while we might still see slight benefits in
terms of labor costs within countries such as New Zealand, living
standards and local wages have for the most part surpassed those in the
US, which has dramatically turned the tides.
A few interesting venues do still exist however, in particular
within the EU among recently admitted countries such as the Baltic
States which have a strong maritime tradition. Another venue of
considerable interest is Turkey, a very well developed maritime nation
with a long boat building history. With the push toward EU membership the business climate
has become more familiar, making Turkey the most attractive
venue in all of Europe, and possibly for US customers as well.
Other countries of interest are of course Taiwan, but also in recent
years China has become quite an important international player.
In South Asia, there
is greatly increased interest in Thailand and Malaysia, both of which
have "free ports" where imports can be received without duty.
Due to its duty free status, even Dubai begins to look interesting for finishing
out.
Certainly we will see more US and EU boats being built in these alternate
venues, the reason being primarily the difference in the cost of labor.
Conversely, if the slide in the value of the US dollar continues, it
may well turn out that the United States will become competitive on the world stage as a
reasonably priced venue for boat building, especially for customers
from Canada, Australia and the EU... A mere five or six years ago this
concept would have been laughable. Consider though
that when the Euro was first introduced in early 1999 it was valued at USD $0.85. In November 2007 one Euro cost USD $1.47,
and in 2008 we have seen a cost as high as USD $1.60 per Euro. Thus in only
10 years' time (1999 to 2008) we have seen nearly a 90% loss in the value of the US dollar against the Euro..!!!
It is not at all difficult to understand why the Euro could replace the US
dollar as the world's benchmark currency.
Other
contingencies exist as well. For example if China were to completely remove
its currency peg to the US dollar, or worse quit buying US Treasury notes, the dollar would sink like a stone.
It is unlikely that either would occur suddenly because it would seriously
cripple China's ability to sell into the US market. Of course China is not
the only major player. It is becoming increasingly possible that
OPEC countries could begin to demand payment in Euro, as has Iran already.
Events such as those are not possible to predict with any
certainty, however it should go without saying that they would
completely reverse the landscape in terms of the subject of this article,
i.e. Building Offshore... Possibly one day in the not too distant
future, wealthy Chinese will prefer to have their yachts built in the US because
it is a bargain..! It could happen.
IMPORTANT NOTE...!
The
following cost estimating calculations were based on an exchange rate
at the time of writing this article (early 2000) when the New
Zealand dollar cost around USD $0.40 - at the lower end of its range.
Since then, the US dollar has varied rather wildly in value.
A few examples...
In May 2004 the New Zealand dollar was around USD $0.63. The Canadian dollar was around USD $0.73. The Australian dollar was around USD $0.72, and the Euro was at
USD $1.18.
In November 2007, the New Zealand dollar cost USD $0.76,
the Australian dollar cost USD $0.91, the Canadian dollar
cost USD $1.09, and the Euro cost USD $1.47, all values that
were not so favorable for US customers, but possibly making
the US a favorable build venue..!
In February 2008 however, the dollar strengthened
such that the New Zealand dollar cost USD $0.53, the
Australian dollar cost USD $0.67, the Canadian dollar
cost USD $0.82, and the Euro cost USD $1.28.
We can expect that the US dollar will return to
weakness due to the "quantitative easing" of the Fed and
the US Treasury, however even that cannot be said
categorically because even if that devalues the US
dollar, it will be against the backdrop of other
countries doing much the same thing. Presently
(early 2008) we can only say for certain that whatever
comes "will be interesting."
Due to the variations in exchange rates over time, an adjustment to the relative
costs given must be made accordingly when using the
following approach to cost estimating.
Due to the wild excursions of the US
dollar, the cost of MATERIALS such as aluminum, copper, imported
electronics and machinery, etc. have also changed. In other words, a substantial adjustment in the
absolute (per pound) cost of boat building discussed below must also be made.
The global economic map continues to change, making other
countries better candidates for effecting labor cost
savings at different times. Therefore, please consider the following essay
to be an outline of how the venue where built can have a dramatic impact on the
cost of boat building.
A Snapshot From the Year 2000...
Canada's dollar (as of 2000) has in the past usually hovered between USD $0.60 and USD $0.75, Australia's between USD $0.50 and USD
$0.65, and New Zealand's between USD $0.40 and USD $0.55, with
excursions in either direction around those values.
If we make use of New Zealand as our example foreign venue, it is interesting to observe that nominal
labor rates in New Zealand are approximately the same as they are in
the US. In other words, a yard that would charge USD $45 to $55 per hour in the US will very approximately charge NZD $45 to $55 per hour in New Zealand.
Based
on the exchange rate as of the time of the writing of this article,
each "New Zealand Dollar" being paid to a New Zealand yard will cost a
US client around 40 US cents. At that exchange rate, a US
customer will very approximately be getting a 60% discount on the labor
to build their boat. Given that the number of hours will be
roughly the same for a specific vessel, regardless of where built, a
yacht built in New Zealand will be considerably less costly than one
built in the US.
At this point we may begin to understand
the rationale for pursuing construction in a country like New
Zealand. For a US clientele, provided that the value of the US
dollar remains stable, New Zealand becomes quite a viable place to
build a yacht.
Using the yard's "hourly rate" as a
gauge, and adjusting for the applicable currency exchange rate, we can
work this same equation for building in Australia or Canada.
Estimating Costs
Given
a fixed level of finish, complexity and outfit, the cost of a vessel
will usually vary according to the vessel's cubic contents.
At the beginning of the design process, in order to make use of a readily available parameter that also varies as the cube
of the overall dimensions, I ordinarily use the Design Waterline Displacement.
Although
not always the case, a vessel's displacement will usually provide a
convenient variable that roughly parallels the cubic contents of the
whole boat. If it is less, I will use the light load case
weight. In other words, I do not include any tank contents or
other consumables, nor any owner supplied outfit items, i.e. just the
"boat" itself and all items permanently attached to it.
The
guidepost I currently use when asked what a medium sized metal yacht
might cost is to begin at a preliminary average cost of around USD $12
to $15 per displacement pound. Presuming we are comparing like to like, we may then infer that the cost of a vessel will approximately vary directly with the displacement.
This preliminary "cost per pound" presumes that the vessel will be built in the US; that it is reasonably simple
in terms of equipment and outfit; that the interior is elegant but not
fancy; and that the structural components will be NC cut. For
most small craft, I refer to this level of finish as being done to a
"high end commercial standard" both on the interior and
exterior. This assumes that the interior finish will be done
simply but nicely using North American hardwood face frames and trim
with otherwise painted surfaces, and that the systems will not be
overly complex, i.e. that they will be more or less typical for a small
sailing or power yacht.
If
the vessel is to be of aluminum, then this cost per pound implies that
the exterior will not be painted except where necessary, therefore
approximately equaling the cost of a painted all steel vessel.
I will then adjust that preliminary baseline
cost per pound up or down depending on various factors such as
increased or decreased systems complexity; higher or lower grade
machinery; more or less equipment and / or electronics; higher or lower
grade interior; yacht grade or commercial grade exterior paint job,
etc.
Each one of those cost-adjusting factors can
have a significant impact. Collectively, their impact can be
dramatic. One can indeed embellish a vessel to the point of
unaffordability, whether it is a production boat or a custom
design. For example if one were to ramp up all of these factors, the baseline cost could easily be well in excess of USD $20 per pound, plus the cost of any unusual equipment or outfit extras.
Conversely,
a very simply specified vessel may turn out to be between USD $10 and
USD $12 per pound. This is the reason we tend to prefer simple,
rugged, reliable boats. They are much more affordable, and in the
long run easier to care for.
Once the preliminary
baseline cost per pound is adjusted for these owner induced factors,
the cost is applied as though the vessel is to be built in the US.
How Much Can You Save Offshore?
Once
the appropriate general assumption has been made with regard to cost
per pound, and assuming that we are making a comparison to a similarly
specified vessel. I will then make the following assumptions:
1.
Very approximately, if built in the US, the costs for materials and
labor for a boat with a nicely done yacht finish will hover somewhere
around 40% for materials and 60% for labor. If we are considering
a somewhat less complex or a more simply finished boat, then the ratio
of labor to materials may tend more toward 50 / 50.
2.
One can assume approximately that materials will cost the same
regardless of where purchased, once the monetary translation has been
made.
For example
when approximating construction costs in another country I do not
assume there will be any materials or equipment cost advantage,
regardless of where the equipment or materials get purchased.
As
we have noted the nominal shop rates in New Zealand are approximately
the same as they are in the US. A yard that might charge USD $45
or so per hour in the US will have a similar New Zealand counterpart
charging approximately NZD $45 or so per hour.
Accounting for the exchange rate, this very approximately amounts to nearly a 60% discount on the overall labor
bill. If the cost of labor amounts to approximately 60% of the
total cost (if the boat were to be built in the US) that becomes very
approximately a 35% discount on the project as a whole to a US customer.
Naturally,
there are costs involved to build in New Zealand, such as travel,
shipping, and import duties. Factoring in these considerations
means that the benefit may come closer to an average of some 25% to 30%
overall savings for a US client to consider New Zealand as a venue for
the construction of their vessel.
Of course there are
adjustment factors to throw at the equation at every step, such as for
what percentage is assumed to be expended on labor. For example,
should the finish be aimed at a less yacht-like finish the labor
percentage may dip closer to 50%, and therefore the savings may be more
on the order of 20% to 25% if built in New Zealand.
Conversely, with a higher finish and a more complex (i.e. more labor
intensive) equipment specification, the savings will be proportionately
greater.
Variations in the exchange rate will obviously affect the above percentages, possibly dramatically.
An Example
We
might consider a generic vessel as an example, such as a fairly simple
and somewhat traditional 38' medium displacement metal Tug Yacht of my
design, the Nidaros, which was built in the
Puget Sound area (US Pacific Northwest) for around USD $9.20 per pound
(year 2000). This is a small "trawler yacht" type in terms of the
level of finish, and has a steel hull and deck with an aluminum house
structure. To a large extent this vessel follows the level of
finish described above for our "basic example vessel."
On
this small Tug Yacht, per client request there were two price
increasing factors: 1) A hydraulic system for winches and
thruster. 2) A relatively high-end Lugger / Twin Disc engine and
gear combination. Another price increasing factor was that the
hull is steel and therefore requires a very thorough and complete paint
system inside and out, and that the house is alloy, requiring a
relatively expensive bi-metal transition bar between.
At
USD $9.20 per pound, we can see that the builder in that case was
obviously highly motivated and that the price was extremely favorable,
especially in light of the above mentioned cost increasing
factors. A more realistic price for that vessel in the hands of a
more typical US builder would have been somewhere around USD $12 plus
per pound at the time it was originally estimated for construction
(1999).
A more detailed look at costs for this vessel are
as follows: The vessel has a DWL displacement of around 30k
pounds. Factoring in the complexities we have mentioned for this
vessel, and assuming construction at a typical US yard, therefore using
approximately USD $12.50 per pound, we would have a US build cost of
around USD $375,000. Applying our very approximate 25% discount
for construction in New Zealand, we have the possibility to end up with
a total cost of somewhere around USD $281,000, or perhaps $9.38 per
pound.
In general, the designs we create tend toward an economically achieved "simple but elegant" yacht finish, or what we call a "high end commercial" finish. These fairly simple yacht designs can be built using around USD $12 to $15 per pound as a base number, then adding on for embellishments, or subtracting for simplifications.
For New Zealand construction then, using the exchange rate at the time of writing (April 2000) the base numbers come to somewhere between USD $7.80 and $9.60, plus or minus the usual correction factors for complexity and finish.
Is this Method Accurate?
The
prices quoted are roughly applicable at the time his article was
written (April 2000). Variables such as inflation, interest
rates, and currency exchange rates will naturally have their effect
over time.
The above method is intended to provide a
quickly achieved "target" cost, and is based on a given "typical" type
of example vessel. It is of course a very rough approach and will
require that corrections be applied depending on variations in the type
of vessel.
The actual prices quoted by yards will often
vary considerably from the above approximate guide, depending on the
yard's accustomed "quality level," their overhead costs, their market,
their typical customer types, and on how busy they may happen to be
when the construction cost estimate is solicited.
Among
other considerations, one must look at whether the boat is relatively
heavy or relatively light for her overall size. We should throw in a
correction factor for a vessel's displacement to length ratio,
since a lighter vessel will invariable cost more "per pound" than a
heavier vessel on which there will be more pounds to spread the cost.
In spite of the possible shortcomings of this method, as a base-line
estimating tool and as a means to provide a quick comparison between
boat types and between differing locations for construction, we have
found the price per pound approach to be highly useful.
I
have spoken with experienced project managers here in the US who use
completely different "off the cuff" ways to create a quick "ballpark"
estimate for a prospective project. Even though these yards may
use entirely different methods, their estimates do seem to come out
more or less in the same range, once adjustments are made for
complexities, relative displacement, etc.
Overall, it must be kept in mind that this approach is based on comparing "like for like" since one vessel type
can vary substantially from another vessel type. For our example, we
have used a typical small "trawler" type that has a "high end
commercial finish" throughout. A different type such as a fast
motor yacht will have fewer 'pounds' with which to divide the costs,
will tend toward a much higher finish, will have a more elaborate
'style' and will often have a much higher specification - in particular
with regard to propulsion machinery and other support systems.
The Cost of "One Off" Construction
Can one-off construction compete with a production environment?
By
"one-off construction," I am assuming that the boat is to be unique,
including the vessel's design, and that only one vessel will be built
to that design.
In other words, I am inquiring whether a client can consider custom design and custom building as a viable and cost competitive option when planning a new yacht.
A comparison published during 1998 in Ocean Navigator magazine showed a number of fiberglass production "Trawler Yachts"
built in the US and elsewhere. It revealed an average "as built"
cost of around USD $13 to $15 per pound. Among them, the
Nordhavens and Krogens tended closer to an average of around $16.
Others were as low as around USD $10 per pound for an extremely basic boat such as a Willard.
It must be kept in mind that these quoted prices for production boats ordinarily do not
include outfitting and in many cases do not even include electronics or
other systems beyond just the basics. However, these production
boat prices ordinarily do include a fair sized margin for
middle management, for promotional events, for advertising, and for
brokerage overhead. For example, a yacht broker will usually
charge 10% commission on the sale of a vessel, and that will be added
to the top.
Fiberglass
One-off
fiberglass construction requires that new hull mold tooling be
created. This has the obvious disadvantage of adding overhead to
the project both for materials and for labor.
One highly
promising technology that has the potential to benefit the labor side
of the equation for one-off fiberglass boats is to make use of computer
modeling, with the resulting ability to employ NC cutting to create the
hull mold.
A specialized shop doing just that is Janicki
Machine, in Sedro-Woolley, Washington. Janicki uses a 5 axis NC
router mounted on a large overhead carriage to carve out hull and
superstructure molds. At this shop, their maximum machine size is
88' x 20' x 8'. If the project is larger, the mold is segmented
with parts that are keyed together.
Janicki begins with the
designer's NURBS surface computer model of the hull and superstructure,
and import the model to their CAD system using the IGES file exchange
format. If the designer has not supplied a computer model of the
hull, Janicki creates a computer model in-house from which to create
the mold.
Janicki's shop is set up to carve out a
foam-block mold using a large 5 axis NC router. Their strategy is to
stack up "lifts" using relatively light foam. The lifts are
routed to a clearance of some 3/8 inch beyond the required surface
location, then a higher density foam is sprayed on. The high
density foam is machined to the final tolerance, and the result sprayed
with a fairing material, usually a high build paint that is applied to
a relatively heavy thickness for sanding. The mold is then
shipped to the builder for assembly and final sanding.
The
costs for the NC mold making process by this method are slowly becoming
competitive with manually done mold work. Currently, for
intricate superstructures, there seems to be a cost advantage favoring
the NC cut method. At the other end of the spectrum, for simple
chine hull forms it seems to be less costly to build a disposable mold
manually.
This approximate parity of manual versus NC
methods for mold making is due both to the increased materials costs
for the foam mold, and for the high cost of "machine time" on the large
NC router.
For the time being, the primary advantages
offered by this type of NC mold making system are the dimensional
accuracy of the mold, and that the lead-in time for mold construction
can be removed from a boat builder's schedule. Another advantage
offered to the boat builder is that lofting may be completely
eliminated, which translates into a savings of labor and shop space for
the builder, ultimately reducing shop overhead.
On the
basis of cost, in spite of the advantages of NC cutting, the above
factors have made one-off fiberglass boat building relatively
un-competitive with a production environment. As a result, the
one-off fiberglass yacht market is currently focused on vessels above
80 to 100 feet where production boats are relatively less common, and
where owners often want a 'signature' vessel with, say, a unique
styling to the superstructure.
Metal
Among
boats built in the US, one-off metal construction costs can compete
very well with production fiberglass costs. The trade-offs are
approximately as follows.
Considering just the production
costs themselves, while there is considerably more labor involved in
the fabrication of a metal hull and superstructure than there is in the
laminating of a GRP vessel, to offset the added cost for labor, the
cost of materials for a steel hull is quite a lot less than with for
GRP hull. Even if the metal hull is aluminum, material cost will
still be less than for fiberglass. With higher labor costs for metal,
and higher materials costs for fiberglass, we may for the moment assume
the costs of metal and fiberglass to be approximately at parity.
For metal then, where are the savings?
Obviously,
there are no mold costs with metal construction as are required for
fiberglass, and there is no mold to take up shop space during or after
construction, therefore lesser overhead. This gives a slight edge
to metal construction.
Taking metal construction technique
one step further in terms of efficiency, if hull and superstructure are
pre-cut NC driven tools (plasma torch or water-jet) the labor saved can
be substantial, and metal construction will generally win the cost
comparison.
Let's take a brief look at what kind of savings are possible for metal boats via NC cutting.
NC Metal Cutting
What's NC...? It simply means "Numerically Controlled."
With
NC cutting, the number of hours added to the design tasks in order to
create the structural detailing for a computer-cut hull is not so
great, particularly if the design work has already made use of computer
modeling to create the hull geometry. Even if the hull model must
be created just for sake of the NC cutting operation, the cost expended
to create the model and the NC cutting files will be compensated for
several times over by the labor saved while building the boat.
Estimates
of the metal fabrication time saved via NC cutting for one-off
construction will typically range from 40 to 60 percent of the hull
building labor, depending on the builder, and on the degree to which
the boat is pre-cut.
We can look at a generic example here,
using the same 38' tug yacht design. If the vessel's structure
were all manually cut, we can approximately assume that it will take
roughly 2,500 hours for the hull and deck metal fabrication, including
final weld-up. For ease of calculating, if we assume a
conservative savings of around 40% for an NC cut hull, deck and house,
the savings may amount to some 1,000 hours. This saving of hours
times the shop rate being considered provides an example of the
possible savings.
Our estimate of the time required to
generate NC cutting files for this fairly "typical" 38 foot metal
tug-yacht example is between 150 and 170 hours. The cut files for such
a project usually include all internal structure for the hull,
deck and house structures, except for extrusions such as longitudinals
or pipe guards, etc. In other words, all frames, girders,
tank ends, tank faces, large cut-outs, tank lids, etc. will be
pre-cut. The NC cutting files also include all hull and
superstructure plating as well as the rudder internals and plating.
Small parts such as cleats and hatches are not detailed for NC cutting,
however chain plates, anchor roller cheeks, and reinforcement insert
plates are included.
In order to permit ease of
bending-in the shell plating, there are generally no cutouts made for
portlights, windows or doors, even though marking lines for those
openings are provided. Marking lines are also provided
for grid elements, and all parts and grid elements are labeled for ease
of assembly.
In exchange for the relatively small amount of
time expended at the computer to create the cut files, we can see that
the cost trade-offs heavily favor NC cutting. We assume of course that
the hull geometry will have been accurately developed, that the NC cut
files are carefully and accurately prepared, and that the cutting is
done to a close tolerance.
One of my designs built in New Zealand was the all aluminum 25' tug-yacht Boojum.
Done as a proof-of-concept in terms of being able to repay the cost of
developing the NC cut files, the Boojum project has accurately
confirmed the above assumptions. Since then, we've done a number of
other NC cut projects that have re-confirmed our original estimates of
the fabrication labor saved.
For a good overview of the process of developing NC cutting files, please
see our Design Stream article and other
articles linked from there.
Cost of NC Cutting
Per the various NC metal cutters in the US Pacific Northwest, costs are given approximately as follows:
For
plasma cutting steel to a "standard" tolerance at Far West Steel in
Seattle, the work is roughly estimated at around USD $0.12 per pound
using the gross NC cut steel order weight. For plasma cutting the
same order using a "high definition" tolerance, Far West estimates the
work at around USD $0.18 per pound.
The range of costs
quoted for plasma cutting aluminum by Northwest Plasma in Seattle seem
to have settled at around USD $0.44 to USD $0.46 per pound. For
estimating purposes, I use around USD $0.45 per pound for aluminum,
using the gross order weight.
A newly competitive
method of cutting aluminum has begun to gain popularity: water jet
cutting. In most shops in the Pacific Northwest the cost of water
jet cutting is estimated on par with or slightly greater than the cost
per pound of plasma cutting aluminum. Therefore there can be cost
advantages to plasma cutting, versus quality of cut advantages to water
jet cutting.
Very roughly, around 12% to 15% of a
small yacht's as-built structural weight will be in the form of
extrusions such as longitudinal stringers and pipes which will not be
NC cut. It is assumed that all other structure will be NC
cut. In order to estimate the weight of the gross NC cutting
order, a 25% to 30% waste allowance is assumed on the material that is
to be NC cut (after deducting the appropriate percentage for the
vessel's extruded members).
Acceptance of NC Cutting
For new construction of commercial
vessels in the US, it is nearly unthinkable to consider manually
cutting the structure for a new boat. However, there has been
very slow acceptance of NC cutting for yacht building in the US.
In
other words, here in the US, where we imagine ourselves to be at the
leading edge of technology, we are currently quite behind the times in
the yacht building industry. In my view, this is mainly a matter of
unfamiliarity with NC cutting among yacht builders. Many yacht builders
are simply not willing to admit that a computer can be a real
boatbuilding tool.
It is interesting to observe that in New
Zealand, Australia, and throughout the EU, this situation is just the
opposite. Builders in those locations now expect that a metal boat will be NC cut, even if it is a one-off yacht.
In
the final analysis given the excellent software tools available there
is just not a more practical means to build a vessel, whether small or
large, regardless of the material of construction. Since this
kind of software has become increasingly affordable to smaller design
offices, the general acceptance of computer modeling and computer
cutting is on the rise.
We can expect to see the computer
cutting process employed for yacht construction more and more often in
the coming years even for one-off boat projects.
The Cost of One-Off Design
Compared
to a production environment, one-off construction implies that the cost
of the design work itself will be added to the project. We must
then ask, "Can one-off design be competitive in terms of cost?"
In order to answer this, we have to ask, "What does custom yacht design actually cost?"
For
larger yachts, custom design may cost between 6% and 8% of the as-built
cost of the vessel as-built by a professional yard to a 'turn-key'
stage of completion. Smaller vessels (say below 40 feet) will
usually tend toward a somewhat higher percentage for design work, there
being a certain minimum number of hours required to design even small
vessels.
Of course the same caveats must be applied to
design costs as apply to vessel costs, including vessel size, added
complexities, exotic structure, elaborate systems, whether the vessel
is light or heavy for her length (the D/L factor). Other factors
affecting the cost of design are variables such as changes, tank
testing or other special requests.
For a thorough discussion of the cost of one-off design, please see our separate web article on Yacht Design Costs.
Regardless of the material chosen for hull construction, if the designer
has been the source of the client, then there are considerable savings
to the client in terms of there being no promotional costs or brokerage
fees. For example, simply eliminating brokerage fees alone
(ordinarily around 10% of a vessel's cost) will immediately offset the
entire cost of custom design work, plus some.
Other Cost Saving Factors?
Whether
using a large NC router to create tooling for a one-off fiberglass
boat, or using NC plasma cutting for a custom built metal vessel, it
should go without saying that if the designer has created the hull
geometry within a NURBS based computer modeling environment,
the labor already expended in the design office to create the hull
model can then be leveraged and put directly into the production
environment.
Both designers and builders can use NURBS
surface modeling in combination with other construction oriented CAD
tools to effect a substantial labor savings and therefore a cost
savings to the builder, and those savings will be to the benefit of the
client. In the case of NC metal cutting, the labor savings are
enough to pay for the cost of generating the cutting files some 2 to 3
times over.
There are other often overlooked ways a boat owner can save build costs
and still have a first class vessel. For a thorough discussion of
those strategies, please see our web article on
Affordable Boatbuilding.
Design Considerations For Building Offshore
What special considerations are designers faced with when developing a new design for offshore construction?
For
US designers and possibly for a large portion of Canadian designers,
there will be the issue of differing measurement systems. It is
more or less the case in North America that all construction trades
still use the Imperial measurement system, whereas in most other countries of the world the Metric system is in use.
As
an example, in the US and Canada, whether you are purchasing plywood
for fiberglass mold construction or for interior joinery, it will most
often be supplied in feet and inch dimensions. The same is the
case when specifying metal structure: The metal components will
virtually always be supplied in Imperial sizes.
This
situation means that a designer must know the construction venue as
early on as possible in the design process. For example, with
metal construction, the difference between Imperial plate thicknesses
and Metric plate thicknesses can have a dramatic effect on the overall
weight of the structure.
In addition, the designer must
make frame size and spacing allowances in order to create a structure
of equal strength, using materials which will be locally available to
the builder of choice.
For example, my 25' tug-yacht Boojum was
originally designed using all Imperial dimensions for construction in
the US, in aluminum. The drawings were done using an
architectural scale, typically 3/4" to the foot. When it was
discovered that the vessel would be built in New Zealand, we made
changes to the called out dimensions on the plans, and left the
Imperial scale as it had been drawn.
Since Boojum was to be
NC cut, there were quite a few changes to be made to the hull model,
and to the computer defined parts. Fortunately, the decision to
build in New Zealand was made prior to having expended much time on
creating the actual NC cutting files, and it was a relatively simple
transition. The main adaptations required in the NURBS surface
hull model were to accommodate Metric sizes of aluminum tubing where
Imperial aluminum pipe sizes had been originally specified.
Having
been designed at first using Imperial materials sizes, of course all
the plating, framing, and longitudinal members' strengths needed to be
re-calculated via the ABS rule, using the Metric components' new
dimensions. This did require additional design costs, but those
added costs did not amount to a great deal. I had originally
sized components and their spacing quite conservatively. As an
example, there were no changes of location required for the
longitudinals, only changes of dimension.
Several of my
current vessel designs are being considered for construction in New
Zealand. These vessels have typically been designed using metal
hull, deck, and house structures. In all cases I have encouraged
the clients to pursue estimates for construction as early on as
possible, in order to establish a relationship with a yard, and
therefore to know in advance the country in which the vessels will be
built. With this decision made early on in the design process, I
will be able to begin the NC cutting files sooner, and be that much
farther ahead of the process when construction begins.
What Standards Will Apply?
In
addition to differences in the available sizes of materials and
differing measurement systems in use, there will be differing standards
with regard to stability, structure, and safety.
Among them, what standards should be applied?
Structure
Whether
construction is to be done in the US, Canada, Australia, or New
Zealand, one will need to choose which body of standards to
apply. For my design work, I most often make use of the ABS rule
for structure. If the vessel makes use of a wooden structure, it
will be according to Lloyds. I have also come to appreciate the
simplicity of the German Lloyd's rule.
With a few minor
exceptions, the ABS rule books are clear and well organized. The
ABS rule provides the benefit of being flexible in terms of skin
thickness, as well as frame and longitudinal spacing.
Other
scantling rules, such as the one recently put forth in Elements of Boat
Strength, by Dave Gerr, instead provide a prescriptive or "cookbook"
approach, giving the designer a much simpler rule, but one with much
less flexibility.
In New Zealand, the ABS rule is often
used, so building a vessel to an ABS inspection is easily done.
Other structural rules in regular use in New Zealand are Det Norske
Veritas and Lloyds. For a US client, ABS, Lloyds, or DNV would
all be equally satisfactory.
New Zealand also has an
in-country "Maritime Safety Authority" referred to as the
"MSA." The MSA provides a body of structural rules that are
based on a collection of Lloyds and ABS. The MSA also provides
inspections during construction.
Power Vessel Stability
For
a US client, if the vessel will for some reason be US Coast Guard
inspected, the stability criteria applied will be found within the US
Code of Federal Regulations (CFR).
The specific stability
criteria used will vary somewhat according to the type of US registry
that is being sought. Although fairly well organized, the US CFR
is very obtuse, having been developed over many years by the US
legislature (i.e. lawyers and politicians) in a very non-linear
fashion. In places, the US CFR is confusing to the point of
absurdity. Nevertheless, it is the standard.
For
passenger vessels, although the CFR does not directly acknowledge any
"foreign" stability criteria, the US CFR entirely reiterates the IMO
(International Maritime Organization) basic stability criteria for
"vessels of unusual form" within 46 CFR 170.173 Subchapter S, Subpart
E, "Weather Criteria."
For power vessels I have used
the US CFR on occasion, for example when working with passenger
carrying vessels. However for power yachts I have found the
internationally recognized IMO Code On Intact Stability to be both more
rigorous, and far more easily applied (Publication IMO - 874
E). Ordinarily I will additionally impose the requirements
of the IMO Severe Wind and Rolling Criterion contained in Chapter 3,
Section 3.2. By comparison to the US CFR criteria, the ISO criteria are uniformly
applied, therefore they are relatively easily calculated for a wide
variety of sailing vessel types.
Sailing Vessel Stability
For sailing
vessels, the US CFR contains criteria for Sailing School Vessels and
other Passenger Carrying Sailing Vessels. These criteria can be
excessively restrictive in terms of sail area due to induced heeling
angle. I believe the CFR methodology to be appropriate for very
large and / or very heavy displacement sailing vessels. However
for small offshore sailing yachts or passenger carrying sailing
vessels, in particular if they are relatively light displacement, the
CFR criteria are at best difficult-to-impossible to satisfy. The
net result is extremely heavy displacement and / or very scant sail
area - a very non-optimum combination for yachting.
For
smaller sailing yachts, say below 100 feet, it seems far more
appropriate to make use of stability criteria for offshore sailing
yachts recommended by the International Standards Organization
(ISO). The preliminary work to develop the ISO criteria was
originally referred to as the Dynamic Stability Factor (DSF). The
DSF method was originally proposed by Moon and Oossanen using stability
data gathered after the well-known Fastnet race losses. The
basics of the originally proposed DSF criterion are given in
"Principles of Yacht Design" by Larsson & Eliasson. Now in its
final form, the ISO criteria for sailing vessels are contained within
ISO - 12217 (applicable to yachts from 6 meters to 25 meters in
length).
The ISO - 12217 criteria have been derived
by a variety of studies done within various member nations of the
European Union, and are now included by reference within the EU's
Recreational Craft Directive (RCD). Although complex, the
criteria are rigorous. Rather than establishing a simple range of
positive stability, eight separate seaworthiness factors are calculated
and accumulated into a "Stability Index" (STIX) which rates the yacht
for service in one of four categories: Ocean; Offshore; Inshore;
Sheltered.
As an assessment of relative seaworthiness for sailing
yachts, I have found both the original DSF and the final STIX criteria
to be highly appropriate and extremely useful.
Safety
Safety
is provided for via adherence to applicable ABS, ABYC and COLREGS
standards. For construction in New Zealand, unless a given
feature or equipment item is specified otherwise, builders there will
ordinarily defer to the requirements of the New Zealand Maritime Safety
Authority (MSA).
Construction Inspections
In
New Zealand, construction inspections may be arranged for compliance
with scantling rules such as ABS (American Bureau of Shipping), DNV
(Det Norske Veritas), GL (German Lloyds), or LR (Lloyds
Register). In New Zealand, certified inspectors are used, much as
they are in the US, Canada or Australia.
If desired,
various inspections can also be made by the New Zealand in-country
Maritime Safety Authority (MSA) inspectors. Weld quality,
structural arrangement, safety, and other types of inspections are
easily accommodated through the MSA.
Workmanship
Prior
to choosing a yard in New Zealand to build the tug-yacht Boojum, the
client invited me to accompany him on a trip there with the purpose of
meeting with the prospective builders, and to discover if other yards
might be more suited to the project than the few which we had already
contacted.
We toured New Zealand from Invercargill to the
Bay of Islands, and in the process met nearly every significant builder
on the South Island, then began looking around the North Island.
We
discovered that the level of experience in the boat building work place
in New Zealand is very good. New Zealand has an apprenticeship
program for boat builders, and the results of that seemed to be evident
in the quality of the work being done at the yards we
visited. In other words, we were impressed.
In
the US where GRP construction is most common, it often seems somewhat
unusual to consider a new yacht built in metal. As a result, it
can at times be an adventure to find a qualified US metal boat builder
with shop space available.
In New Zealand by comparison,
metal yachts large and small are everywhere, and the metal working
expertise is readily available for their construction.
Communicating Effectively
During
the last several years, internet connectivity has become
widespread. We can now take advantage of quick and inexpensive
worldwide communication via email and via the web.
Email
We
have all become increasingly dependent on email as a working
communication tool, even locally. As a tool to help manage
projects on the other side of the world it has proven to be
indispensable.
Using the Boojum project as an example, we
made use of email right from the very start. We initiated
contacts with New Zealand yards via email and sent the Preliminary
Vessel Specification as an email attachment, usually as a PDF file
(Portable Document Format). Sending documents as PDF's permits all
formatting to be preserved including special fonts that may not even be
on the recipient's computer system. The recipient can view the document
and print it out as it was intended to be seen. Perhaps of greater
value, they are unlikely to edit what they receive.
Using
these methods we negotiated the contract via email and kept the yard up
to date with the most current Vessel Specification.
Except
for the Lines Drawing itself, the plans sheets for Boojum were hand
drawn, so updates were sent via international courier. Presently
however, we use nearly 100% CAD and even the drawings will be sent as
PDF files which can be plotted to scale at any well equipped print
shop.
Once completed, the NC cutting files for Boojum
were sent as email attachments directly to the metal cutters in New
Zealand using the DXF or DWG file format in general use for the
exchange of CAD files.
Parts were nested onto metric
plate sizes that had been specified by the New Zealand metal
cutter. After a "pre-flight" process of verifying the accuracy of
the files, the parts were cut, then delivered to the builder.
By
email the New Zealand yard provided us with weekly updates on the
progress of construction and using a digital camera they emailed photos
of the vessel taking shape. The emailed photos were used
primarily to keep us informed of progress, but also to verify the
yard's interpretation of the drawings. Occasionally they were
used in order to ask for clarification of some detail or other. This
worked extremely well.
In my view, internet connectivity is what made building Boojum in New Zealand such a smooth process.
Since
then, email has become central to all our communications and even to
the work flow, allowing our design team to be 'location independent'
not just with regard to the project, but with each other.
Web Pages
During
the design and construction of Boojum I researched product specs on the
web. This was especially useful for items available locally in
New Zealand for which I did not previously have information. In
recent years, a large book case full of catalogs is totally obsolete...
since all that information is now readily available on the web.
On other vessels we've designed I have made use of public
and private web pages. As drawings are completed, they are posted
either to a private page for the client, or to a public page, whichever
is appropriate to the situation.
As a communication and visualization tool, the internet has become vital.
Import / Export Considerations
Exporting a Vessel From New Zealand: New
Zealand has a GST or General Sales Tax. However, boats built for
export are exempt from GST and all other local taxation within New
Zealand. A yard building a boat in New Zealand for export may
also import materials and equipment for that vessel without customs
duty being imposed on import to New Zealand, or on export from New
Zealand.
Importing a Vessel to the United States: As
mentioned, there is currently no duty imposed on a vessel that has been
built in Canada when imported to the US. For a vessel built in
New Zealand there is a 1.5% duty on the value when brought into the US.
Sea Trials
When
the vessel is completed and launched, there will be a period of Sea
Trials, done either by the yard, or by both the yard and the new owner. In
New Zealand, as in the US, Sea Trials are considered to be an extension
of the construction of the vessel, during which time no taxes are
levied.
In New Zealand, after Sea Trials have been
completed to the owner's satisfaction, title to the vessel is
completely transferred to the owner, and a period of "in-country" use
begins. In the case of Boojum, the builder asked the New
Zealand authorities for a three month in-country trial period for the
owner, to allow cruising around New Zealand without taxation.
If
Boojum then exits New Zealand within the allowed three month grace period,
there will not be any New Zealand taxation. We have not investigated
whether this grace period could be extended, but we
anticipate that it would not be a problem if requested in advance.
Delivery
According
to pricing provided by the builder in New Zealand, shipping Boojum to
the US as cargo on the deck of a ship would cost approximately the same
it would cost to truck the vessel across the US. Boojum is 25
feet long, and weighs around 14,000 pounds light. The shipping
costs quoted (April 2000) were in the range of USD $5k.
For
an ocean going trawler yacht or sailing yacht the use of a delivery
skipper is always an option. Most of them will quote on the basis
of a cost per mile, plus consumables and expenses.
Despite
her relatively small size, Boojum was designed for long range passage
making so is capable of making that kind of voyage on her own bottom.
Summary
We
can see that building offshore can provide a decided cost advantage to
a US client, and in particular that New Zealand, Australia and Canada
are quite good places to build a boat.
New Zealand for
example has a well trained work force, and a very boat-oriented
population. As a confidence factor, New Zealand, Australia and
Canada are familiar cultural environments in which to do business, and
there are no language barriers to US customers.
Have we missed any hidden advantages in our inquiry with regard to New Zealand or Australia?
Yes, I believe so.
New
Zealand and Australia are pleasant to visit, the people are friendly,
and the countryside is stunningly beautiful. As a bonus, we can
visit "down under" during our winter and get a good dose of summer
sun...!
Michael Kasten
May 2000
Updated as Noted
More Articles on Cost:
Estimating Boat Building Costs |
Affordable Boatbuilding |
What Will The Boat Cost..? |
What Will the Design Cost..?
