Tight tolerances

Discussion in 'Laser Class Politics' started by sprayblond, Dec 25, 2011.

  1. sorosz

    sorosz Member

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    My understanding is that the current sail cloth specified for the Laser sails is somewhat unique so that is likely to increase costs since it requires special production runs just for Lasers (based on what I recall from previous discussions here). The tighter specifications also mean that it is likely there is more waste/expense for sails that don't meet the standards which means more cost in the manufacturing process (ie our strict one-design process probably means a certain number of sails get rejected for fiddly reasons that don't really make a difference in terms of performance or longevity).

    We don't really know all the costs that go into the distribution/supply chain but here is my attempt at taking a guess starting with the assumption that building a sail in Asia costs only $100 in materials and labor (which I think is likely to be a little low).

    (all amounts & percentages are just a guess.)



    Hypothetical Laser Sail Cost

    Class Legal Knock Off
    Manufacturing Cost $100 $100.00
    ICLA Class Royalty 30% $30 $0.00
    ISAF Royalty 30% $30 $0.00
    Designer Royalty 30% $30 $0.00
    Shipping 10% $10 $10.00
    Distributer Mark-up 30% $60 $33.00
    Retailer Shipping 10% $16 $0.00
    Retailer Mark-up 30% $44 $0.00

    Total Retail $320 $143


    Granted, I'm just pulling the percentages for royalties, shipping and markup out of . . . thin air but even with these assumptions a class sail is over double the cost of a knock off. It is likely that there are other costs in the distribution/supply chain that I didn't even consider which would likely add to the cost of the class legal sail compared to the knock offs like. For example, is a 30% markup on a low volume item enough to stay in business? Also is the percentage and placement of the royalties in the correct sequence? It's possible that some or all of the royalties might be structured more like VAT and added in several times during the process or calculated later when the cost is higher. I also have no idea what, if any, the effect of taxes and duty might have on the cost for either class legal or knock offs. I was just a history major and math and finance aren't my strong suit so maybe someone else has better assumptions. . .

    Taking a quick look online it looks like a North Class Legal sail costs $565
    An APS practice sail that is " heavier" 3.8 oz cloth runs $179.95. They also advertise a 4.5oz "training" sail for $454.00 which is pretty close to the class legal sail price. Could it be that the heavier cloth is a less common weight that increases the total cost?
    The Intensity sail lists for $199.95 (on sale for $179.95) and is made of a "firmer dacron" "3.7 oz polyester".

    Given that Vanguard was the first Laser manufacturer in the US to not go out of business (if I recall correctly) I kind of doubt that anyone is making a huge profit on Laser stuff. The retail price differential of the practice sails compared to class legal isn't that far off percentage-wise from my guess above.

    While I'd like to see a cheaper, longer lasting sail just like anyone else but when I think of all the other areas where companies are trying to rip me off I can't that worked up over the deal I'm getting on Laser sails.
     
  2. 49208

    49208 Tentmaker

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    The only "royalty" on the sail is the class button, which adds approx $12-15 (USD) - No designer, no ISAF - those are only on new boats IIRC (Kirby would have banked twice as much then has has if he was getting royalties on the parts sold after the initial boat sale)

    The cost cloth difference is negligible, the cloth in the class legal sail is only unique from the standpoint that no other sails are built from it, and the specs are such that there is actually less finished material rejected then a typical dacron used in other classes.

    I believe the assumption that manufacturing costs between the class approved and the non-class approved are correct.

    So, the cost difference between the class sail and the non-class sail as they leave the first step in the supply chain (the sailmaker) is really just the royalty button. The rest of the difference is in the markup
     
  3. sprayblond

    sprayblond Member

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    So now we are there. The monopolist, LPE, would as predicted restrict supply to maximize profits. Anyone think this would have happened if you had several builders bidding for the supply to the championships?

    -----------------------------
    Delay in the opening of Late Entry Applications - Latest Information
    6 February 2012

    We are still urgently trying to secure the provision of charter boats for the championships in Argentina. As soon as we get any positive information we will announce it here and email all the sailors who have made an application. Until then we will not open the application list for late entry.
    --------------------------------------------
     
  4. SFBayLaser

    SFBayLaser Member

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    That's an interesting conclusion to draw from that statement, though maybe not the one I would make.

    Traditionally the builders have provided charter boats to the world championships - specifically the builder owning the rights to the region in which the championship is held (e.g. PSA for the upcoming Master Worlds). They build the required number of boats, ship them to the venue, charter them to the sailors (through ILCA but with the charter fee going to the builders), then sell them (at a discount). Depending on the venue, some fraction are sold onsite to dealers who cart them off, some are shipped from the venue to dealers, etc. The point is that ILCA and/or the regatta hosts have not traditionally purchased the boats for the events.

    At this point I don't think this is news or anything even resembling a big secret... LaserPerformance have decided they no longer want to participate in the boat charter business for major events like this. As I understand, the lone exception is here in North America for the High School and College Sailing singlehanded championships, but other than those they will not provide charter boats for any other events (US Sailing Singlehanded Champs, European Champs, World events, etc.).

    Going forward LaserPerformance says it will focus entirely on boat building. All previous "support" functions once performed by LP will be transferred to their sister company McClaren which will handle sports marketing. Organizations once receiving "support" from LP can now apply for sponsorship to McClaren. As you may recall, McClaren already sponsors sailors, like Anna Tunnicliffe and US Olympic sailor Rob Crane.

    Also, remember that South America is defined to be LP's territory, through its ownership of the trademark and through all the builders having contracts with ISAF and Bruce Kirby. So, even if ILCA wanted to buy boats for the world championships they would be constrained to buy them from the builder in the region of the host venue.

    You may interpret all of the above as you see fit.

    In the meantime, ILCA is still working very hard on finding a solution to provide boats to the 4.7 Worlds.
     
  5. Wavedancer

    Wavedancer Upside down? Staff Member

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    Thanks Tracy; it's 'nice' to see the relationship between Maclaren and LP clarified. And BTW, Maclaren also sponsors some of the sailing at the Bitter End Yacht Club (BVI).

    http://www.maclarenbaby.com/
     
  6. sprayblond

    sprayblond Member

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    Well this was news to me at least.

    Never heard about similar problems in opti and 420. In fact in opti it is tough bidding with several companies wanting to supply the 270+ oppies. Wonder why these classes are different? Tracy; to me this sound like using nice words for something which may more bluntly be described as LP blackmailing ILCA.
     
  7. 49208

    49208 Tentmaker

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    First I'm hearing about it too, but I admit I have not checked the latest Laser Sailor, or the NA or Intl Laser sites in case this info has been posted there..

    "All previous "support" functions once performed by LP will be transferred to their sister company McClaren which will handle sports marketing"

    Is supplying a fleet of new boats for charter considered one of the "support" functions or is LP/McClaren basically saying they are no longer going to supply boats under a charter arrangement ?

    "Also, remember that South America is defined to be LP's territory, through its ownership of the trademark and through all the builders having contracts with ISAF and Bruce Kirby. So, even if ILCA wanted to buy boats for the world championships they would be constrained to buy them from the builder in the region of the host venue."

    I thought I recalled someone saying that LP no longer had a contract with BK ? I guess that doesn't matter if they still have the trademark ownership, that would be enough to prevent, say, PSA from supplying a fleet of charter boats, correct ?

    Messy.. (unless we hold all major champs in a region serviced by PSA :D )
     
  8. torrid

    torrid Just sailing

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    My guess is McLaren might help hook up a few top-level sailors with a charter boats, but not 200 boats total.
     
  9. torrid

    torrid Just sailing

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    What about the Sunfish class? I would imagine they are in a similar bind for their world championships.
     
  10. 49208

    49208 Tentmaker

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    Except that is not how the senior/open worlds are run. The idea of supplying all new equipment to everyone was so that it became a test of sailors, not equipment (subject to builders tolerances )
     
  11. Wavedancer

    Wavedancer Upside down? Staff Member

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    Maclaren was on every hull and sail on the 2011 Sunfish Worlds boats (Curacao). At that time, the relationship was a mystery, to me at least...

    I just read though that the planned 2012 Worlds, which was supposed to be in Ecuador, will not be sailed over there because of certain 'issues'.
     
  12. Tillerman

    Tillerman Member

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    Hmmm. So Maclaren is now handling all the support functions for LP including "sports marketing." But what are they marketing?

    As far as I know, Maclaren's actual products are baby strollers and related "parenting" products. But I don't see much publicity for Maclaren baby strollers associated with their sailing sponsorship efforts so far.

    Are they just marketing the name "Maclaren" as some brand associated with sailing? If so, to what end? Will we soon see Maclaren Sunfish? And eventually Maclaren Lasers?
     
  13. Eric_R

    Eric_R D10 Secretary

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    Most of those charters are from companies that buy lots of boats and then charter. They also have some builders like McLaughlin supply boats but they are mostly companies that charter then sell them off later. I don't think you see the builder support that the Laser class gets with other fleets (though it has been great). I don't know the financials of chartering but I can see the pain of lugging around the boats making sure things are not broken, fixing them and then selling them after a few regattas. Though the drop in price for a relatively new boat is good for buyers because they eat up event boats all the time.
     
  14. sprayblond

    sprayblond Member

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    I would disagree. The main companies doing charter will be builders , Winner(DEN), BlueBlue(POL), FarEast(CHN), Lange(CHI), Nautivela(ITA). And they offer good support as part of the package with spares and repairs available on site.

    My point is that they do this because it is profitable. I am sure it has been for LP also, but refusing to offer this they Blackmail ILCA. What prevents ILCA or any other company from buying 200 boats from Australia and then ship them to where ever there is a championship and then sell them afterwards. I am sure 200+ boats sold in Europe after the 2012 championships there would make a nice bump in LP sales budgets.

    This story can become very interesting if say the womens worlds in Boltenhagen will be without boats. Maybe I can offer one of mine f0r a good price..?or maybe they need to use RCLasers for the Olympic qualifications...
     
  15. SFBayLaser

    SFBayLaser Member

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    The trademark.

    Nobody, not event ILCA, can buy boats from one builder and bring them into the trademark territory of another builder without that builder's permission.

    Whether is profitable or not is open to debate but, in the end, we don't have access to the builder's books so can't confirm. They would like us to believe they lose money on the proposition.
     
  16. torrid

    torrid Just sailing

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    I hate to keep drawing conclusions, but given the deafening silence there is not much else we can do. To me it looks like LP is trying to put the squeeze on the ILCA by not providing boats, maybe clearing the way for them to create their own class association.
     
  17. sprayblond

    sprayblond Member

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    Of course you can buy boats and sell them elsewhere. I have bought several lasers and I do not remember signing anywhere that I was not allowed to bring this boat out of Europe and resell it there.

    This is called parallell import and in fact manufacturers trying to prevent this could be in significant trouble with authorities due to anti-competitive behaviour.

    There is nothing preventing a company from buying a load of lasers, Mercedes, Lacoste shirts, Redken Shampoos or whatever else where they want to buy and resell where they want. Normally prices will be too similar and this will not be profitable, but when the alternative is zero availability for championships...?

    Hello McLaughlin time to put on your boots and buy some Australian Lasers...!
     
  18. Tillerman

    Tillerman Member

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    I wish LaserPerformance's sister company well in their sports marketing efforts. But they seem to have a rather unfortunate name in that there are several other companies in the field with very similar names...

    First of all LP's sister company, I believe, is Maclaren (not McClaren or MacLaren or McLaren as they have been called earlier in this thread.) Maclaren is a company that makes baby strollers and the like, which uses that logo of 5 red diamonds that we saw on the sails at the Laser Slalom in SF last year.

    Actually there really is a company in the sports world called McClaren. This is McClaren Sports who "work with athletes, coaches and sports business leaders to seize their greatest opportunities" whatever that means.

    Neither of these should be confused with the even better know name, McLaren, a group of companies which grew out of the Formula One Racing Team of the same name.

    You should also be careful not to confuse any of those companies with Maclaren Sports Marketing Inc. which, in spite of having the identical spelling of its name is not LP's sister company either, as far as I can tell, but a small family company based in Odessa, FL.

    I wonder if Maclaren is getting into sponsorship of sailing just so we can all remember to spell their name properly? If so, their strategy doesn't seem to be working!
     
  19. SFBayLaser

    SFBayLaser Member

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    You are correct in that YOU, as an individual, can go to, say, Australia, buy a boat and import it back into your home country (which may be in, say, LP's trademark region) for you PERSONAL use. That is a clause in the Olympic contract signed by ISAF, the builders AND ILCA.

    You cannot buy a boat, or boats, with the intent to resell it/them without running afoul of the trademark. In fact, I'm told that, technically, you aren't even allowed to resell a boat you import for personal use.

    LP has been in the past quite aggressive in enforcing this and more than one container has been seized at the point of importation.

    If this could be done then its such an obvious solution it would have been tried. And LP would not have been successful in seizing containers at the point of importation.

    A big difference between the Laser Class and other classes is the trademark, specifically that its owned by the builders in the territories they control.
     
  20. gouvernail

    gouvernail Active Member

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    Siezed containers...

    I have heard about this before...

    Is this an urban legend or do we have the names of those who attempted to import and the numbers of boats and the dates these events happened?? What eventually happened to those boats??

    It seems to me the only thing LP can do is sue somebody who attempts to sell a sailboat and call that sailboat a Laser.

    I do not believe there is any law restricting anyone from building a fiberglass object that is exactly like the Laser sailboat and selling that object complete with rigging that makes it look and perform exactly like a laser sailboat.

    In fact, I have a hunch a business could build and sell a line of FYLIBMO and FYSIBMO and the ONLY current problem would be the ILCA and Sunfish class refusal to allow look alike work alike boats to compete in their sanctioned events.

    The only two reasons I have not built a few myself??:


    no trusted lawyer who has said my beliefs are correct

    lack of available capital to get started


    ( They are acronyms...ending in I Built My Own)
     

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