PLEASE NOTE: The contents on this page were adapted from information derived from www.marill.com/csy: Much of this text was written by Dr Van Ost.
HISTORY OF C.S.Y. YACHT CORPORATION
Who is CSY?
In 1967, there were less than two-dozen boats in all of the Caribbean being offered for bareboat charter (you-are-your-own skipper). In that year, Caribbean Sailing Yachts, Ltd. (CSY) was founded. We introduced a new idea-full service chartering-with a fleet of 14 identical yachts, which allowed us to maintain a full set of parts and to standardize our procedures which were entirely new to the yachting world. We first tried our idea out in Essex, Connecticut in the summer of 1967. We then packed up the whole shebang and shipped it to St. Thomas in the Virgins. CSY introduced the idea of provisioning the yachts with everything-our famous SailAway-Without-Delay Plan, We also were the first to provide for our charterers a complete Charter Manual for the operation of the yachts which is still tops in the industry. In 1968, CSY published the first edition of the Yachtsman's Guide to the Virgin Islands out of dire necessity, since there was none at that time. This has been revised annually, and has become the yachtsman's bible for anyone sailing the Virgins.
In 1969, CSY's success demanded an enlarged fleet. So we devised the Sail 'N Save Plan whereby individual owners bought the yachts that we had especially designed and built for southern waters and then leased them back to CSY. We added 25 Carib 41's to our fleet that year. This was the landmark yacht that started a trend toward the comfortable and spacious center cockpit cruising auxiliaries so familiar today. That same year, we opened our marina in St. Vincent and moved our operation out of the U.S. Virgins into the British Virgins at Maya Cove on Tortola in the center of the sailing area. In 1971, we brought full-service chartering to the Bahamas. At the same time, we introduced the Carib 39-a shallow draft yacht designed especially for the Bahamas, which had as much living space as the Carib 41. It was designed and built especially for CSY by Pearson Yachts, That same year, we added the sleek and beautiful Halsey Herreshoff-designed Carib 34 built by Bristol Yachts. This brought our CSY fleet up to a total 85 yachts. In 1972 we completed the first marina specifically designed for full-service bareboat chartering at Marsh Harbour on Abaco in the Bahamas. In 1973, CS introduced one of its most popular programs-the Sail 'N Learn Cruises in St. Vincent, which is described elsewhere. Also, in 1973, we published the Yachtsman's Guide to the Windward Islands by the famed cruising author Julius Wilensky. In six months, half of the first printing was gone.
Late in 1973 and early 1974, we put into operation a new power yacht-the Carib Trawler. This, too, is the first motor yacht designed specifically for carefree charter in the islands, which brought our total fleet in three marinas up to almost 100.
In 1975, we opened the first marina-hotel designed specifically for bareboat charters at Baugher's Bay on Tortola in the British Virgin Islands. A similar facility was opened in 1976, in St. Vincent.
In 1973, we began the long period of study and development which culminated in the plans and specifications worked out with our architect Peter Schmitt, for what is now known as the CSY 44. We were so uncompromisingly demanding in the high standards to which this yacht was to be built, that we couldn't find a manufacturer to build it. Therefore, in desperation in our quest to be true to our principles, we really went out on a limb. C.S.Y. Yacht Corporation was founded by Caribbean Sailing Yachts, Ltd.'s chief executive officer, John R. Van Ost.
By June 1978, from standing start, we had produced the 100th CSY 44. We were then building at the rate of two CSY 44's per week.
The property on which it is presently located was leased with a two year option to buy for $450,000. This lease was extended to a three-year option which is exercisable on September 1, 1979.
At the start in 1976, a new plug and mold was built, and the first boat went into the water on January 15, 1977. Production gradually increased to seven CSY-44's per month by May, 1977. The chart illustrates the number of people employed, and the number of boats molded and delivered through July, 1979.
Along the way, another version of the CSY-44 was designed and built. The CSY-44 Pilot House Ketch was introduced at the fall boat shows.
A CSY-37 was designed, built, and shown for the first time at the Miami Boat Show in 1978. This yacht has since been redesigned into two models, the two stateroom model, and the popular one stateroom model.
By June 1978, from standing start, we had produced the 100th CSY 44. We were then building at the rate of two CSY 44's per week. We are now operating in a plant of 64,000 sq. ft. at 5250 W. Tyson Avenue in Tampa, Florida. The telephone is (800) 237-2565. We have 300 employees and have become, in less than two years, the sixth largest sailboat manufacturer in the USA. But, we are number one in quality and we are going to stay that way.
Our charter boat marinas have over 100 employee who are the most experienced in the business. Some of them are going into their twelfth year with us. Each of our marinas has the most complete facilities in the business Each has its own simple hotel accommodations ... 9 rooms in St. Vincent to be expanded to 16 this year; 9 rooms at Tortola to be expanded to 12 next year; and adding 5,000 more square feet to the bar, restaurant, shops and showers there. Our 335 foot dock at Tortola was completed last year. A 20-room hotel marina complex designed in a Balanese style is going up in Roatan. In addition, there are five people to serve you in our stateside booking office in Tenafly, NJ. And there are five more full-time people at Anchor Travel to see that your travel arrangements are without foul-ups.
Last year, we served over 15,000 people and next year that will go over 25,000. Probably more people have sailed with CSY over the last twelve years than with all of our competitors combined.
We never let the grass grow under our feet. Although we may be the largest, our foremost thought in everything we do is to continue to render the most personal service available. We are not just the biggest, we are the best, which is far more important. As anyone who has chartered from us will tell you, CSY is where the standards are set, not met. So do yourself a favor and try CSY first.
In the fall of 1978, the CSY-33 was introduced at Annapolis. At the present time, five of each model, CSY-33, CSY-37, and the CSY-44 are being produced each month.
In March of 1979, Dr. John R. Van Ost took personal and full-time charge of the company. The CSY Yacht Corporation has been completely reorganized since his arrival. CSY labor relations have been drastically improved. Unionization of the Labor force was defeated by a margin of over two-to-one vote by the hourly employees in May, 1979. Production has now been increased by almost 50%.
Peter Schmitt, our naval architect, has been engaged on a full-time basis as Vice President in charge of Engineering and Design. A long-range expansion program has been worked out. Phase I of that program is underway which will provide a customizing building where the Pilot House Ketch will be built, a new Administration and Sales Office with a Ship's Store, a new Commissioning building, and a new tooling and small parts building.
This program will be self-supporting. It will increase production by as much as 25%. It will offer greater econ @ cs in that our glass small parts-will be built here. We will be able to do more of our stainless steel work, pulpits, stanchions, bow sprits, and shafts at the plant. We shall do all our rigging and spars, and have the space to do our'canvas and cushion work. All of this is now done by outside suppliers, and we expect this will at least double our potential income and mke the ccapany more self-sufficient and less dependent on outside suppliers.
The company has initiated an advertising and marketing program which is generally recognized as the best in the industry. We are the only major yacht manufacturer that sells directly to the public. Thus, CSY Yacht Corporation can stay competitively priced and at the same time give the customer a higher quality yacht.
CSY is also unique in its recently formed customized service, which allows a broader variation of options and customizing than any other yacht manufacturer. Its location on the water also allows the company to offer the most complete commissioning service of any manufacturer. Over 95% of all the CSY yachts are delivered on their own bottoms all over the world. The company has a nationwide warranty surveyor service which allows warranty service to be authorized anywhere within the continental United States.
From a standing start in 1976, in just three years the CSY Yacht Corporation has become one of the top half-dozen sailboat manufacturers based on dollar volume. It is generally recognized as the highest quality production manufacturer of cruising sailboats in the country.
The CSY boats were sold directly from the factory, without any dealerships or middle-men. A very important marketing tool used to promote these high-quality boats was a fairly hefty soft-cover book, rich with color pictures of the boats, in all stages of construction, with detailed information in over 100 pages describing the CSY design philosophy, the choice of materials and systems. The book is named the CSY Guide to Buying a Yacht, by John R. Van Ost. This was an elaborate and very informative publication, far more than the typical yacht brochure. It was a key marketing expense for CSY, part of a marketing strategy to reach the buyer directly without the expense of a dealership network. The aim of this book was to effectively reach prospects and spread the word about the design and quality of these boats. The book invited prospects to visit the factory in Tampa, FL to see for themselves the quality of the operation.
-----
The document below, also scanned and converted via OCR technology to a Microsoft Word document, describes in detail some of the challenges faced by Jack Van Ost in running the company, starting with the quality issues using the Irwin boat-building facilities. The document was produced to clarify the key issues that existed at the time, and how Van Ost dealt with them to keep the company going.
A SHORT HISTORY OF
CARIBBEAN SAILING YACHTS LTD (CSY, LTD.)
and the
CSY YACHT CORPORATION (CSY, INC.)
We have preceded this with a history of CSY Ltd.
CSY Ltd, has become known for the largest charter organization in the world with plans for franchising its operation word-wide.
CSY Ltd. has grown from an annual profit of $75,000 in 1975 to $815,000 in the first half of 1979, with three marinas and 140 boats. It has a lease with an option to buy a 51-berth marina in Marathon, which is already under its management, and plans to be operational with 45 boats for charter for the 1980 - 1981 season.
CSY Inc, was inaugurated in the present plant in September 1, 1976, just a little over three years ago,
This cam about because CSY Ltd. had designated the Irwin Yacht Corp. of Pinellas County, to build a fleet of 75, 44-foot yachts, which CSY had designed carefully specified.
Through CSY Ltd, a notice was sent out that Irwin was to build these boats for lease back by CSY Ltd.
CSY Ltd. had placed its mm inspector on the job. The first five hulls were found to be so defective that we could not accept them for our program, After a showdown with Irwin, in August, 1976, it became clear that Irwin either did not intend to perform to specifications or was unable to.
It was then that we notified the prospective owners of our decision and proposed to start on our own manufacturing facility. Pieter Stoeken, who had been our manager in St, Vincent and our inspector at the Irwin plant was put in charge of the new operation - CSY Yacht Corporation.
Six days later an injunction was made against CSY Inc, restraining them from building boats for the prospectus owners CSY had obtained for Irwin to build the boats. Each of the owners declined to have Irwin build the boats. Even though Irwin closed his shop; CSY Inc. was not allowed to build the boats. Thus, we had to seek others to sell the boats to.
The injunction was not lifted until August of 1977. At that point we negotiated with a committee of the owners to build the 53 boats for the former Irwin owners, which was to be at cost, It took until April of 1979 to build the last of these boats - all at a substantial loss as the costs rose and the price remained fixed. Similar contracts had been made with other owners at the time of the lifting of the injunction for advance delivery at prices which turned out to be below our costs. Only recently have the last of these been built.
All during this three-year period, we had to develop other models if we were to stay in business. The CSY 44 charter boat just didn't have a large enough appeal. Thus, we developed the CSY 44 Pilot House Ketch version on the 44 hull. Then we designed and made the tooling for the CSY 37 in a charter model, (A model), and a one stateroom model,(B Model). Then we produced the CSY 33, which began production early this year. The new CSY 44 Walk-Through is now in tooling and some 20 orders are on the books, sold from plans. We are planning to start two lines of this model early next year. All during this time we were developing a sales and marketing program, which has become generally recognized as the most effective in the industry. This, plus the 12 year reputation of CSY Ltd, has made CSY Inc., in three short years, generally recognized by yachtsmen as the Cadillac of the industry. In dollar volume, the CSY Yacht Corporation remains among the top three.
CAUSE OF LOSSES
This has been primarily due to the long lead-time of orders and not anticipating the rise in costs in pricing. This period is now behind us, as is evidenced by the cash flow projections which follow.
Until May of 1978, production was built up to a consistent 8-9 CSY 44's per month. At that point mismanagement set in, wherein the CSY 44 Pilot House Ketch was put into production before it had been engineered properly, which completely disrupted production, and, of course, cash flow. By November, only four boats were produced during the month.
The last of the first ten Ketches were finished in March of 1979.
In March, the Dr.Van Ost closed his practice and came to Tampa to assume the overall direct management of the Company.
He found the following:
1. Labor turnover was at an all-time high, Over one third of employees turned over in January alone. By March half the work force was new. This meant that unemployment and Workmen’s Compensation costs were skyrocketing. overtime was at an all time high. An organized movement had been presented to management to unionize the plant, which had been authorized by the National Labor Relations,
2. Production was back up to nine boats or ten boats per month but with an increased work force. Quality Control had run amuck, Boats could not be delivered for lack of parts and purchasing was completely disorganized.
3. Our payables had gotten out of hand.
4. The management of the sales department, the accounting dept and production were not talking to each other,
5. The manager of the plant had lost contact with what was going on in the plant and had insulated himself with three layers of management between himself and the guys building the boats.
Dr. Van Ost proceeded as follows:
1. Contacted all suppliers and exchanged payables of over 30 days for 12 month notes paying 1% per month interest.
2. Set up plan to centralize administrative offices making way for two lunch rooms and badly needed toilet facilities.
3. Held personal meetings with everyone in the plant in groups of ten. Introduced a new benefits package - a uniform wage policy - restore to the Personnel Manager the necessary authority to hire and fire - made up new employment handbook - Introduced monthly beer parties as monthly quotas are met.
4. Fired old personnel manager - replaced sales coordinator - dismissed production manager and didn’t replace him, but put Pieter Stoeken back in direct management of production.
5. Raised number of employees, which increased production from ten boats per month to sixteen boats per month - went from a 5 day cycle to a 4 day cycle. All but cut out overtime
6. Stabilized turnover - cut down on number of crew chiefs and line supervisors.
7. Built a new building to build Pilot House Ketch so as not to interrupt production on the line and to provide space for prototyping and customizing.
8. Dismissed XXXXXXX who was found to be a divisive force.
9. Dismissed Controller and replaced his replacement shortly thereafter and hi-red Cost Accountant. Now have control of income and outgo. The present controller is fully knowledgeable of all operations in the plant, having worked his way up.
10. Efforts with labor rewarded by Union being defeated by more than two to one.
11. Continuing to cut back on work force as efficiency is built up.
12. Introduced a four-stage quality control program which is responsible for our quality continuing to improve.
13. In July, hired Peter Schmitt, our naval architect, as V.P. in charge of engineering and design. He has developed a complete engineering and drafting department which has smoothed out problems on the line, and his research and development program is designed to continue to improve the product.
14. Recently the machine shop has been moved to a building that
Dr, Van Ost owns on Interbay Avenue, so we can have the capability of building all our spars and stainless steel parts.
15. A new tooling department has cut down on our problem in the glass department.
16. The sales department has been recently reorganized so it is more directly accountable to Dr. Van Ost .
17. A new sliding pricing policy was adopted last spring which raises the price of our yachts l 1/2% per month, so that we cannot get into the fixed price contracts which have so badly affected the company.
18. The purchasing department has been completely reorganized and a new numbering system set up so that we have better control of purchasing and a more accurate procedure for taking inventory, which had never been properly accounted for.
This sums up in the seven months since Dr. Van Ost has been at the plant:
1. The work force has been stabilized and is being made more efficient everyday.
2. The whole of top management has been replaced and is working
in harmony.
3. A realistic pricing policy has been instituted which will
return a profit to the company and at the same time remain competitive.
The sales of the combined companies will be 20 million this year, and 25 million next year. It is anticipated that these profits will put the company in a very healthy state in a short time.
The reason for the increased losses with the increased sales over the last few months is that since each boat was under-priced, increased production equaled increased losses. However, that is now behind us, and the projection which accompanies this report is realistic and based on prices for which the contracts have been made, or for prices now in effect. These prices are now under constant review and adjusted as indicated.
Our present backlog of fifty plus boats added to a twenty boat order from Abaco Charters and forty five boats CSY will need in Marathon leaves only one third of our production to be sold for next year, which is only five boats per month which will be exceeded no matter what the economic climate.
In summary, the strength of the CSY Yacht Corporation lies not only in its already formidable reputation for building the best boats in the business, but it also lies in its merger with CSY Ltd., which took place in September, which buttresses its cash flow and provides a market for its boats as well.
Chartering continues to grow at 50% per annum, as it has from the beginning. This tied with the now mature yacht building, provides the kind of strength which no other yacht company can claim.
It is clear the major problems of a new company are now behind us and there is no way to go but up.
With kindest personal regards,
John R. Van Ost, President
CSY Yacht Corporation
JRVO/bsh