By Sigurd Neubauer
Boats have been used by mankind since the beginning of civilization. It is also the oldest form of transportation. The first boats are estimated to have been built some 800,000 years ago by the Homo Erectus, according to Marine Insight.
Hallberg-Rassy is a Swedish legacy company. In 1943, Harry Hallberg (1914-1997) established a shipyard in the Swedish fishing village of Ellös, which is idyllically located on the western island of Orust.
Today, Hallberg-Rassy is the country’s largest producer of sailing yachts.
The company has 190 employees, most of whom work within yacht construction. It is also Ellös’ largest employer, which has less than a thousand inhabitants. The company has a sales office in Germany but enjoys a large network of dealerships around the world.
“Acquiring a Hallberg-Rassy boat is a big investment – even for those with deep pockets – as the price range is an estimated $264,000 for the smallest boat of 34 feet and up to $5.2 million for the largest 69 feet. The resell value is also important when one looks at an investment of this caliber,” explains CEO Magnus Rassy.
Rassy is the second generation to manage the family held company. His father, Christoph Rassy (1934-2021), a German immigrant from Bavaria, moved to Sweden in 1960 where he eventually built his own shipyard. In 1968, Hallberg had an accident at his shipyard, and after struggling to find a competent successor, sold it to Rassy in 1972 so that he could retire.
“Hallberg was a much larger and well-known company, which is why the new company was named Hallberg-Rassy. Before that, there was a Hallberg and a Rassy shipyard on Orust,” the CEO reveals.
Commenting on what it took to join the family business, Rassy reveals that “he has always been very interested in sailing” but while growing up, he never envisioned himself as someone who would eventually lead the company. “But step-by-step, it became natural,” Rassy explains, pointing out that he has been CEO for the past 20 years.
“My initial plan was to hire someone, which we did, but it did not work out.” A decision was forced once the older Rassy planned to retire. “My father decided to sail around the world for two-and-a-half-years. During that period, he was never in Sweden. He left so that I could figure out the business myself, which worked out really well.”
Continues Rassy: “It was a very good start for me because then I could manage the business my way without the previous generation hanging over my shoulder, saying ‘why do you do this or that,’” he says with a laugh. The CEO has two daughters, 15 and 20, but asserts that it is too early to determine whether they want to be involved.
Hallberg-Rassy builds exclusively long-distance cruising boats but no power boats, catamarans, or other types of vessels.
A competitive market
The United States is the company’s largest market, although its boats are sold on every content, except for Africa. In fact, Hallberg started selling boats to the United States during the early 1950s, according to a book published on the company’s history. For the curious reader wanting to learn more, here’s a hint: the company history is about hard work, vision, business acumen, and sheer determination as both Hallberg and Rassy came from modest means.
Today, Hallberg-Rassy has become one of the world’s most sought-after manufacturers of sailboats.
“The company is fully debt free, and as of date, we have delivered 9 700 yachts,” Rassy reveals, adding that the current exchange rate of a low Swedish Krona – against both U.S. Dollar and the Euro – has accelerated sales worldwide but the United States remains his largest market.
“But the combination of the low exchange rate coupled with our strong brand and dealership networks around the world has catapulted sales to a 15-year record. We are expanding capacity, which means that our staff is working 24-hours a day from Sunday night through Friday.”
While the pandemic of 2020 also led to an increase in orders for the Swedish boat manufacturer, “as no one could travel and finding solitude on boat was the ultimate form of social distancing, the sales are even better now,” Rassy says.
Responding to how Hallberg-Rassy competes, the CEO says: “We have a well-built boat for cruising which requires a minimal crew. We achieve that by push-button-sailing, which leaves the sailor without having to do any of the heavy work.”
Hallberg-Rassy’s technology is not just about electric sail handling systems managing how sails are set or lowered, but the push-button system also covers how the anchor is lowered in a marina. “This allows the user to enjoy a big comfortable boat without a large crew,” Rassy asserts.
The technologies have been developed by Hallberg-Rassy in partnership with suppliers, but while some of its competitors have similar technologies, “they don’t have it in the big package that we have. Push-button-sailing is a protected brand name that belongs to our company.”
But in a competitive market, innovation is key.
On how Hallberg-Rassy balances between protecting its brand recognition with innovation, the CEO explains that “it’s a balancing act as one cannot have either too much of the other.” Rassy is specifically referring to his latest model – the Hallberg-Rassy 69 – which has the latest designs, but one can immediately identify it as a Hallberg-Rassy.
The Hallberg-Rassy 69 is the company’s flagship vessel. Its interior was designed by Germán Frers , 82, of Argentina.
“This is the case of a new boat as well as one that is decades old. We have a special style, which is recognized by the blue stripe around the hull and the windscreen. Many boat manufacturers develop new designs, but one cannot see what brand it is. With us, one can easily recognizing a Hallberg-Rassy as a Hallberg-Rassy, even from a distance.”
His boats are also easily identified by their interior designs as the woodwork has been crafted by skilled carpenters. “Our boats also stand out from competitors as the windows allow for more natural lights while the interior is lit up by LED lights. We also have an excellent ventilation system.”
Responding to how Hallberg-Rassy maintains its brand value versus the used-boat market, the CEO says: “We have a boat that is built to last; and our design is unique and timeless; even if it is 20-30 years old, it is an attractive boat.”
The most popular Hallberg-Rassy boat, The Monsun – which was 31 feet long – sold 904 units from 1973-1982.
“We have never been late on any delivery, including during the pandemic,” the CEO explains with obvious pride. He notes that all production takes place in Sweden. “This enables us to maintain full control over production. “Every boat has been delivered on time, which is only possible to do if production is done here where we live.”
Lamination, woodwork, and all the technical installations are made in Sweden. The company nonetheless relies on suppliers from all around the world, including for sails, masts, engines and so forth.
Responding to how the company finds talent, Rassy reveals that it hires “a lot of young people with the right approach and trains them in-house. The young people work side-by-side next to the more experienced ones so that they can learn the skills. But it takes time, often one or two years. It is a long starting process.”
Last year, Sweden was ranked as the number one country in the world when it comes to quality of life. This, of course, means that production costs are high. Between high production costs and the fact that sailboats and yachts are luxury products, the yacht market will inevitably be impacted once there is a downturn in the global market.
“When we experience a downturn in the market, we adjust our capacity to demand, which we did during the Great Recession of 2007-2009. It was a very difficult period for the yacht industry all over the world as the market deteriorated with about 80 percent.”
What Hallberg-Rassy did at the time, the CEO recalls, was to respond to the collapsing demand by reducing capacity. But, he emphasizes, when a downturn happens, “it is really important that this is done in the right way so that production can be increased when times pick up again.”
But it’s all about maintaining loyalty, both among staff and customers. On how to maintain loyalty during a downturn, Rassy explains that the company does so by keeping the most skilled people as the individual in question “can carry out a lot of different tasks within the yacht building business. It is also easier to hire new people with more limited skills and then increase capacity. The key is to keep the most skilled people with the widest knowledge,” he asserts.
Acquiring a Hallberg-Rassy
Getting the financing, purchasing, and delivery right is essential for any business. On how the legacy Swedish company does it, Rassy explains that it requires one-third of payment at the order followed by the second-third four months later. And prior to delivery, the remaining third is collected.
“In practice, this means that before we start building the boat, we have already collected two-thirds of the payment. Because our order book is much larger than boats currently in production -coupled with financing from the customer and our existing profits – this has enabled us to be fully self-financed. We are debt free.”
“We don’t have any situations in which a customer says, ‘sorry, I can’t afford to purchase the rest of the boat’ because he has already put down two-thirds of payment. If he’s in a tricky situation and unable to come up with the remaining third, he may have to sell the boat, but that’s an extremely rare situation,” the CEO reveals.
“Hallberg-Rassy is a nice cruising boat as it is easy to manage while at the same time, it is pleasant to be inside because of its interior design. Most people want a small family crew and have a good time on board.”
All images are credited to Hallberg-Rassy.