On the Riviera
THE MAKING OF A LUXURY BRAND
Since 1980, Australian-owned Riviera has been building luxury yachts for the pleasure of international seafarers. For much of that time, CEO Wes Moxey has been in charge of operations.
Wes joined Riviera in 1982 as a shipwright, just two years after the company was founded in 1980. He was later promoted to production manager in 1987, general manager in 1989 and then managing director in 1998. Wes oversaw the move to the company’s 14-hectare state-of-the-art Coomera facility in 2000. His extensive marine experience and boat building knowledge fuelled his rise to the challenge of CEO, and in 2002 he led the private equity backed management buyout of the business. In 2008, after 6 years of private equity ownership, he took a three-year sabbatical from Riviera during which he developed the Belize Motoryacht line before returning to the helm wiser, refreshed and ready for the next challenge.
Wes’s beginnings were as humble as they come.
“I grew up in a dairy farm in Newcastle and did an apprenticeship at age 15. I did very well as a shipwright; building steel ships and then moved to Queensland for lifestyle choices. I was 21 and didn’t really know what I was going to do, so I did various jobs when I first arrived on the Gold Coast. I had an uncle in boat building. I had a brother, who was a mechanic, and I mucked around with that for six months and then started working for myself as a boat builder just doing general repairs. I did that for about a year and things got a bit quiet, so I went and saw my uncle and he told me Riviera was looking for people.”
In August 1982 Wes started at Riviera. He worked in new product development and quickly found himself with 22 guys working for him in the varnish shop and fitout contracts. They were contract positions but being an ambitious young fellow, Wes was up for the challenge. He was interested in driving the new product banner and developing his craft in boat building.
After the stockmarket crash of 1987, a power struggle ensued at Riviera and Wes found himself in the position of production manager. Not too far down the track, he was appointed general manager and then when the boss left to compete in a race in Europe he asked Wes to take on the managing director role.
“Bill the owner said, ‘I want you to be managing director’. I said what for? He said, ‘I’m ‘going to’ race my boat in Europe and if anything happens I want to know that the place is okay’.
“We agreed on something that I was happy with and that I would do it my way with my team. Bill always believed that the cream always rises to the top and if you want something badly enough, you will take it. I guess that suited my style and attitude and I just worked hard.”
Since then Wes has seen every up and down a business can go through. He was in charge during the 1991 market crash, the rise of interest rates, the recession we had to have and the US luxury tax. In 2000 he led the Coomera facility build and oversaw the construction, while managing what had become an $85 million company.
The move to Coomera transformed Riviera.
“We were spread across three sites before this; we had to truck a lot of stuff around. Moving here was a huge feat though. First of all I had to build it, and I built everything so it was literally sorting out where every power point went, how it was wired, what the spec was and making sure the builder didn’t rip us off. The challenge was from the owner, he said ‘well, if you want it, you ‘gotta’ build it out of cash flow. I’m not going to borrow any money. So, that’s what we had to do. We had to grow the company and build in cash flow and profits. I was fortunate to have a great team that could drive the business to achieve this goal. We achieved it and went straight from an $85 million turnover to $125 million and that made our export business very strong.”
Wes describes Riviera as a big company with a small mind. By that he means Riviera is not a corporate company; it is very hands on in every facet of building a yacht that people can take pleasure in. As such they have won awards for training and innovation.
“We just know our craft well, how to build boats and do it efficiently in a high cost area.”
Riviera is renowned for its quality craftsmanship and it’s customer service.
“We engage with our people. Our customers are wealthy and they are time poor, and the time on their boat is precious, so when that gets disturbed or they have a bad experience they’re not happy. My job is to make sure that they are happy. That’s part of our people strategy, and you know, as we look forward in rebuilding the company that’s very much where my focus is: product the people and the profits. The three Ps.”
Another P that Wes had to learn to deal with was private equity. The steepest learning curve Wes has faced is when private equity came into the company in October 2002. Wes wanted to make it clear that before they wrote the cheque, he wasn’t going to be told how to build a boat.
“I said we are very, very good boat builders; we are very good at our craft and what we do, where we’re weak is in our financial systems and processes. We need good financial foundations on which to grow if we want to continue to grow. We don’t have a very big or strong financial team on site, that’s the area that needs bolstering not building boats.”
Six CFOs in six years didn’t help the cause. However Wes got a good look at what the CFOs were meant to do and he came to understand the expectations of private equity groups. The similarity to public ownership when you have private equity investment is uncanny. So a balance had to be reached between the corporate governance and financial reporting demands of the incoming private equity owners and the historical way the business had been run from the entrepreneurial mindset of Wes and Riviera’s outgoing owner, both of whom held similar views.
“We come from similar backgrounds. You work hand in glove and you can have a fairly short discussion about what you are going to do, and you just get on with it. There’s no papers written or documents, we never had a business plan before 2002. We were a $125 million dollar company with a very strong bottom line and we had no business plan, because we just knew what we were going to do. That’s how it was, but private equity comes in and of course that’s not tolerable; you have to have a business plan, an HR department and you’ve got to have all these other things to be a modern and saleable company, because all they worry about is an exit.”
Changing from general manager to managing director didn’t affect Wes, because Riviera still had the same ownership structure. Changing from managing director to CEO with private equity ownership was a defining moment.
“It’s fair to say that realistically a
cheque was handed over and the business was born. The way we conducted ourselves from that day forward, for the next six years, before I left in 2008, was far more of a corporate structure, but we also grew the business in that six year period from a $125 million to a $410 million.”
Growth was spectacular, but Wes could see a change coming. There was going to be a downturn and he wanted to consolidate the company’s position rather than continue on a growth strategy.
“I could see the writing on the wall, that there was a crash coming well before the GFC. I disagreed with the direction and where we were headed and wanted to consolidate our position rather than to keep growing, but that doesn’t sit well with the private equity group.”
So Wes left. In that time he had achieved a National Employer of the Year award. He says his greatest achievement was having 180 apprentices on site and their own training facility.
“We had 14 high schools feeding us school-based apprentices, and we started that back in 1996 before it became trendy and before government understood it. We probably broke all the rules to get it going, but we started with four and we ended up with 180. We never put an ad in the paper for apprentices; we got them from school, so I would say that was our greatest achievement. Not just training them as boat builders, engineers, fiber glass technicians, upholsterers, you know we had all of the trades covered, but not just in training them, but two hours a month, we had a program developed for them called Propel and it was talking to them about life skills: buying a house, negotiating with the bank, trading shares, budgeting, planning. Senior management would spend two hours a month going through a set program and talking to these young apprentices about their life skills. Seeing those young people buying houses at 20-21 years of age and seeing them go on to be managers doing MBAs, doing certificates in management, I’m quite happy. People say you train them and then they leave, but as an industry leader I felt a sense of responsibility to train and I do it again now.”
In the three years Wes spent outside Riviera he bought a small 100-acre farm in northern New South Wales to give his two boys an understanding of where he grew up and what he did. He was tired and at the time and felt he had given as much to Riviera as he could. He went back to his roots and spent as much time as he could down on his farm with his wife and kids. His wife had also worked at Riviera. She was there before Wes and has a strong understanding of what it takes here to be successful. So she clearly understood Wes’s need to find other roles.
AB Patterson College is where Wes went to school in Queensland and they chased him to be on the Board, where he spent three years.
“That was a great thing as a drop off dad to get into. I came out with a broader understanding of education, how complex it is today and how difficult it is to run a private school from the business and the educational side. I enjoyed that a lot. I also joined the Grand Banks Board in Singapore for about a year.”
Grand Banks is another famous boating company and it stoked the fires in Wes’s heart to get back into building.
“I could see that I couldn’t affect the change in Grand Banks quickly enough, and then my wife said, ‘you’ve got too much knowledge, you’re too young, why don’t you do it yourself ’.”
Wes formed a partnership with another veteran shipbuilder Lee Dillon and the pair went about creating a luxury motoryacht brand.
“I didn’t want to compete with Riviera because I still had a lot of friends there and I didn’t want to do what a lot of people do and build the same product, so we went out of our way to build a product that didn’t compete with Grand Banks or Riviera, but build something that was totally different to those products.”
It was an expression of what Wes and Lee love in a boat: a blend of the old and the new. New being the technology, the finishes and the quality. Old being the retro styling.
“If you look at all the car companies like Masseratti, Astin Martin, VW Beetle, all of those companies have gone back to yesteryear for its inspiration today. And we wanted that same sort of thing. We didn’t want to be a cheap product, we wanted it to be an expression of who we are, what we are and what we love.”
The Riviera and Belize worlds merged into one when Riviera came out of receivership in 2012 and returned to private ownership under the stewardship of Rodney Longhurst, the managing director of Longhurst Marine Holdings, and Rodney asked Wes to return to Riviera as CEO.
Wes returned to Riviera through a sense of responsibility.
“It’s a tragedy when you put 26 years, more than half your life of blood, sweat, and tears, into something and you see it fall. To come back and resurrect a great brand, a great company, support great people and again grow and train is why I’m here. My responsibility this time around is very much
“Having built the company through the 1990s and into the 2000s, I know the formula for success, how to behave, how to operate, the style and how many people can be here.”
around ensuring that the management and the foundations are strong and the succession planning is right.” Wes has gone back to basics. “Having built the company through the 1990s and into the 2000s, I know the formula for success, how to behave, how to operate, the style and how many people can be here. To me it’s just intuitive and easy. Whereas dealing in a private equity world versus a private ownership world, was very, very different. It’s like oil and water, they’ll never mix.”
Unfortunately on his the first day back in 2012 he had to let 80 people go. Since the takeover, another 70 have gone.
“We have to run lean, we’re in very uncertain and difficult times as the global economy recovers. We need confidence in the economy, we need confidence in the governments, we need confidence in leadership and I think that’s the thing that’s understated by the current government. The change of government brought confidence to the business community and this community generates the wealth for others. And when you haven’t got that confidence it’s difficult for us to sell boats, because no one needs a boat. So people need confidence to spend. And that’s where we are at the moment.”
Despite this, the culture is still strong and people are still committed. They believe in the brand and they believe in Wes, whose vision is to be in excess of $100 million in revenue in the next three years. He also believes they will be employing around 500 people. The company is currently in a growth phase, hiring people again and has reinstated the training and apprenticeship program.
“I have no desire to take it back to the boom of $400 million and 1300 people. That’s not my passion to be the biggest. The focus is on building a high quality product. That’s what we did with Belize and that’s where we’ve taken Riviera. Since we’ve been back, we’ve really pushed the quality boundaries rather than the size boundaries. There’s nothing better than having a high quality product that is sought after and people are prepared to wait for it. I think that’s really the driving force for where we will be in the future.”