Slow boat to China: How luxury boat builder sank dreams

Customers of a now collapsed Gold Coast luxury boat builders face an expensive battle to get their vessels finished in Chinese shipyards.

One of the unfinished motor yachts in Ningbo boat yard.

Mick Hollingsworth’s dream of spending his retirement years cruising around on his own boat is in tatters.

The Victorian man has lost $1.45m in the collapse of Pacific Motor Yachts, a Gold Coast-based company that compared its luxury vessels to six-star resorts.

Mr Hollingsworth, 63, said he put down an $800,000 deposit for his boat as well as invested in engines for the vessel. But following the collapse of the company late last year he discovered work had not even started on its construction. 

“I had to walk away as I would have been forced to pay double the amount I had already paid to get it finished,” Mr Hollingsworth said.

The company’s practice of outsourcing manufacturing to shipbuilders in the Chinese cities of Ningbo and Guangzhou played a big role in its failure, according to liquidators.

According to a report filed with ASIC, the company’s director, Brett Thurley, blamed the collapse on delays in manufacturing, shutdowns and border closures due to Covid-19, as well as adverse foreign exchange movements and expenses to hire engineers in China.

Comment has been sought from Mr Thurley, who established the business in 2015, after a career in the boating sector in the US and at Queensland boatbuilding company Riviera. Another customer, who did not wish to be named, said she and her partner had paid Pacific Motor Yachts more than $1m to build her boat.

But the couple have now been forced to pay another $1m to the Chinese boat yard to get the vessel completed. “There was no accountability from Pacific Motor Yachts about where the money was going,” the customer said. “There should at least be an explanation.”

The couple, who have nothing but praise for the work of the Chinese boat yard, will finally receive their vessel in May after the completion of sea trials.

Brett Thurley blamed the collapse on delays in manufacturing, shutdowns and border closures due to Covid-19.

In promotional material, Pacific Motor Yachts said its Clipper range of “luxurious motor yachts resemble 6-star resorts” with plush soft furnishing, polished wood, large cockpits, and “master staterooms that would rival luxury hotel suites”.

Liquidators Glenn Livingstone and Alan Walker are now winding up Pacific Motor Yachts as they look at a complex trail of international transactions leading up to the company’s failure late last year.

In a report to creditors this month, the liquidators identified $3.36m in transfers to AFEX, a non-bank financial provider that processes payments.

They said that based on the supporting documentation, it appeared most of the recipients of the funds were overseas boat manufacturers and freight companies.

“As the accounts do not contain complete records, we have written to AFEX requesting details of the recipients of the funds and are currently awaiting a response,” the liquidators said.

Most customers of the failed firm are now directly dealing with the boat yards – Ningbo Fuhua Boat Building Industry Co and Guangzhou Jianghua Marine & Engineering – in order to get their boats completed at their own cost.

The failure of Pacific Motor Yachts underscores the risk of manufacturing and sourcing products overseas. The global luxury yacht sector is expected to expand to $US13.67bn by 2030 but had faced severe headwinds during Covid-19 due to border closures and economic uncertainty.

Freight rates out of China for Pacific Motor Yachts had increased by at least fivefold with a downturn in the business in the first half of 2023 impacting cashflow.

The company also said it faced rising labour costs in China, including hiring full-time supervisory staff and design engineers at a cost about $300,000 a year.

Pacific Motor Yachts owes unsecured creditors, including the Australian Taxation Office and customers, more than $23.7m.

The ATO is owed $487,000 while customers are owed about $10.7m. According to the report to creditors lodged with ASIC by the administrators, the company had contracts to build 11 vessels with a sale price of $16.7m.