Management Companies: Good, Bad or Ugly? An Engineer's Perspective

Posted: 15th June 2013 | Written by: Mike Wilson

Mile Wilson 6

Isn’t that the question of the decade?  As the years have progressed, there has been a significant shift in the industry towards owners putting the well-being of their vessels in the hands of more organized and structured programs. This was not always the case.  For many years, management companies were around, but on a much less proportionate level. There was still the “sales” side that was taking place and each owner was getting the pitch about the “real benefits” that this extra large expense was providing for them.

These days, it's the norm and they're here to stay.  Some of the questions to consider are:

What is it that they actually do for you that your crew does not /cannot? 

Why is the crew not doing it, if that's the case?

What is ISM and ISPS and why should I care? 

Why can’t the captain or my own company’s Human Resource department do the payroll?

And most directly related to us…technical management; isn’t that what my chief engineer is supposed to be doing?

All very good questions, and many of us still wonder about them, although we know that they do things that we as crew either do not want to do, or that they simply do better. 

ISM and ISPS are cases in point. But the fees for certain items is money, in our minds, that could be better spent on something more productive. 

The level of bureaucracy is another major issue. Do you want me to fix it? Or do you want me to write a report about it so you know what I should be fixing?  Either way, we all have our gripes and annoyances, but they are here to stay, so we might as well play nice!

I’m sure that between all of the readers out there, we have an entire realm of perspectives.  There is good reason too: management companies are NOT created equal and we all know that.  We all have different opinions on who is doing it better and why.  Personal relationships and past politics often play a significant role in this too.  Given all of these things, the writer is certainly going to keep his point of view on a broad range that opens discussion rather than pointing the finger. 

To start from an engineering standpoint: to what level does the management company serve the owner?  Who has the final call? We all know that this is not always a straightforward answer, and will most likely lie somewhere in between a combination of the captain and management company with the guidance of the chief engineer. Longevity on the vessel and personal relationships with the owner will be major factors in this equation. I have worked on yachts in which, without question, if I told the management company that my word was God, in terms of the technical well being of the vessel, I know damn well that the captain and owner would have backed me against the management company.  

I have also been on the flip side in which I was working with a first-time owner, who thought that the management company had complete and utter control over everything…everything. It got to the point that the captain and I wondered why we were even there. A true story from this period involves a conversation with the captain, myself and the owner, in which the owner questioned why we had not contacted the management company over 2,000 miles away, about a black ship that had occurred as a result of an electronic lock-up, and that I had been able to solve as a result.  The captain and I just looked at each other confused before answering, and asked why we would contact people who are not on site to deal with it? The owner was so completely reliant on the management company that she was unable to allow anyone else on board any responsibility to do the very jobs we were there to do. The captain and I would later laugh at the ridiculousness of the situation and stated that, next time, we would just sit there in the dark, drop the hook, call the management company and wait for the cavalry to arrive.  After all, what else were we supposed to do?  It was the management company’s job – right? 

This was a complete breakdown of the entire organization. It cost everyone not only their sanity, but a positive working relationship. In this particular instance, the management company was at just as much of a loss and not in any way to blame.  It did however raise some serious questions. Who does have what responsibility and why? And more importantly, in a case like this, who has the wonderful job of explaining to the owner exactly who is there to do what – and to what level.  And what happens when you complicate the situation even more by adding in the owner’s personal business advisors, who are trusted and already tenured, but know nothing about a rubber duck in a bathtub, let alone a $50-$100 million yacht. 

Where does the technical management side actually assist the chief engineer? After all, this can be one of the greatest benefits to the vessel long term and therefore to the owner’s ever-increasing bank account. But how many of you can tell me the last time you have been dependent upon, or actually used, your management company for technical advice?  I am not asking how many circulars you have received from them, I’m talking about actual instruction.

I am guessing not too often, if ever.  Intentions are usually good, and it’s part of the package that owners are paying for.  But what is the owner actually getting out of it?  Not to open another topic, but reputation and licenses do a play a part in this as well.  The more you advance as an engineer, the more your credibility grows and the more overall control you will be able to demand of your program.  This can also be an argument for management who are there to fill in those voids if, in fact, they are present at all. 

I do truly believe that technical management has a place in the right environment and, in most cases involving yachts, this environment will be shipyards and refit planning. But that really is the extent of it. Again it can be argued as to what, or what level of assistance, they are providing.  Is it technical expertise? Or is it overall planning?  Budget structuring? Time schedules, and contacting contractors to do the technical work themselves or work with the engineers on board? 

In some cases it can be all of the above or even none of the above.  At the end of the day, as chief engineer, you are responsible for that vessel along with the captain. The management company will not be there at sea after cleaning up the mess for the decisions that were made.  Their personal safety and the safety of the owner and guests are not directly in their hands. At the end of the day, you will be the one who needs to make the decisions and ensure that the vessel is maintained and serviced in the correct manner.  

I am possibly pushing some buttons and edging on lines that are not always clear.  But then again, what in yachting is always clear?  Not much, from what I have seen.  Though I do know there are common goals, that each of us as professionals – whether as crew, or shore-based support  – try to maintain. 

First and foremost “WORKING ON THE BEST BEHALF OF THE OWNER”.  Why is this in caps?  Because that is what we are all there to do. We may not always like the owner, we may actually detest the individual and would rather be swabbing horse manure 16 hours a day.  But in the meantime, that is our job, and it is also the management company’s job.  I personally take this side of the argument very much to heart and believe it is the only thing that should be considered when working with management. I have seen and worked with some of the very best on this;  people and organizations who truly are working every day for the owner, and to assist the crew to the best of their ability.  You know who you are! 

On the flip side of the coin, I have seen total abuse of the position given, where both personal and professional gain took precedent over maintaining positive representation.  I have seen people who were in no way working on behalf of the owner, their client and customer.  Along with the obvious waste of the owner’s money and time, the vessel suffers too.  

Blatant theft is what happens! These situations are disheartening because they are the very people that have been empowered to the highest level by that owner to make those decisions. Unfortunately, this is the way of the world, and when there is a lot of money being thrown around, there will always be people that abuse it.

Luckily, some of us will be privy to choosing who we work with one day. Pay attention now – listen and understand who is doing what and why. That way, when you have the chance to work with, or deny help from a management company, you are making an educated decision.  A decision that will work for you and for them. It can be an amazing partnership in the right circumstances, or it can turn disastrous. I certainly know who I will use, and those I will do my best to make sure never get another contract. 

I look forward to your opinions on these topics.  It is a broad one, and in no way is my opinion the only one! 

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Michael Wilson has 12 years of engineering experience in the yachting industry, working full-time and freelance. He has also worked in project management, yacht management and brokerage. Mike is currently a rotational chief on M/Y Senses, and has worked in the industry for over 10 years on multiple yachts, including S/Y Maltese Falcon.

He is a Florida native and U.S. Coast Guard Chief Engineer 3000Grt Unlimited HP (a Y-1 equivalent). He studied finance and human resources at Purdue University, graduating in 2000.

 

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Readers Comments

  • Comment by: Mike Grant - 15/06/2013 5:12am (6 years ago)

    Hi Mike, I have often wondered why we use them. Can see the need if we had a fleet of ships to do a particular function. Running and maintenance of marine machinery according to your ticket is what I go on. Have had chiefs ticket since 1978. Cell phone and internet is all you need. Regards Mike