Ocean Alexander – Quality, Construction Questioned

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KOMO-4 News,  July 10, 2013 — Black smoke billowed from a brand-new 85-foot Ocean Alexander luxury yacht as it burned for hours in Roche Harbor, San Juan County, Washington. Sheriff’s officials said the midsummer fire in the brand new Chinese-made luxury mega-yacht was the result of an electrical flaw, and the flames completely destroyed the $8 million craft. The yacht was moored at a pier awaiting sale, and was unoccupied when the fire erupted.    

It may have been one of the most spectacular and visible results of Ocean Alexander’s growing repertoire of construction issues, but it certainly wasn’t the first.

OA burned yachtIt’s no secret that Chinese products, which continue to flood the American marketplace with everything from clothing and pet food, to toothpaste and candy, enjoy a reputation for being inexpensive — and often poorly made at best, poisonous at worst.

In fact, “quality control” in Chinese manufacturing in far too many instances has become an unfortunate oxymoron. And complicating the problem is the evident, almost cultural, lack of interest on the part of many Chinese manufacturers to stand behind their products.

These quality and safety issues are not limited to consumers’ grocery-basket-sized purchases.

Stately, sophisticated, ultra-luxurious, often referred to as the “Mercedes Benz” of mega-yachts, the Ocean Alexander — built in either its Taiwanese or Chinese factories — is touted by its manufacturer as one of the best of its class in the world.

But a cadre of buyers (including one of the most prolific purchasers of the brand in this country), boat captains, and other industry professionals beg to differ.

Michael Farley, a long-time captain now living in Mexico, said the manufacturer’s quality problems are not new. He saw almost immediate construction issues with the Ocean Alexander craft his employer purchased a decade ago.

“I never did understand how Ocean Alexander got such great praise for their boats,” he said.

“Right from the get-go, we knew there were some inherent problems with these boats. The boats were never that great. The problems we had were weight issues, and shortcuts they took (during design and construction).”

Farley said the manufacturer’s advertising theme emphasized “how light their boats are, and fuel efficient, and all that. But what they did was just cut corners.”

Problems materialized quickly: “As soon as we got out to sea, the bulkhead started delaminating, and other things started happening,” Farley recalled. “Ocean Alexander just tried to make the boats too light, and so they don’t hold up. We had to take ours from Mexico to Newport Beach for repairs twice.”

Farley added, “If you just putt-putt around in quiet waters, you’ll never know what a piece of shit they are. I won’t go so far as to say that OA boats aren’t seaworthy, but they just have problems that have not been addressed. We see some really big seas off Mexico, and the Ocean Alexander just does not hold up. When you are out on the open sea, and you can put your hand on the bulkhead and feel it moving, it’s not a very comfortable feeling. I mean, it’s not going to sink, but… Let me say, had it been better built, that would never happen.”

Farley said he thinks when Ocean Alexander “started getting into building the bigger boats, (70-100 feet) the problems we had been having with our boat just became bigger and more severe with the new boats. Quality control just got out of hand. When people get on the boats, they like them, but boy, if they ever get out to sea in the real world, well, that’s where they really pay the price.”

For a year or so after he bought his fifth Ocean Alexander, Southern California entrepreneur David Parker was satisfied. He was featured with the Jelly Bean II in the summer 2006 issue of International Yachtsman, and was quoted praising the manufacturer: “Besides the quality, it’s that extra mile that brings me back time after time to Ocean Alexander. It’s a great outfit.”

That article was published shortly before the Jelly Bean II began experiencing very big problems.

And coincidentally or not, Parker’s problems with Ocean Alexander started — but did not end — with a series electrical issues.

Parker is a man who staked his professional reputation on backing the quality of products he developed and marketed for years under the brand name, Pelican Products. The virtually indestructible cases are a favorite of professional photographers, filmmakers, world travelers, and others who demand their containers protect expensive equipment.

Pelican manufactures high quality cases and lighting systems, backing them with a product guarantee to buyers that is simple and uncomplicated: An entire lifetime coverage against breakage or defects in workmanship, or replacement or reimbursement of costs will be swift and undisputed.

Pelican Products, a global manufacturer of 80 different sizes of cases, and has annual sales of more than $300 million. Facilities include six manufacturing plants, six distribution centers, and numerous sales offices around the world.

The company promises its customers, “We care about the products we sell, the quality engineering of our products, and the impact they have.”

“I built my company on that guarantee,” Parker said recently. “You break it, we replace it forever. We’ve stood by that for almost 40 years now. We stand behind our products. I just don’t know of any other way to do business.”

Today, he can only wish that the same level of guarantee he always promised for his product would be applicable to one of his purchases — the elegant 98-foot passenger yacht christened Jelly Bean II he keeps moored at a specially-built dock in Redondo Beach’s King Harbor.

Following his sale of Pelican Products, Parker found he could afford one of his lifelong obsessions, a yacht capable of taking him and guests anywhere in the world accessible from the open seas.

In fact, he has bought five of the luxury yachts since he peddled Pelican Products, each one a step up from the previous model. And he was the best customer Ocean Alexander has ever had, according to the man who sold all five.

Parker bought his first Ocean Alexander, a 42-foot flush desk, in 1983. Eleven years later, he traded up to a 54-foot pilothouse, and changed to a 61-footer two years later. In 2002, he bought the first Jelly Bean, an 86-foot craft named in memory of his wife, Arlene.

Then, in 2005, he went mega, purchasing the very first of Ocean Alexander’ largest yachts, a 98-foot floating dream, the Jelly Bean II. But then the dream went dark.

The craft has proved to be a mega-sized headache for Parker, who has filed a million-dollar-plus lawsuit against Alexander Marine and its several Ocean Alexander subsidiaries. The lawsuit is the eventual result of a long-simmering dispute between Parker and Alexander Marine, with both construction and design issues, and warranty satisfaction, at issue.

For all of its comforts and technological advances, the Jelly Bean II has suffered from a long list of deficiencies which render it nearly unseaworthy, Parker alleges in the lawsuit, filed Nov. 14 in a Los Angeles federal court. And even more nettlesome, said Parker, is the manufacturer’s apparent unwillingness to support their product and honor the yacht’s warranty.

Parker’s issues with the boat’s design and construction started with below-the-waterline leaks from the hull and keel, and the degrading of its lamination, and have widened to incorporate numerous other problems discovered following a detailed forensic survey of the yacht and its substructure.

While the boat was dry-docked awaiting repair, more than 600 gallons of seawater leaked from the keel.

Ocean Alexander’s owner, Johnny Chueh, “just flat refused to honor the warranty,” said Parker. “He wouldn’t even come and inspect the boat. I made numerous phone calls and sent emails daily to young Johnny. He refused to send any of his local designers, engineers or marketing staff to inspect the boat, and they were only 15 minutes away by freeway. Johnny was right there in the local offices, too, where he spent most of his time. My boat was just poorly constructed. And it wasn’t the design I approved.

“It was the first one built of only three 98-footers. All three of those had problems. They just screwed up. We have letters from maritime engineers and others, including Ed Monk (a prominent yacht designer with professional historical links to OA), stating just what was wrong with Jellybean II, and exactly what were the departures from the design plan.”

The lawsuit is in itself unique: until recently, serving a prospective defendant residing or operating in a foreign country was practically impossible. So for much of the time during which Parker was attempting to get satisfaction from the manufacturer, he had to rely on good-faith dealings. And those were not forthcoming, he alleges.

But due to a corporate decision by Alexander Marine to install company-employed sales outlets in the United States, that technical wall has been breached. When the company opened sales offices in Newport Beach, Seattle and Florida, the door for legal action was left ajar.

“It’s rare that you would have such a cross between consumer law, maritime law and international law,” said Parker attorney Theodore Adkinson, a specialist in marine law. “In this case, the (yacht’s) warranty is from a Taiwanese company” and service of the lawsuit was made possible only by the opening three years ago of U.S.-based sales outlets.

“Generally, a company will make a reasonable effort to solve quality control problems,” said Adkinson. “But some companies don’t necessarily take that stance. And when that happens, what are your options? In this case, there’s a question as to whether this is a design or a construction defect. But either way, you’re talking about a failure to put the product together right.” Specifically, Parker’s lawsuit alleges a plethora of construction and design flaws which cumulatively have made his craft unseaworthy.

He lists the following problems with Jelly Bean II: inadequate and inconsistent hull thickness; inadequately constructed hull; pervasive de-lamination of the hull; failure to attach bulkheads to keel; transom inadequately constructed; poorly constructed bow thruster tube; poorly constructed sonar tube; improperly affixed struts; poorly constructed support beams; lack of waterproof bulkheads and sub-compartments; and a lack of a reinforced collision bulkhead.

“These defects were not reasonably discoverable in the ordinary usage, inspection and maintenance of the boat, in that these defects could only be discovered through the destructive testing and/or cutting into the hull,” according to the lawsuit. This did not happen until Nov. 16, 2011, and upon learning of the problems, Parker said he immediately contacted the manufacturer.

He went right to the top guy.

Johnny Chueh, Alexander Marine’s president, a 1997 economics graduate of University of Chicago, returned to Taiwan to help with the company shortly after his father, Alex, founder of Alexander Marine, became ill. Alex Chueh died in 2011 after a lengthy battle with cancer. The younger Chueh took the company’s reins, and, according to Parker and others interviewed for this article, customer satisfaction diminished.

“Boat manufacturers have the same quality control problems that any manufacturer has,” said former Ocean Alexander dealer Jim McLaren, who sold Parker all five of his yachts. “There will always be stuff that they have to take care of.”

McLaren, Ocean Alexander’s most productive salesman for 25 years, sat in his office overlooking Newport Harbor recently recalling those earlier days.

“Nobody sold more boats than I did,” he said. “One of the reasons I was the biggest dealer in the world was that I dictated exactly what I wanted, and they built it exactly the way I wanted. I out-produced the bigger markets in Florida and Seattle every year. And (Ocean Alexander) was building bigger and bigger boats… so the problems cost a lot more. There is more equipment with bigger boats.”

Then McLaren became a casualty of Ocean Alexander’s decision to establish company-owned dealerships. That’s a decision he believes precipitated what he views as today’s problems with the company’s customer satisfaction reputation.

Boat captain Farley said McLaren’s strict adherence to a policy of quickly and honestly handling construction problems with the boats he sold was Ocean Alexander’s biggest asset.

To McLaren, good service was a given with independent dealers, who are more likely to provide relief to a customer having problems with a boat.

“Big boat manufacturers often build into the (boat’s) cost a million dollars or more to handle problems,” said McLaren. “These (yachts) are very complex things, and most problems are minor. They can be taken care of quickly and easily. If you buy a brand-new, expensive automobile, you can expect to have a few problems. The dealer fixes those, gets reimbursed by the manufacturer, and the customer goes away happy. The problem that Ocean Alexander has is that (the company is) not paying for those repairs.”

That was not always the case, he added.

“When Alex was alive, these problems would be handled quickly and efficiently. My customers got taken care of,” he said. “Now (Ocean Alexander) is passing on big-dollar items, finding ways to not take care of them. (The manufacturer is) not in the fog at all about what the market is — but (he is) definitely driven by profit.”

And Parker’s current problems — with an estimated repair price tag of more than $1.2 million — are the result of that change at the top, said McLaren.

“(Parker) isn’t being taken care of because they cancelled me,” McLaren said. “Dave’s problems cropped up after that cancellation. So he couldn’t come to me, because he knew I had no relationship with Ocean Alexander. Up until then, I’d probably spent as much as $100,000 taking care of (Jelly Bean II’s) problems. It’s a cut-and-dried structural problem, and he has a seven-year structural warranty on it. But they just shined him on.”

Parker met recently with Chueh, but said he got no promises of satisfaction from the boat company owner. Rather, he said, he got the distinct impression that Chueh’s attitude was “too bad… that’s your problem.”

In his lawsuit, Parker alleged Chueh “responded to (Parker’s) notification of the hull and structural deficiencies by summarily dismissing and rejecting the possibility that problems existed.” Also, Parker claimed, Chueh or his representatives “refused to inspect the vessel despite several offers… and refused to pay for any repairs.”

“I know they are hurting over there, just like here,” said McLaren. “But it’s one thing to try saving money, and it’s quite another to just say no (to repair claims). Then it’s the dealer who has the problems.”

McLaren said that Parker’s boat issues are unique: “The thickness of the hull was not to specifications. And I can’t tell you why. Nor he said, could “a number of naval architects and structural engineers who inspected it.”

McLaren is convinced that the problem lies both in design and manufacturing methods: “They take shortcuts as they design. Then repairs don’t hold, because the design is wrong.” Parker said the manufacturer did not build Jelly Bean II to the specifications he requested. Chueh disputes this. In a recent email to this reporter, he wrote, “Ocean Alexander does not take ‘shortcuts’ in its construction.”

He also refuted allegations that boat design is a problem.

“Our design team continues to be in the factory. Ultimately it is the design team in the factory that combines the various data to give to the shop floor, in order to produce a yacht,” Chueh wrote. “We have always used different outside ‘specialists and consultants’ such as interior design, structural design, hydrodynamics design, electrical design, and mechanical design. The reason for this changing field of specialists is that each specialist brings different skill sets, such as size of yacht, type of yacht, and capabilities of yacht, to different requirements.” Chueh took issue with complaints about quality.

“We do not share any of these findings that (OA’s) quality has diminished,” he wrote. “We believe that quality is ultimately verified by warranty and also the ‘repeat rate’ of existing Ocean Alexander owners buying another Ocean Alexander boat. We have not seen negative trends on either of these metrics in the past few years.”

Chueh added, “We have warranty and post-sales personnel whose sole task is to address warranty… spare parts, post-sales efforts. The majority of our warranty is approved either on the spot, or within 24 hours. I view our customer relationships as being vital to the long-term survival of a company. I believe my father felt the same way…. I do not believe many Ocean Alexander owners consider their yacht as unseaworthy. If they did, we would not continue to see the sales growth, nor repeat sales rates.”

With those kinds of guarantees, responded Parker, “You’d think Johnny could have had one of his people just take a look at my boat.”

Parker’s lawsuit is not the first quality construction problem to be filed against Ocean Alexander.

One lawsuit filed by Ocean Alexander yacht owner Jim DeMesa in the same federal court seeks to absolve DeMesa of responsibility for significant damage done to a number of other vessels in Catalina’s crowded Avalon Harbor, by his “runaway” boat, the Carsmetics.

Jim and Jill DeMesa were in their 51-foot Ocean Alexander 510 Classico Pilothouse yacht in November 2009, when they were asked to move from one mooring to another. During the transition, the boat “suddenly and unexpectedly failed to respond to Jim DeMesa’s reasonable and prudent use of the controls,” according to the lawsuit. Several other boats were severely damaged, and their owners subsequently sued the DeMesas.

The DeMesas claim the incident was “a direct result of… latent defects in design and construction (of the yacht) and its component parts, including its controls.” Because of that, the lawsuit asserts, “the Carsmetics proceeded out-of-control, and inevitably into one or more vessels.”

Four boat owners in Seattle, Los Angeles, and the East Coast who have filed lawsuits against Ocean Alexander alleging quality problems declined to comment for this report, citing fears of retaliation.

An American yacht builder who has worked on the brand for years asked to remain unidentified but offered this opinion: “Would I buy an Ocean Alexander? No. No, I would not.” Ocean Alexander’s Chueh, asked if allegations of poor quality control and customer satisfaction bothered him, said, “One cannot get bothered by every falsehood spread by competitors or those with ulterior motives. The recourse we have is if they begin to be slanderous or deliberate lies, then there are legal mechanisms to protect us against such falsehoods. We will be aggressive in protecting our legal rights (and) remedies against anyone who spreads false rumors, lies and deceits.”

While U.S. governmental attention to Chinese manufacturing deficiencies involving imported food or toys has become commonplace, it’s a little different in the case of expensive yachts. Most boat quality problems are issues between a manufacturer and purchaser, but the American government does take specific interest in some construction problems. The U.S. Coast Guard regulates boat design and construction, according to its website, and “develops and enforces vessel construction standards, as well as domestic shipping and navigation regulations.”

But Coast Guard officials said they do not oversee individual manufacturing quality issues. Chueh insists that “our motto is ‘to build each yacht better than the one before.’”

For his part, Dave Parker, a man who was literally Ocean Alexander’s poster boy, wonders why that didn’t apply to his yacht.