Yacht building USA

Very simple, under-capitalization and mismanagement. There is no reason whatsoever a US manufacturer can't be successful. You did leave Hatteras out of your list.

Just a few examples. Ferretti and Sunseeker were facing some challenges, but purchased and backed by large wealthy Chinese firms. Both builders are also huge compared to the now defunct US builders you meantioned and others you didn't.

Meanwhile, you can read of Trinity's issues in "Grand Ambition." A great insight into how Trinity, Northern, Christensen, Burger and others end up having to operate when the funds aren't there.

Christensen, half owned by men of modest wealth and the other half owned by one of much greater wealth who then maneuvers toward finding ways for him to get special deals. Desperate, they take whatever they can get. Now the business probably going to receivership and partners in a dispute. Boats allegedly sold to half owner below cost.

Northern, the rights to it leased to a man without great means who couldn't sustain through poor times and had to make sales that ultimately were below his costs.

Meanwhile Westport. Owned by a passionate boater with plenty of money. Able to sustain itself. Started many speculative boats to keep the lines going and most sold before completion. Now sold to an even wealthier but still passionate boater.

The boating industry is a microcosm of US business. Venture capitalists. Under capitalized. Radio Shack failed to respond to market but the way they assured their downfall was huge stock buy backs that used all their capital. So the debtors, who are capital investors took control of the situation.

While many industries can't afford to manufacture in the US, boat building can be successful and profitable here. I've done extensive calculations on moving a company not in the US, but with the majority of their sales here. Their costs would decrease significantly. Look at Ocean Alexander and their move to get boats built here, although not by themselves, but contractors.

One thing you'll consistently see in Chinese boat building is well equipped and organized facilities, well engineered. Many of the US facilities are not, even some of the older ones.

Many of the US builders who have struggled really hadn't built many boats comparatively in recent years, if ever. They were one or two boat a year builders. Burger was certainly hurt as more fiberglass boats were built in their size ranges. The market for 100-120' aluminum boats weakened. Also they failed to build new or innovative designs. They did begin a bit late to offer some but never to my knowledge have sold any of them. I compare them a bit to Moonen. Certainly Moonen isn't in a low wage area. But they've seen the need to be more innovative and even then been through several ownership changes.

Some US builders have also been family businesses with various members of those families splitting away and doing their own thing.

In clothing manufacturing, it's absolutely labor costs. But boat building is so capital and materials intensive plus the cost of shipping to the US works in US builder's favor. Exchange rates can enter into the equation but haven't been unfavorable in years.

A last item is that some US builders have in recent years found a lot of commercial work available and more profitable to them than yachts. Trinity is a good example. But look at Edison Chouest and their manufacturing facilities. 4 manufacturing facilities plus one other shipyard, all but one in the US. Now slowed down recently with the drop of oil prices, but Navship in Brazil employs about 2000 people, LaShip in Louisiana about 1200 employees, NAS in Louisiana has built more specialized offshore vessels than any shipyard in the world, and GulfShip in Mississippi is very large. This is on top of conversions and rebuilds in their Tampa facility.

And that makes a final point. Look at all the conversions and rebuilds done in the US, mostly in South Florida. Rybovich has done projects from small to large per their web site on 377 boats in the last 18 months, 353 of those over 100' and 145 over 160'. Now many of those are small jobs, but still when you look at their complete rebuilds they're the size of a successful boat builder. And that part of the business is far more labor intensive than a new build.

We only have ourselves to blame. This business takes two things. A passion for it and the money and willingness to spend that money necessary to do it right. Really that's what any business takes to be successful. The boat builders in the US that have failed in recent years lacked one or both of those elements. If a US boat builder couldn't be profitable do you think Gary Chouest would have just invested what he did in Westport.

It's become much too common for companies to blame their downfalls on the economy or on the labor costs or even materials instead of just looking around at their competitors and acknowledging they are doing something wrong.

Very well said. American labor costs have been a mantra for those trying to take markets from America for years. The fact is that you get what you pay for with labor costs. If labor costing half as much takes 3 times as long and results in warranty claims, there's no savings. The big problem is that there's such huge money involved in things today, and such huge risks that most choose not to compete. To lay out millions of dollars building spec boats is crazy IMHO, but some people (corporations) around the world have so much that they need to invest that they're willing. When the fall comes it'll be huge, but these are bankers not boat builders. They pick up their marbles and move on to the next game leaving ruin in their wake. Boat builders know the business and don't want $20,000,000 sitting on only a few sets of blocks in the yard when people start cutting back.

Christensen is making major press releases regarding their four boats in build, two of which are sold, and two not. I think it's time for a little update on them and placing these builds in perspective.

Henry Luken was 50% owner prior to their bankruptcy. However, he'd also set up a financial company that was his, and had entered into various agreements including the purchase of yachts from Christensen. He then purchased the company out of bankruptcy under WIT Washington. According to the news sources his partner in the new company is Donald Burns from South Florida. Henry Luken made his money in media and communications and what many might term corporate raiding. Donald Burns made his in telecommunications. There were previously two sold boats and they were to Luken and Burns. I don't know if this is still the two being reported as sold or not. Just don't know if the sales reported are new.

Now, there are suits from the previous officers still being highly contested, by David Christensen, his step son who was running the company, Joe Foggia, and Pat Withey. These allege Luken of pushing the company into bankruptcy by, among other things, selling boats to himself and friends at substantially less than the price to build. That then apparently led Christensen to a mini-Ponzi scheme type method of operation, building one boat on the money collected from the next customer, and running further behind with each boat. That's not unusual for a manufacturer in trouble and much the same as was seen in New World/Northern. Those suing have also accused Luken of taking $5 million from one customer and spending it on personal things. Luken has threated suit for libel over that accusation.

All the information I'm sharing is public and freely available information. Why is it important here? Well, Christensen is planning on showing these two boats at FLIBS and has started builds on two others. Whether those were previously customers boats where the builds were stopped, I don't know. The current interim CEO of Christensen is Jim Gilbert, the foundng editor and former president of ShowBoats International magazine. He has publishing experience and knows a good bit about the industry but has no experience in the operations of a boat builder.

I don't think it's possible right now, at the very least not until the legal issues are resolved, to know what is going on in Christensen, to know how things will be managed or boats built. A lot of accusations to be worked out in the courts but regardless any of this could potentially catch a buyer very much in the middle. Ask Ocean Alexander how it all worked out for them.

I was prompted to do this update by the front page post on Christensen's four boats in build. All I'd say is you just need to know who you're dealing with if making a purchase of a yacht, their financial condition and any outstanding legal matters that could greatly impact the company. Also, need to be careful about contracts and need to use good attorney's for any you enter into. I'm stating this a true in the case of all builders. Checking legal proceedings and knowing the history of those owning or operating any business is an important part of due diligence and determining whether you're comfortable doing business with them or not. It's not difficult. Google is your friend. You can find much more about the key people than I'd ever disclose here.

Caveat Emptor always.

BTW, Palmer Johnson just became no longer a U.S. builder.

What I've seen with a lot of the US motoryacht builders who are in trouble is failure to update quickly enough.

Westport really revolutionized the motoryacht industry in the late 90's from 98'-164' by being some of the first to build fiberglass production motoryachts that had good quality and yet allowed the owners enough individualization with 7 or so types of woodwork choices, and interior colors. Before that and over 80' +/- was your choice of aluminum or steel.

Meanwhile Broward MY's sat on their laurels (who had built a ton of motoryachts) and stuck with the same designs. A 2003 Broward looks like a 1990 broward but with square windows. They stuck with Aluminum and it's higher maintanence which owners started veering away from. Burger the same thing, aluminum only and Burger could survive if they stepped up their size game to where Aluminum MY's are still the primary choice, but haven't really. Palmer Johnson did well by revolutionizing the style of MY they built and sticking with aluminum but that fad seems over. I'm not sure if Burger is capable of building/launching 200' + which that market is hot right now.

Trinity was their own demise with a failure of quality on both the interior and exterior paint and always coming in way over budget and delivery dates. They could never step up their quality to yachty from being a oil industry boat builder.

Hatteras did the same thing, a 2001 Hatteras MY looked like a 1990 MY with different windows, they ventured into megayachts (at the time) with builds as large as 155' I think that they never truely excelled in sales. It allowed the Euro Brands like Sunseeker, Feretti, Azimut to really take over a large part of the market they pretty much owned. Hatteras woke up in 2002 and introduced modern looking 63' and 80' motoryachts and revamped their line since then with even more modern looking 70', 90' and 100' MYs and are completely stocked with orders and a year backlog and the 100' MY is doing very well.

The Taiwanese only really own the fast trawler market such as Flemings and similar. Their motoryachts which I don't really consider motoryachts because they generally cruise at 15 knots and burning a TON of fuel for their size and wallowing around in a sea because they always come in way too heavy with inefficient hull designs like OA and others and run around at maximum plow and never get on plane like the Westports and Hatteras'. The Taiwanese have a much smaller market share than they did in the 90's when it comes to 60' + motoryachts giving way to the Europeans.

The Americans OWN the larger SF market..... All the good custom builders are backlogged several years. Viking and Hatteras both running on backlogs. Nobody else globally has been able to compete in the 60' + arena. Same with the center console market which is booming.

Interesting posts, thanks OB.

Yeah... what he said ^

It's not only mismanagement and funding issues, it is also, as touched above, a design/quality issues. It's not unlike what's been happening in automotive industry in 80's-90's.

The sentiment oft repeated, probably as much as labor costs themselves, is "you get what you pay for". With the implication that the eastern (or wherever else) labor might be cheap, but it's bad, and nothing beats "genuine American quality". Ugh oh.
Just out of loudly publicized stories, the late Bertrams in mid-size and Palmer Johnsons in "big" were generally not a well-built boats. And many other struggling American builders pushed out quite sloppy workmanship for quite some time. The market just grew wise to it.

Also, not a topic I'm any proficient with, but I've been told that for some tax structuring reasons buying US-built boats for US-citizen HNWI makes no sense. Something about the tax situation in that case being much worse then otherwise.
Hope someone else elaborates, but to me that would explain why mid-size yards, like SFs, are more or less okay, but the mega- end of the spectrum is virtually nonexistent: there's definitely a difference between paying additional hundred thousands in taxes "for the peace of mind" or a couple millions for the same ))

Olderboater you cannot compare Sunseeker, Ferretti, Azimut or Princess with the brands you mentioned (Trinity, Christensen, Broward, Hargrave etc).

Only Hatteras can compare a bit to the Euro yards above, but as Capt J says correct they never got it perfect apart with what they are doing now in the Yacht line with the 100 and 90.

All the yards above (minus Azimut) actually created the market share they have in the smaller sizes over the years or decades.
I say minus Azimut cause they have been building eight feet plus since 1983, when they purchased the Benetti yard.

The yards above had to make a move as it was a long time coming of having clients out growing them and mostly moving to some of the smaller semi-custom Italian yards (Falcon, Canados, Cantieri di Pisa, Overmarine, Baglietto, Fipa, and Sanlorezo before the new management etc).
So they decided to try to push for the larger sizes of 80 feet and more, which worked very good for them in the past couple decades.

There is a mirror image of what the European yards did with Viking, but its concentration is dedicated to the Sportfishing market.
It will be interesting to see where they can take this market.
The 92 has been a huge success for them.
I still think they could have done the 75 Motor Yacht much better, and for them its been a hard sell so far.

The build quality on the Hatteras is far above the Euro brands overall. Just go look at 10 year old motoryachts. I just got off a 2006 Hatteras 64' I delivered. The paint is perfect, no flaws with the fiberglass anywhere (cracks etc). The interior is still perfect in every aspect, even the origional carpeting and wood flooring.....and everyone of that vintage I look at are like that. While I really like Sunseeker, I just looked at a 2012 where ALL of the woodwork was almost white (milky) in the Master, VIP and staircase going up to the helm. I have managed a 2007 for a long time and the woodwork is shiny, but has long cracks in the veneer in a few spots. Azimut the wall coverings are falling off the walls when they're 10 year old. etc. etc. etc.

What's your thoughts on Viking? They came out with their 75 MY last year or so and are now expanding to an 82 MY based on the 75. The downside is that Hats and Viking seem to be considerably more expensive than their Euro counterparts.

You get what you pay for. Viking is a very good builder as well. Since they're aren't any 10 year old Viking USA built MYs, I didn't mention them. BUT, if you look at a 10 year old Viking SF, they hold up extremely well also and age very well.

Everyone wants to bash Searay (no, they're not a Viking nor Hatteras nor priced the same), but when you compare a 10 year old Searay to it's peers....carver, regal, azimut, etc. The Searay's hold up very well also......

Where the old 75's not U.S. built? It's a nice change that Viking lets you see their MSRP pricing's online without having to deal with dealers. I feel this information would help buyers out in general. Looking at the pricing, though, the 75 MY starts at $5.5M and quickly gets into the $6.5M range (consistent with the Hatteras 70). What's the equivalent Sunseeker, Azimut, etc? $4.5M? These two are probably considered to be in a different class, however.

One thing that I haven't spent much time researching but am curious about is in residual cost and maintenance cost difference between a 10 year old Sunseeker and a 10 year old Hatteras. They both depreciate pretty quickly but I'd be curious if the $2M price differential as mentioned above will be realized in the end. If it's the ending residuals are close by the time you want to buy a new yacht (be it 2 year or 10 years), I feel like you could make the argument that it would be better to get the Sunseeker, keep it for 5 years, and then upgrade versus being $2M in deeper with a Hatteras without realizing any benefit during that time. Again, this is just something I am curious to see if anyone has put in work to figure this out.

The old Viking 75's were built by a company that is best known as Lazzara. They were pretty well built, but not as good as a Hatteras. I used to run an old 72' Viking wide body MY from time to time.

Hatteras has better resale, so you'll get some of it back there.....Sunseeker you'll be replacing carpeting and painting the entire boat by that time usually because of the gel coat cracking, and replacing the teak decks because all of the Euro builders in that class put thin teak decks on them to start with versus 3/4" thick ones on the Hatteras so that's a few hundred K right there.

We painted the hull on the 2007 I manage 2 years ago, and then had lots of cracks on the rubrail up....but the new owner wouldn't listen and could've gotten that painted for $40k and he spent $25k with this idiot fixing all of the gel coat cracks who never completely finished and also got gelcoat on EVERYTHING... cleats, deck lights, wiper arms even.

Capt.J I am not discussing the quality of Hatteras versus the Euro main stream builders, my comparison was more about brand building and going from smaller to larger.
Which is what the original topic is about.

Re gel coat I must point out that Hatteras also Imron paints there boats (since the 80s?) which is a big advantage.
Blu dark color gel coat of most Euro builds for example lasts about three years if you are lucky for example.

Pershing paints there dark colors and I managed a few ten year old plus (navy blue) and it is still in excellent condition for example.
It is important to make like with like. Everyone who take care of boats knows dark color gel coats have a short life span unless you polish it every other month.

I was very disappointed with most Sea Ray boats to be honest on the overall quality but also some finishing details.
Would like to see how the new models will perform in a five year span, which on the design front are a big improvement from the hybrid going know where of EURO-USA style of the past two decades.

This is an interesting argument. Which deserves consideration (possibly in another post) and how the market performed in the last five-six years.
About eight - ten years ago, the big Sunseeker's and Princess (75 - 85 feet etc) where among the more depressed sellers, but where also cheaper to your typical Italian yacht.
I think only Azimut was a bit closer in price to these Sunseeker new and they always hold there money well (74 Solar, 80 Carat 85 Ultimate etc).

But then Italy had the tax police running around everyone from 2011 onwards and the market spectrum changed and semi-custom yachts from Italian builders started to depreciate as well.
I also have to point out that some of the Manhattan big Sunseeker's where not so yacht looking as big Azimut's so may be that was part of the factor.
The Yacht series from them started to change all this.