Up to 250 let go with drop in demand
New Jersey's largest boat-building company, Viking Yachts, laid off as much as 17 percent of its work force this year in what could be the biggest downsizing since the 1990-91 recession, coupled with a federal luxury tax that decimated the Bass River boat works.
From a recent peak of 1,400 workers, the company has shed 210 to 250 positions in several rounds since March, said Peter Frederiksen, Viking director of communications. Escalating fuel costs earlier this year were one factor, and the deepening global economic malaise has reduced domestic and international demand for the company's distinctive sport fishing and motor yachts.
"Some people are furloughed, which means they will be brought back when there's work," Frederiksen said.
People who have lost their jobs range from fiberglass workers, who lay up plastic and resin to build hulls from 45 feet to 82 feet in length, to some 20 administrative office staffers who were laid off in the summer. Out-of-work employees can still use the company's on-site health services, Frederiksen said.
The company's 600,000-square-foot production plant on the banks of the Bass River was expanded this year with completion of a 130,000-square-foot addition. Production had expanded in recent years to as many as 108 vessels annually, priced from around $1 million to $4.5 million each, according to the company.
For a time, the weakened American dollar and international exchange rates made Viking vessels an attractive choice for European buyers, and the company's foreign sales climbed to 30 percent of its business from 10 percent, "but it doesn't have the momentum it once had," Frederiksen said.
The National Marine Manufacturers Association is hearing anecdotal accounts "that estimate business is down about 30 percent for powerboats," said Ellen Hopkins, director of marketing communications for the group.
The association runs boat shows around the country, and the harsh climate, ironically, is helping to book display booths, Hopkins said: "People are scrambling to exhibit because they're not getting traffic at their showrooms."
The layoffs don't come close to Viking's crisis of the early 1990s, when the company went from 1,500 to 80 workers at one point and closed a Florida factory. In the years since, Viking founders Robert and William Healey diversified the privately held family company, which has interests in real estate, technology and energy.
"We're trying to manage this the best we can," Frederiksen. "From the luxury tax in '91, we knew we could never do it with boat building alone."
The company's new flagship 82 Convertible and other boats will be taken to the Miami International Boat Show in February in search of potential customers, he said.
"The fact is, boating has always been a cyclical business," Frederiksen said. "Eventually, we'll come out of this."
Viking is a major employer for southern Ocean County, and the layoffs and other job losses in recent months are contributing to a surge in need among area families low on cash.
Dan Hartmann, past president of the Tuckerton Area Inter Church Food Pantry, headquartered in a former garage next to the Little Egg Harbor Community Center on West Calabreeze Way, said there has been a tremendous increase in requests for food.
"In the past few months, it's almost doubled," Hartmann said. "Where we used to get 115 families, some months we get 200 to 230. There has been a tremendous increase at all levels. Even working families are having a hard time."
His wife, Anna, the current president of the food pantry, said she went straight to the food pantry Monday morning, even though the pantry is only open from 2 to 4 p.m. weekdays, except holidays.
"We are inundated," she said. "We are still feeding them. We had 230 families in October. We're still making Thanksgiving baskets."
Sectors of the boating industry began to feel a slowdown in 2007 as real estate markets stalled in what had been high-growth regions, and increasing fuel prices tipped the scales further.
New England-based builder Albin Marine halted production suddenly at its Rhode Island facility last year, citing high material costs and a decline in home equity among would-be buyers of its midsized motor cruisers.
Along with fuel prices this summer came the credit crunch, drying up financing for all but the best-rated borrowers. The National Marine Bankers Association canceled its annual December lending workshop in Fort Lauderdale, Fla., citing "existing market conditions and the economic hardships our industry continues to endure."
The early 1990s boating recession was intensified by imposition of a 10 percent federal luxury tax on high-end boats, such as those built by Viking. Robert Healey organized what became a national campaign to win repeal of the tax by 1993, and the brothers' continued investment in keeping the company alive enabled Viking to retool and surge back into the market.
"Bucking the tide is where you find success in today's world economy," Viking Executive Vice President Pat Healey wrote in the current issue of Vahalla, the company's twice-yearly magazine for Viking owners. "We appreciate your business and are doing all we can to hold pricing, despite ever increasing costs for raw materials, machinery, overhead and labor."
Healey said the launch this month of the 82 Convertible — the biggest boat in Viking's 44-year history — "continues our commitment to launch at least one new model yearly and sometimes more."
source: app.com
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http://www.app.com/article/20081125/NEWS/811250326/1003
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