Yacht builder cuts 17% of jobs

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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Fort Lauderdale ramps up plans for boating upgrades

Lauderdale wants to improve its most popular launch site

By Robert Nolin South Florida Sun-Sentinel

November 22, 2008

Fort Lauderdale officials are launching a $1.1 million renovation plan to improve life for mariners who use the city's most popular boat ramp.

Funded largely by state and Broward County grant money, the city wants to rejuvenate the 15th Street boat ramp. Planned improvements are expanded parking for cars and boat trailers, including more handicapped spaces, relocation of overhead power lines, new lighting, seawall repair and the replacement of an existing fish cleaning station.

"It's an important upgrade," said Andrew Cuba, the city's manager of marine facilities. "It's truly in need of a face lift."

The 15th Street facility, just off the Intracoastal Waterway north of the 17th Street Bridge, is the most popular of the city's four boat ramps. About 50,000 boaters a year launch vessels from the facility's two ramps, Cuba said.

The ramps are the largest in the city, allowing big boats to be floated.

"The location is the best," Cuba said. "It provides the closest proximity to Port Everglades Inlet."

The open sea is only about two miles away.

Pleasure cruiser Marc Kiar, 27, of Davie, launches his 21-foot Sea Ray from the facility nearly every weekend. It's convenient to the ocean as well as nearby waterfront restaurants, he said.

"If the city is spending funds to rejuvenate the area, it would be wonderful," he said.

Kiar said more parking would be especially welcomed. "When I go there on Sundays it's almost impossible to get a parking space," he said.

The city will spend approximately $350,000 from its capital improvement fund toward the total estimated $1.1 million cost of the improvements, Cuba said. The remainder will come from grants, if approved, from the Broward Boating Improvement Program, the Florida Boating Improvement Program and the Florida Inland Navigation District.

But boaters shouldn't expect smoother sailing at the boat ramp anytime soon. It will be next year at the earliest before work begins, Cuba said.

Robert Nolin can be reached at rnolin@SunSentinel.com or 954-356-4525.

Boat ramp

$1.1 million

Cost of renovating the 15th Street boat launching site

Plans

More parking for cars and boat trailers, new lighting, seawall repair, relocation of overhead power lines and replacing a fish cleaning station

source: sun-sentinel.com

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Fort Lauderdale ramps up plans for boating upgrades


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Boat sales not completely sunk

While attendance may be down at the 49th annual Fort Lauderdale International Boat Show and boat sales have run into choppy seas, some positive signs persist for both the show and boat sales across South Florida.

The show, which ran Oct. 30 through Nov. 3, saw a 4 percent decrease in attendance from last year for all of the days of the show, excluding the final Monday, a show spokeswoman said.

Show Management, the managerial agency, did not immediately provide exact headcounts for each day or final figures. The spokeswoman estimated that between 130,000 and 140,000 people attended last year.

Sales figures may not be available until a week after the show ends, but the general outlook was positive, according to Show Management COO Andrew Doole.

However, the show's projected economic impact, which includes hotel bookings and restaurant sales, has been revised from $720 million to $650 million.

The financial crisis caused some concern for vendors and show organizers, he said. Still, “I think everybody here is pleasantly surprised at the crowd we’ve got.”

The crowd was relatively steady, thanks to increased marketing efforts abroad. The show targeted Russia, the Middle East and South America, in particular, Doole said. The result: a 15 percent increase in international attendance.

International attendance was helped by the fact that many new marinas have been built in Central and South America and the value of the U.S. dollar, which, until recently, had declined against many foreign currencies, Doole said.

“The boats here are a bargain at the moment,” he noted.

While the dollar and the soft market for smaller boats have caused many price tags to drop, not every boat is a bargain. Some brokers and builders said the megayacht sector –those boats longer than 80 feet and often priced in the millions – are selling just fine.

“Under 100 feet or under 80 feet, those guys are dying,” said Tim Johnson, a broker at International Yacht Collection’s Fort Lauderdale office. But, since most of International Yacht Collection’s boats are “well above” 100 feet and its clientele is extremely affluent, the company’s business is steady, he said.

“People ask me on a daily basis: ‘Isn’t the price of fuel affecting your business?’ Oh, give me a break,” Johnson said.

Mike Dickman, director of marketing for HMY Yacht Sales in Dania Beach, said that most of HMY’s boats are in the mid range – 45 feet to 80 feet – exposing them to more market pressure than the biggest boats. Still, early sales from this year’s show forecast a better year than last, he said.

The credit crunch may make financing a boat more difficult, but it didn’t play a large role, said Frank Herhold, executive director of Marine Industries Association of South Florida. However, it could impact lower-end sales where the industry is seeing a slowdown, he said.

“My gut feeling is [getting financing is] a little bit tougher but it’s there,” Herhold said. “I haven’t had dealers tell me they lost a sale because they couldn’t get financing.”

At any rate, the high-end deals are mostly cash, he noted.

South Florida Business Journal reported data in late September showing that new boat sales here declined 26 percent for the first half of 2008 compared to the same period in 2007.

The decline is a large concern for the marine industry, which has an estimated $13.5 million impact on the region and accounts for more than 150,000 jobs.

source: south florida business journal - by Bill Frogameni


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Merrill-Stevens gets out of yacht sales, charters

Merrill-Stevens said on Monday that it will discontinue its Fort Lauderdale-based yacht sales and charter divisions and focus entirely on its core yacht repair and refit business on the Miami River.

While the yacht sales division experienced some success during its three-year operation, the company said in a news release that competing yacht brokers and yacht management firms often would not refer their clients to the shipyard because of possible competition from an in-house sales brokerage division.

“Focusing on our core business – yacht repair/refit and maintenance – will assure referring yacht brokers and yacht management firms that we are serving their needs – not competing with them,” CEO Fred Kirtland said.

As a result of the shift, the company will eliminate four positions and transfer some administrative staff to its shipyard operations.

The sales and charter brokers are independent contractors, and the company said it will help them, and their clients, with the transition.

source: south florida business journal

http://www.bizjournals.com/southflorida/stories/2008/11/10/daily8.html

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Maritime industry lauds passage of Amendment 6

Marine industry leaders are cheering the passage of Amendment 6, a state measure that stipulates working waterfront property be taxed at its actual usage – not its “highest and best” potential.

Amendment 6, which received an overwhelming 70.5 percent voter approval, will protect the state’s considerable maritime sector against property assessments that skyrocketed throughout the real estate boom.

“It’s great to see all the grassroots efforts have paid off and common sense has prevailed,” said Frank Herhold, executive director of the Marine Industry Association of South Florida, which represents businesses that service the region’s recreational boaters. “Florida, as a state, has demonstrated that public access to the waterfront is a big priority.”

Recreational aspects of the maritime industry (marinas, boat yards, etc.) have an $18.4 billion impact statewide, Herhold said, with the tri-county area generating $13.6 billion of that.

Fran Bohnsack, executive director of the Miami River Marine Group, also praised the amendment’s passage.

“Many of these businesses have had their taxes grow two or three times what they were just a few years ago,” she said.

The river’s unique businesses – which includes smaller shipping terminals in what is considered Florida’s fourth-largest port – stand to benefit under the measure. In recent years, river businesses have fought to maintain protections as real estate proliferated northwest from the downtown Miami boom.

Bohnsack said she was concerned that the wording of the amendment may be somewhat ambiguous when it comes to protecting shipping facilities along with marinas and boat repair facilities. But, she said she’s confident the amendment will offer broad protection to maritime interests.

The vote comes as welcome relief for Miami River businesses that have been hit hard by declining shipments to Caribbean nations and high fuel prices.

Richard Dubin, whose Haiti Shipping Lines terminal is on the lower end of the river, near downtown Miami, was among those impacted by the higher taxes, a decline in shipping to the Caribbean and higher fuel costs.

Dubin said economic conditions have driven his business down about 35 percent compared to a year ago, and the typically brisk Christmas shipping season looks soft this year.

Adding to the strain, Dubin’s annual property taxes are now somewhere between $120,000 and $130,000, up from $40,000 two years ago, he said.

“Maybe someday, someone will knock this down and build a $2 million house,” he said. “But, until then, this is where I’m working.”

source:

South Florida Business Journal - by Bill Frogameni

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Amendment 6 could give local marine industry a tax break

Friday, August 22, 2008

South Florida Business Journal - by Mark Szakonyi and Darcie Lunsford

Florida’s maritime industry could get a tax break if a state constitutional amendment that would appraise working waterfront property at its current use, rather than its “highest and best use,” passes.

If it is approved during the Nov. 4 general election, Amendment 6 would help protect the state’s marine industry, which has been increasingly taxed out of business as condominiums and waterfront resorts raise the potential value of waterfront property.

The issue has become urgent in South Florida, as the many of region’s marinas, boatyards and trade terminals have fallen to development or been pushed out in the aftermath of the residential boom.

While the housing slump has lessened the pressure of potential value, some development continues and will eventually increase once the market rights itself, Amendment 6 supporters say.

Housing developers “will be back for sure. Florida is a state that is built on growth industry and the most desirable properties are waterfront,” said Fran Bohnsack, executive director of the Miami River Marine Group, which represents 55 marine companies along the 5.5-mile Miami River. The river’s 100 or so exporters, importers, tug operators and repair firms employ 6,100 people and churn out about $4 billion a year in commerce.

Bohnsack said residential encroachment in recent years has shaved the river’s maritime acreage to 37 acres from 80. It also has the river bleeding jobs and commerce. She said states such as North Carolina are actively trying to recruit struggling South Florida marine businesses to build their economies.

“I hope people will support the amendment. We really need them to.” Bohnsack said. “Everything that makes Florida special comes from the waterfront.”

$13.6 million for the economy

The Marine Industries Association of South Florida (MIASF), which represents businesses servicing the region’s 150,000 recreational boaters, also has pushed for Amendment 6, as well as requirements that the state do more to recruit marine firms, according to Gordon Connell, director of association services. He said boating pours $13.6 billion a year into South Florida’s economy, with Broward County being at the heart of the recreational boating industry.

And these businesses need tax relief, said Frank Herhold, executive director of the 850-member MIASF.

“I think it is important that waterfront facilities be treated as waterfront facilities, not as what they could be,” he said. “The high cost of business starts at the waterfront – and it isn’t just property taxes. It is insurance and regulatory requirements. We can deal with all that, but when your taxes are so far out of line because someday [your property] could be a condo that is simply not fair.”

The valuation issues are worse in Palm Beach County than in Broward or Miami-Dade, he said.

Preserving working waterfronts not only keeps businesses going and improves residents’ quality of life, but is also a boon to tourism, said Susan Grandin, director of the Jacksonville office of the Trust for Public Land.

The land conservation nonprofit is buying property adjacent to the St. Johns River in northeast Florida, which it sells to government agencies or environmental nonprofits.

If Amendment 6 passes, many marine-related businesses will receive much-needed property tax relief.

The current system of “highest and best use” has more than doubled the property taxes owed on Jacksonville Marina in Atlantic Beach, a suburb of Jacksonville, GM Dennis Young said. Paying an additional $32,000 annually hurts, but it is made financially rougher because the marina, like many others, has sold less fuel due to rising fuel costs.

The increased assessed value of the 2-acre marina was driven by Vestcor Cos.’ plan to build condominiums nearby. The developer has since dropped plans, and the property is being reassessed by the Duval County Property Appraiser’s Office.

The amendment “gives us a way to do the right thing, in terms of assessing someone who has an economically underused piece of land,” Duval County Property Appraiser Jim Overton said.

If the amendment does pass, however, many cash-strapped governments could be squeezed even harder by the reduction of marina property values.

mszakonyi@bizjournals.com | (904) 265-2239 dlunsford@bizjournals.com | (954) 949-7523

source: south florida business journal

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Rory Vanucchi

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Boat sales not completely sunk

South Florida Business Journal - by Bill Frogameni

While attendance may be down at the 49th annual Fort Lauderdale International Boat Show and boat sales have run into choppy seas, some positive signs persist for both the show and boat sales across South Florida.

The show, which ran Oct. 30 through Nov. 3, saw a 4 percent decrease in attendance from last year for all of the days of the show, excluding the final Monday, a show spokeswoman said.

Show Management, the managerial agency, did not immediately provide exact headcounts for each day or final figures. The spokeswoman estimated that between 130,000 and 140,000 people attended last year.

Sales figures may not be available until a week after the show ends, but the general outlook was positive, according to Show Management COO Andrew Doole.

The financial crisis caused some concern for vendors and show organizers, he said. Still, “I think everybody here is pleasantly surprised at the crowd we’ve got.”

The crowd was relatively steady, thanks to increased marketing efforts abroad. The show targeted Russia, the Middle East and South America, in particular, Doole said. The result: a 15 percent increase in international attendance.

International attendance was helped by the fact that many new marinas have been built in Central and South America and the value of the U.S. dollar, which, until recently, had declined against many foreign currencies, Doole said.

“The boats here are a bargain at the moment,” he noted.

While the dollar and the soft market for smaller boats have caused many price tags to drop, not every boat is a bargain. Some brokers and builders said the megayacht sector –those boats longer than 80 feet and often priced in the millions – are selling just fine.

“Under 100 feet or under 80 feet, those guys are dying,” said Tim Johnson, a broker at International Yacht Collection’s Fort Lauderdale office. But, since most of International Yacht Collection’s boats are “well above” 100 feet and its clientele is extremely affluent, the company’s business is steady, he said.

“People ask me on a daily basis: ‘Isn’t the price of fuel affecting your business?’ Oh, give me a break,” Johnson said.

Mike Dickman, director of marketing for HMY Yacht Sales in Dania Beach, said that most of HMY’s boats are in the mid range – 45 feet to 80 feet – exposing them to more market pressure than the biggest boats. Still, early sales from this year’s show forecast a better year than last, he said.

The credit crunch may make financing a boat more difficult, but it didn’t play a large role, said Frank Herhold, executive director of Marine Industries Association of South Florida. However, it could impact lower-end sales where the industry is seeing a slowdown, he said.

“My gut feeling is [getting financing is] a little bit tougher but it’s there,” Herhold said. “I haven’t had dealers tell me they lost a sale because they couldn’t get financing.”

At any rate, the high-end deals are mostly cash, he noted.

South Florida Business Journal reported data in late September showing that new boat sales here declined 26 percent for the first half of 2008 compared to the same period in 2007.

The decline is a large concern for the marine industry, which has an estimated $13.5 million impact on the region and accounts for more than 150,000 jobs.

source: South Florida Journal

Fort Lauderdale Real Estate Blog & Homes For Sale
Rory Vanucchi
RoryVanucchi@gmail.com