Getting pinched | A downturn in the lobster industry leaves boat builders high and dry
The lobster boats in Glenn Holland’s shop look like the nesting dolls that fit together, the smaller ones tucked into progressively bigger shells. Near the entrance to Holland’s workshop is a whale-like blue boat in progress, with a 38-foot hull, while behind it sits an identical but smaller 32-foot yellow boat. Next to that boat is a squat 12-and-a-half-foot peapod, a basic rowboat.
And it is this small peapod, no match in grandeur to the other boats, that appears these days to be the sturdiest vessel of all for Holland’s lobster boat business. “I might start pushing the smaller peapods more,” he says, looking at a new peapod mold he’s created, which is still dusted with wood shavings. “But I’d have to make a lot more peapods to equal a 38-footer.”
The peapod, which Holland will likely sell for around $3,500, is far more affordable than his larger 32-foot and 38-foot boats, which begin at $120,000 and can push $250,000 or more. Holland figures the little boats may appeal to customers increasingly unable or unwilling to spend more in today’s rough economy. “When I was a kid in the early 50s, a handful of guys still fished in them,” he points out.
Holland, who grew up in Stonington surrounded by fishermen, founded Holland’s Boat Shop in 1973 in Belfast to make work boats for Maine lobstermen. Over time, he also began receiving orders for pleasure boats based on his classic lobster boat model. By the mid-1980s, and continuing up to just a couple years ago, half of Holland’s orders were for pleasure boats — or what he calls “lobster yachts” — and half were for commercial lobster boats. Back then, business was good.
Recently, though, orders for commercial lobster boats have retreated. “Right this minute, all the boats I’m building are pleasure,” Holland says.
Holland, like other lobster boat builders in Maine, is being pinched by a worried fleet of commercial lobstermen. After years of enjoying a booming lobster industry that posted record annual landings, lobstermen reported a smaller haul in 2007, down by about 12 million pounds from 2006. And these numbers could continue to slide. Additionally, prices for lobsters have slipped off their 2005 peak levels of $4.63 per pound to $4.14 in 2006 and $4.44 in 2007. Meanwhile, the cost of fuel has soared. The exuberance of yesterday is gone, and with that has gone the confidence to invest in new boats and equipment.
“The catch is still really strong, but the profitability of the industry has been declining,” says Patrice McCarron, executive director of the Kennebunk-based Maine Lobstermen’s Association. “You see people making do with what they have. I don’t think they are upgrading boats. You hear about people downsizing boats and engines, getting by with a little bit less.”
And this downward shift has made the dozen or so Maine lobster boat builders — who for decades relied on a base of commercial lobstermen — anxious to the point where at least one says he is contemplating closing. To ward off that fate, boat builders who thus far have gotten by on word-of-mouth marketing and building rugged, traditional work boats are changing their business models. Some are downsizing and laying off workers, or like Holland, contemplating building smaller, cheaper boats. Many, too, including Holland, are also spending more on advertisements and new websites to attract more pleasure boaters to make up for the slack in commercial lobster customers.
Cathy Holland, Glenn’s wife, says while she’s watched this shift from work to leisure boats steadily take place over the years, she still misses the company’s origins. “I like building boats for working people,” she says.
The boom and bust
Lobster boat builders are coming off an unprecedented lobster bounty that fueled good times through the 1990s and up to 2005. The catch jumped from 28.1 million pounds in 1990 to a record 75.3 million pounds in 2006. Rising incomes persuaded experienced lobstermen to invest in new boats and attracted fresh gold-seekers to the industry.
In the middle of this boom, Holland was making, per year, between 10 and 12 complete or unfinished “kit” boats — just a hull and deck — and pulling in about $500,000 in revenue. Now, though, he says, “In the last couple of years, work has dropped off.”
The number of boats and kits he makes is closer to five or six, and his sales last year dipped to around $300,000. After failing to stir up a new order in the past six months, he says he had to lay off two workers, reducing his crew to just two full-timers, plus him and his wife.
Peter Kass, owner of John’s Bay Boat Co. in South Bristol, also is watching the black clouds form at the horizon. He says if his company doesn’t land an order soon, he’ll have to close and lay off his three full-time workers. “We had a run of really good years, up to 2005,” he says. “Any decent fisherman was making a good living, buying new boats every 10 years.”
McCarron says though scientists haven’t agreed on a cause for the generous harvest, a confluence of factors may have led to the lobster birthing spurt. A decline in ground fisheries possibly reduced lobster egg predators, and warmer waters and favorable currents could have helped the population grow. In the past few years, however, the ocean floor’s temperatures have cooled and some predators have returned, possible warnings that future lobster catches could decline.
What is certainly clear in those years was that money was flowing. “People made money, made capital investments,” McCarron says. “People hadn’t gotten rich historically, and people hadn’t really been turning over equipment so rapidly.”
The 2005 total revenue paid to lobstermen, a record for Maine, was $318 million, according to the Maine Department of Marine Resources. That figure dropped to $312 million in 2006 and $280 million in 2007. And as incomes for lobstermen become leaner, lobster boat builders feel their absence. The builders who already had been targeting pleasure boaters as well as commercial fishermen at least have something to fall back on. “At this point, whatever we get for orders is great,” Cathy Holland says. “I’m just thankful we go after both markets.”
Pleasure cruising
Building pleasure boats based on the classic lobster boat model is not new; lobster boat builders say they’ve had interest from the general boating crowd for years. What’s changed, though, is the number of lobster yachts they’re building now.
Nate Hopkins, owner of Atlantic Boat Co. in Brooklin, says his family-owned company — the result of a merger of Duffy and Duffy and Fly Point Marine in 1995 — started out as a commercial lobster boat builder in the late 1970s. But by the mid-80s, new customers began showing up asking for finer cabinetry or tonier details. Gradually, Atlantic Boat found itself constructing more lobster yachts.
“Since the late 1990s, we’ve been primarily a yacht, pleasure boat and sport-fishing boat builder,” Hopkins says, with customers from all along the East Coast, the Gulf of Mexico, Bermuda, the Bahamas, the West Coast and occasionally elsewhere seeking an ocean cruiser that looks like a vintage lobster boat.
The lobster boat is an advanced creation; it has evolved in Maine over the decades as lobstermen and their children and grandchildren changed this and adapted that to create the ideal offshore vessel for hauling traps. “The hull was developed for sea-keeping qualities,” Hopkins says. “It’s got a good ride, an ability to carry weight and be an all-around practical hull for fishing in the North Atlantic.”
Jane Wellehan, spokeswoman for the nonprofit boat consortium Maine Built Boats, agrees. “It’s got a full, long keel, the weight is low, the sheer line is up. They just plow through the water,” she says.
You’ll hear this kind of pride for Maine lobster boats almost everywhere in the marine industry. Holland scoffs at the typical yacht that fills Florida or Connecticut marinas. “[Maine’s lobster yacht is] a real boat to begin with,” he says. “They’re not a toy; they’re based on a working boat.” Plus, the boats are fuel efficient, powerful and, he adds, don’t resemble a “big white sneaker.”
That appeal might help lobster boat builders transition away from the commercial market to the pleasure market. When times are tough and commercial orders fall down, orders from leisure customers tend to be stickier. And pleasure boats often have bigger price tags because of the extras that customers ask for. “As a general rule of thumb, they cost 50% more,” Holland says. Depending on how fancy they get, they can even be as much as double or three times the price of work boats. “They put more stuff in them and the finish work is fussier,” he says.
Yet it’s not always easy converting to what is essentially a different culture of buyers. “It is tough to switch,” Wellehan says. “It is a different marketplace. You might have a fantastic reputation in the commercial fishing boat market,” but, she adds, lobster boat builders often have to adopt new strategies when reaching out to the leisure market.
One way they’re doing it is by polishing their websites, or in the case of Kass and Holland, launching their first-ever website. “I have never advertised or gone to shows, none of this stuff,” Kass says. He’s just gone online with a new site, and also in August rented a booth at the Maine Boats, Homes and Harbors Show in Rockland. “I’ll do magazine advertising, trying to get to the pleasure boat market,” he adds.
Holland says he already advertises in Commercial Fisheries News, National Fishermen, Maine Coastal News, and Maine Boats, Homes and Harbors magazine, and regularly goes to the annual Rockland boat show. He says he will probably shift more of his advertising resources to publications that will more likely be read by someone looking to boat for fun, and will be promoting his smaller boats, like his peapod or 14-foot skiff.
Hopkins, meanwhile, says his plan is to “continue what we’re doing” and continue increasing the efficiency of building boats. He’s also doing as much service and repair work as he can to decrease his yard’s dependence on new boat construction.
“We’re not here to make zillions of dollars, but to do good jobs, and keep myself and the crew buying their kids new shoes,” Hopkins says.
Rebecca Goldfine, Mainebiz staff writer, can be reached at rgoldfine@mainebiz.biz.
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