Making waves | Midcoast boatbuilders are diversifying to ride out the recession's swells
Last August, Belle Ryder and her father Richard had a stark conversation about the future of their family-run Bucksport business, Union River Boat Co. Inc. Their phones were quiet; none of the boat yards they provided parts for were calling. Their facility was increasingly idle. They had to lay off workers.
Instead of eddying into despair, though, the two decided to pursue plans they had been mulling for years. “We sat down and said we’re going to be in a mess if we don’t start diversifying our customer base,” Belle Ryder says. They began the process of splintering their business — which for 15 years had just been a parts company — to meet future market potential.
More than six months later, Union River Boat is now tantalizingly close to closing a deal with an out-of-state company that could hire it, along with Lyman Morse Boatbuilding Co. in Thomaston, to build dozens of sleek cruising sailboats a year. Union River is also building and assembling its first-ever boat — a 30-foot sharpie sailboat designed and priced more for middle-income families than the super rich. And the company is working with a Nova Scotia business to manufacture inflatable rigs that have sparked interest from the U.S. and Canadian governments. Ryder says these three boat models target distinct markets, and if the boats sell, could put Union River on solid ground when the economy swings back.
Union River is not the only boat yard in the region preparing, with a mixture of anxiety and hopefulness, for the pendulum to swing. Yet, as some yards are looking ahead and adapting to an altered economy, many others have curtailed operations, sometimes drastically. The Hinckley Co. has let go 74 workers from its Trenton production facility since last October, reducing its Maine work force to 215, according to the Bangor Daily News. (A Hinckley spokesman did not return calls seeking comment.) Even Union River Boat Co. has trimmed its work force from 28 to eight in the past 10 months. Rockport Marine has laid off six full-timers since the first of the year. Rockport Marine, too, which had initially planned to expand this year by building a $3.5 million boat hoist and facility to service bigger boats, has decided to wait on those plans until economic signs are more promising.
“It’s challenging,” admits Jane Wellehan, president of the industry association Maine Built Boats. Yet, she adds, “We’re going to be fine. We’re going to ride this out. But there are things we need to do to ride out to the other side of this.” Things like diversifying, often in ingenious and surprising ways, and investing in facility improvements — or even, for the lionhearted, expansions.
This sink-or-swim attitude was echoed by others in Maine’s boatbuilding industry. Bill Morong, owner of Yachting Solutions in Rockport, was clear about possible reactions to the economic crisis: “I just think you have two options in a situation like this: You could think the sky is falling down. Or you get out of the way and make something happen.”
Avoiding the crashing sky
Last fall, the North Star Alliance Initiative and the Maine Composites Alliance called a statewide meeting of boatbuilders to discuss a fairly secretive invitation: An anonymous, out-of-state company was seeking a builder for its sailboat designs. In the end, only Lyman Morse and Union River pursued the potential contract, and only after they decided to work together.
Ryder and J.B. Turner, president of Lyman Morse, say the final decision won’t be known for several more weeks. But if the deal works out, the project could have the two companies building 12 boats next year, a number that could grow to as many as 100 boats in an ideal economy five to six years out. Ryder says sales in the joint venture could be as high as $6.9 million by 2013.
“We said, if we can spread the loss between builders, building 12 boats a year is not all that scary,” Ryder says. “It takes less capital investment to do the boat in two places.”
Other boatbuilders may have shied away from this project, Ryder says, because it departs from a common boatbuilding model here: crafting a custom boat on commission. Instead, Lyman Morse and Union River would be more or less mass-producing identical boats. Ryder says because Union River already specializes in building parts, it can adapt well to new products, and Lyman Morse’s facility is big enough to absorb another production line.
Still, to handle this type of production model, both companies will have to invest a total of more than $2 million in their facilities.
The work would not quite be evenly divided. Lyman Morse, which has 159 employees and yearly revenues between $12 million and $16 million, would do the majority of the boat assembly and some building. Union River, which pulls in between $1.5 million and $1.8 million a year, would create the boat’s composite parts, like the hull and deck. The companies plan to create a separate entity to handle finances.
But neither company is stopping there. Union River has invested $125,000 in designing and planning its first boat for the lower-end market, the Presto 30, with a price tag of $75,000. Ryder says she hopes to eventually build and sell six Prestos a year. Plus, if Union River’s joint venture with Nova Scotia’s Rosborough Co. to build rigid inflatable boats is successful, it could make $1.6 million in sales in 2010, and as much as $6 million in 2013, she says, after an output of more than $1.5 million in retooling and facility upgrades spaced out over the next four years.
“There are still people buying boats,” Ryder says.
Lyman Morse has also begun constructing solar-energy generators called PowerCubes, which can provide power to island homes, construction sites, cell phone towers or other off-grid sites, according to the company’s website. The cube comes in two sizes and costs between $20,000 and $40,000. And the company is looking into manufacturing composite aluminum blades for wind turbines.
“If we had to expand, that would be a nice problem to have,” Turner says.
Riding it out
With little else to do other than study alarming financial statistics in the newspapers, other Maine boatbuilders are also seeking out new opportunities.
Artisan Boatworks, which builds wooden boats and annually grosses about $500,000, recently updated its paint-and-varnish bay in its Rockport facility to service boats year-round. Owner Alex Brainerd says he invested $40,000 in the project to ensure work for his three-person crew and give him time to pursue big projects come spring and summer. “The bay doesn’t increase our revenue as much as increase flexibility,” he says. “It spreads out the work. If we don’t have a winter project, we can do paint and vanish. We can focus more energy on new boats in the spring.”
Meanwhile, Yachting Solutions in Rockport has applied for a $100,000 Community Development Block grant from the state to branch out from its major mission of servicing boats.
“We would like to bring manufacturing to our facility, in some form or fashion – marine-related composite manufacturing,” owner Morong says, either by buying a company or forming a joint venture, most likely with an out-of-state company. Investing between $500,000 to $1 million in this expansion would allow Yachting Solutions, which typically has six to 10 workers, to hire four extra employees within the next 24 months, Morong says. He adds, though, that the plan is contingent on locking down financing.
And Wellehan, of Maine Built Boats, says despite the present gloom, she has seen signs that the boat market could recover soon. At a mid-February boat show in Miami, Maine boat builders were busy taking new orders. But then the stock market plummeted again and potential customers pulled back, again. She suspects, however, that as soon as the economy bottoms out and people can realistically assess their financial worth, they’ll start dreaming of the sea.
“There’s a pent-up demand,” she says. “People want to move forward. They’re getting bored.”
Rebecca Goldfine, a writer based in Portland, can be reached at editorial@mainebiz.biz.
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