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Megayachts

Nov 6, 2015 01:48 PM

Economic perception, shifting demand force U.S. builders to diversify

The slowdown in the U.S. megayacht market has prompted a number of domestic yards, like Seattle's Delta Marine, to extend their reach overseas.

Courtesy Delta Marine

The slowdown in the U.S. megayacht market has prompted a number of domestic yards, like Seattle's Delta Marine, to extend their reach overseas.

Despite a notable increase in 60-meter-plus contracts being signed by European yacht builders, production remains slow at most U.S. yards — and nonexistent at some.

“What we are seeing now is the perfect storm against U.S. yacht builders,” said Billy Smith, former vice president of sales and marketing at Trinity Yachts. “It was the recession at first that affected newbuilds, then it became politically incorrect to be wealthy and now it’s the exchange rate.”
 
Smith now holds the title of chief operating officer at the Louisiana- and Mississippi-based yacht builder, following an eight-day “retirement” in June after Trinity Yachts and Gulf Coast Shipyard were acquired by Harvey Gulf International Marine.
 
“What has changed in the last two years? In 2009 and 2010 it was understood that people took a beating in the stock market,” Smith said. “Now the market (has rebounded), so why aren’t they buying?”

While plans on the commercial side focus on the construction of LNG-powered offshore supply vessels and the construction of tank and hot-oil barges, Trinity Yachts — now the superyacht division of Harvey Gulf International Marine — has one yacht under construction scheduled to deliver in February 2016. After that 193-footer, the yard has no new yacht contracts underway.

Delta Marine has four projects underway for clients of undisclosed nationality.

Courtesy Delta Marine

“Since new construction is down and we have the facilities and manpower, we are going after yacht repair to keep the work force,” Smith said, citing five major refits performed on Trinity builds over the past few years. “We never really focused on it in the past because we had so much new construction underway.

“We still have 1,000 employees, but 850 of them are now focused on non-yacht projects. The message we need to get out to existing clients is, ‘Bring your boat back to where it was built to get work done,’ and to future clients, ‘LNG, steel, aluminum, planning, semi or full displacement, we’ve done it all.’ We have so much technology to offer to the yachting industry and we are under new management.”

Technology is what influenced one American yacht owner to build his record-breaking supermaxi Comanche at Hodgdon Yachts in East Boothbay, Maine. Despite building his previous yachts in the Netherlands, the owner chose Hodgdon for its expertise in advanced composites construction.
 
“The whole intent was to build the fastest monohull on Earth,” said Ed Roberts, Hodgdon Yachts’ global director of sales and marketing. The 100-foot Comanche launched in late 2014 and went on to break the monohull 24-hour distance record in July.

Comanche was built of 100 percent pre-preg carbon, which utilizes high-temperature, resin-infused carbon components. This required Hodgdon to transform its facility, which now boasts the largest oven in marine use, in order to “bake” the mixture of epoxies and composite fibers.

Hodgdon Yachts  transformed its facility in Maine to produce the high-temperature components found in Comanche, a record-setting monohull. 

Courtesy Hodgdon Yachts

“As turbines make their way into ships’ systems,” Roberts said, “the use of high-temperature stable components is increasing.”

Founded in 1816, Hodgdon Yachts now has five divisions and facilities: one to build pleasure craft up to 60 meters (197 feet); one for limousine tenders for the megayacht market; another fabricating interiors for other yards; a service division including a small boat yard, and a defense composites division.
 
“Defense work goes up and down depending on the contract,” Roberts said. “The large yacht division accounts for about 35 percent of the work and the other three are split more or less equally.”
 
Hodgdon took measures to create these separate facilities in the years following the 2008 economic crisis.
 
“That was the whole intent, to diversify,” Roberts said. “We are also on the smaller side of some significant shipyards. Our work force is about 135 to 150, not 300 or 400 that requires more volume.”

Looking aft in Comanche during the build process.

Courtesy Hodgdon Yachts

James Brewer, director of business development for Derecktor Shipyards, said only Delta Marine in the custom market and Westport Yachts in the semi-custom market in the Pacific Northwest could be described as booking significant work.

“Notably the strongest area of growth in the mega-yacht newbuild market is in vessels over 85 meters (279 feet), and the current limit of U.S. builders is about 85 meters,” he said.

Founded in 1947, Derecktor — which has facilities in Mamaroneck, N.Y., and Dania Beach, Fla. — has produced a full spectrum of marine vessels, including the 280-foot Cakewalk. Launched in 2010, it is the largest private yacht built in the United States in 75 years.
 
Today, Derecktor continues its refit work on private yachts but has no newbuild megayacht projects underway, having returned its focus to commercial new construction — namely, technically demanding one-off contracts. The company recently completed Spirit of the Sound, a 65-foot research catamaran with hybrid diesel-electric propulsion (see profile).

Westport Yachts, known historically for offering 85-, 112-, 130- and 164-foot semi-custom composite spec-built yachts, underwent a change of ownership in 2014 and has begun refining its product line.

A Westport worker helps craft a newbuild at the company’s facility in Port Angeles, Wash.

Courtesy Westport Yachts

“Our customers are outgrowing us and we are losing market share,” said Daryl Wakefield, Westport’s longtime president. “The Westport ladder worked well, getting customers in at 85 feet and moving them up through 112- and 130-footers. But when 50 meters isn’t big enough, that’s a problem.”

Wakefield said Environmental Protection Agency (EPA) regulations hurt the company on its 85-footers. MTU, the contracted provider of the 85’s diesel engines, at the time did not offer the Tier 3 emissions required to meet EPA standards, which meant the vessels could not be U.S. flagged — an essential option for Westport’s largely American client base.
 
“Engine manufacturers look at their market share before developing because of the money involved. Because we build on spec, we have to commit to a flag state early. If the manufacturer was not incentivized to build under Tier 3, they would skip and go straight to Tier 4,” Wakefield said. MTU went to Tier 4, but those engines were not available in time for Westport. The builder suffered in the process and was forced to halt production of what was once its most popular series.
 
Westport’s line now starts at 112 and the first of its newest models, a fully infused 125-foot raised pilothouse boat, is set to launch in June 2016. While the builder’s 112s, 130s and 164s continue to come off the line as scheduled, management is working with industry designers and naval architects to develop new series of builds between 145 and 200 feet.
 
“We are looking at the marketplace to determine the best spot for us — where are the customers focusing, what are the right amenities,” Wakefield said. “Because we build on spec it requires a fair bit of new infrastructure, real estate, capital, etc. ... We don’t want to jump too quickly, but we need to move fast.”

Westport Yachts changed ownership in 2014 and is in the process of developing a new series of boats between 145 and 200 feet.

Courtesy Westport Yachts

Westport and Trinity were not the only major U.S. yards to undergo a change of ownership in the past two years. In February, Christensen Shipyards closed its gates, just days after the launch of Missing Link, a 142-foot Custom Series yacht. Several months of rumors and stories of legal troubles ensued, followed by the announcement that the yard and its assets had been acquired by Tennessee businessman and former co-owner Henry Luken.
 
No plans have been confirmed for the once-prolific composite builder, but the situation allowed Ocean Alexander to take back two 120-foot hulls it had under construction at Christensen’s facility in Vancouver, Wash. The Taiwanese builder had created a line of 120-foot motor yachts designed by Evan Marshall to be constructed at Christensen’s facility. The first of that series launched in 2012.

“The collaboration with Christensen and Evan was a huge success,” said Sally Doleski, Ocean Alexander’s marketing manager. “We were able to utilize Christensen’s expertise. It would have been a five-year project for us to get the yard facilities ready to build at that size.”
 
The company was able to sidestep Christensen’s ordeal unscathed, returning the two 120-foot hulls to its Taiwan facility for completion.

Simultaneously, construction has begun on the first Ocean Alexander 70E (E for Evolution Series) at a facility the company recently acquired in Merritt Island, Fla. The 70-footer is the first pod-driven model to be offered by Ocean Alexander and meets the needs of an audience the company spent time researching. 

Derecktor Shipyards, with facilities in Mamaroneck, N.Y., left, and Florida, continues refit work on private yachts but is focusing on commercial projects when it comes to newbuilds.

Courtesy Derecktor Shipyards

“We decided there was a need to build a product uniquely suited for a specific market and to position it so that we’re able to meet rapid supply demands in yachts of this size range,” said Richard Allender, Ocean Alexander’s director of U.S. operations. The new facility can accommodate builds up to 90 feet and Ocean Alexander intends to meet that capacity.

In Manitowoc, Wis., Burger Boat Company continues to focus on custom projects and has introduced the Burger Family of Yachts from 112 to 144 feet. The yard also has done well with passenger and research vessels, including an 89-foot all-steel tour boat, Lucia, and the 78-foot Arcticus built for the U.S. Geological Survey (see profile).
 
Burger’s neighbor to the north, Palmer Johnson, announced in September that it was closing its yacht-building facilities in Sturgeon Bay and moving production to the Netherlands. The company, which in the past several years has turned its attention to markets beyond the United States, intends to focus on its new carbon composite SuperSport series. The first of those boats, the 48-meter (157-foot) Khalilah, was launched in July 2014. The hull was fabricated at a facility in Norway with expertise in carbon-fiber construction and then delivered to Sturgeon Bay for completion.
 
Perhaps not surprising given the global market, Delta Marine in Seattle, which has the capacity to build up to 100 meters (328 feet), reports a healthy order book — it has four projects under construction ranging from 164 to 237 feet. Due to confidentiality agreements, the yard is not able to elaborate on the type of build or client nationality.

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