The full-service future - Soundings Online

The full-service future

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As boats get more complex, the facilities that service and repair them respond with new technologies and specialized services.

A stroll through some of the country’s best-known boatyards provides proof that larger and more sophisticated boats require larger and more sophisticated operations to take care of them.

Read the other stories in this package: The yard that changed Newport   Portrait of a modern yard

Specialization, integration and full service have become the norm to handle all jobs. Yard workers, lift operators, painters, carpenters, mechanics, electricians, riggers, sailmakers and specialists for electronics, refrigeration, canvas and upholstery are all players in the boat-service game. Pulling them together requires intricate choreography that keeps tabs on scheduling and logistics. There’s a ton of work, so labor is in high demand.

“Except for three weeks in winter, we’ve been on overtime for five years straight,” says Roy Lopes, foreman of the carpentry department at Hinckley Yacht Services in Portsmouth, R.I.

To a large degree, servicing boats is about convenience because that’s what customers want, but it comes at a price, as anyone who is paying yard bills has noticed. These days $300 to $500 covers an hour’s consultation with a top attorney or an hour on the Travelift. General labor rates range from $50 to $100 an hour and are likely to increase, driven by the iron law of supply and demand. But as the boatyard business has become more complex, so have the issues that surround it.

From “fix it” to “service it”

“As boats get bigger and systems get more complex, owners are more hands-off,” says James Kerr, who manages the Hinckley operation in Portsmouth. Kerr, a New Zealander by birth and a ship’s carpenter by trade, has run his own businesses and worked at the yard when Ted Hood owned it. “In the past, senior foremen usually became yard managers, but now it’s all about service,” he says.

Like nannies, maids and gardeners, boatyards often are in the employ of those who possess more money than time. Therefore, yards strive to whittle down pick-up, drop-off and turnaround times so that time-strapped clients get more value — meaning more use and enjoyment — out of their boats. “To keep customers in boating, we as a service industry must do a better job of making it pleasant for owners, friends and family,” says Rives Potts, who has five America’s Cup campaigns under his belt and manages the Brewer Yacht Yard at Pilots Point in Westbrook, Conn. “Nowadays people spend all their time working hard to afford their lifestyle, which means they hire others to do the work.”

Service-orientation and proximity to customers drive the expansion of companies like Brewer Yacht Yards, with 22 operations, and Hinckley, with eight service facilities. But the growth of the big players is coupled with consolidation on the other end, with smaller yards either getting bought out or closing down. Often that’s bad news for owners and employees, and it affects the budget-conscious DIY crowd, which prefers smaller, less-hectic places and now faces fewer but tougher choices: taking their business to a larger, more regulated yard with higher lay-day fees; finding another mom-and-pop shop; or taking up golf.

Simultaneously, as boats become more complex, many do-it-yourselfers might be out of their league, because servicing and repairing such vessels requires more sophisticated tools and a higher level of know-how. “We recently vacuum-bagged a teak deck in two halves on a 121-footer,” recalls Lopes. “Fifteen years ago, vacuum bagging was considered high-tech and limited to hull construction. Today it is part of marine carpentry.”

Trades move in-house

When boats were simpler, the yard jobs were simpler, and outsourcing was the way to go. It kept the payroll down and small vendors like canvas shops, carpenters, riggers and sail lofts in business. Those were the good old days, and they are disappearing fast.

“We started to bring trades in-house so we can better control the jobs that seem to get larger every year,” explains Kerr. And he is adding new departments, like an upholstery shop and heating, ventilation and air conditioning. HVAC and refrigeration, which are ubiquitous on many boats, are rather complicated systems that require expert installation, service and repair.

Paul Kaplan, co-owner of Keefe Kaplan Maritime in Richmond, Calif., calls this “critical-path services.” As one of the few full-service yards on San FranciscoBay with deep-water access, KKMI sees most of the large yachts and raceboats that make port here. “I’m under the impression that our industry is working hard to make it as difficult as possible on the customer, yet we flourish,” he says half-jokingly.

Kaplan, who also runs a brokerage and a Swan dealership, has resorted to time and motion studies to increase his workers’ productivity. “We put a chandlery in the middle of our yard, so our workers spend less time picking up materials and supplies,” he says. “It comes down to efficiency. I can only sell as many hours as my men can work, but I can help them do more during those hours.” Best practices, Kaplan says, are near and dear to many yacht owners, who often run large businesses. “So they’d like to see that in a boat yard, too.”

Eli Dana, dockmaster at the Newport (R.I.) Shipyard, thinks that in some cases outsourcing still has merit. “We see a lot of incredible boats here, all highly complex but with different systems. But having a dozen different mechanics or electronics experts on staff isn’t practical.” Instead, the yard works with the captains of megayachts and raceboats to hire subcontractors who are authorized service partners.

Full service means that boatyards often have sales and brokerage offices as well, so they keep the customer in their fold. “If a longtime yard customer wants to sell his vessel or buy a new boat, why send him elsewhere?” Potts asks.

Brand loyalty and keeping clients’ business under one roof has been a successful strategy for vertically integrated companies with new-boat construction and service operations. “Our jetboat service package is especially popular with owners of our Picnic Boats,” says Ed Roberts, Hinckley vice president of marketing. It’s the ultimate hands-off service: Call your closest Hinckley yard to have the vessel picked up, hauled, serviced, detailed and returned to the slip at a specified time.

“It adds convenience because it makes owning and using a boat easy,” says Roberts.

Sound environmental practices

In the age of growing environmental awareness, tighter state and federal regulations are bearing down on boatyards. Compliance often requires sizeable capital expenditures, which, in part, get passed on to the customer.

“We have to manage 19 different waste streams, from storm run-off and lead-dust to proper disposal of chemicals, oil and gasoline,” says Potts. “Our power-washing filtration system is 18 years old. We’ve had it long before it was required, but now it needs an upgrade to the tune of $50,000 to $100,000.”

Potts advocates clean yards, for obvious reasons. “We need to stay on the waterfront, so we have an obligation to take care of the environment, our workers and the neighbors,” he says.

But going green (or greener) has other ramifications, too. “We have to use biodegradable and much less-aggressive cleaners, solvents and polishes,” says Keith Mayes, who manages Hinckley’s detailing department in Portsmouth. “After we finish, a 10-year-old boat has to look like new, which is what our customers expect. But now this job requires more elbow grease, which translates into more time spent on each boat.”

Many yard operators aren’t content with mere compliance. “California once had a leadership position in environmental issues, but no more,” KKMI’s Kaplan says. “I think many West Coast yards are falling behind when they could be learning by joining the American Boat Builders and Repairers Association.”

Yards are investing in clean technologies such as high-end Festool equipment for dust-free sanding, paint booths with sophisticated filtration, and proper waste management. “Compliance with regulations is not just a trend,” Roberts says. “We try to stay ahead of the curve by innovating and setting an example for the industry.”

Potts says sound practices are a “fact of yard business, and everybody must share the cost.”

The recruitment bottleneck

Without exception, all of these managers admit they are hustling to find and retain qualified and “yacht conscious” tradesmen. “As smaller yards in the area close, we inherit their customers,” says Jeff Fulcher, service manager at Jarrett Bay Boatworks in Beaufort, N.C. “In 2005 and 2006 we grew by 20 percent year over year, and we are on pace to match this in 2007. Now the challenge is finding qualified people for all the work.”

Some tradesmen who lose their jobs leave the industry, Fulcher says, while others might decide to continue as independent contractors who have little overhead and compete for jobs. “Yard work is hard and rewarding,” he says, “but it takes awhile to learn the ropes. Today, young people opt for a college education and a white-collar occupation that promises a lot of money without the toil.”

Dave Mullen, who manages the electrical department at Hinckley in Portsmouth, says yacht work is a niche business that caters to a demanding clientele, and his employees need to understand more than just their own jobs. “About 60 percent of our work supports other departments; only 40 percent is purely electrical,” he says.

His colleague Dave Frank, who has served in the Navy and the Coast Guard, recruits alumni from these services and qualified candidates from other industries. “We need yacht-conscious workers,” he says. “To attract them we must provide a satisfying, clean and safe workplace and pay competitive wages.”

Demand for labor grows with vessel size, says Kerr. “A 100-foot yacht with serious service needs can easily swallow up 40 people,” he estimates. If this happens, even a yard the size of Hinckley, with 130 employees, needs creative scheduling to keep all jobs on all other vessels on track.

Zoning laws

Zoning laws that favor residential development are an obvious concern of the boating industry because they make it more difficult and costly to hang on to waterfront locations. “Water-related land use is a crisis in all major U.S. markets,” notes Hinckley’s Roberts.

Potts concurs. “It is one of the key external challenges we face today,” he says. “Unlike boatbuilders, yards are location-dependent.” For Potts, this issue has heightened significance because Pilots Point also operates a marina with 863 slips. “Municipalities argue that waterfront property is valuable and, therefore, should be subject to higher duties, which can tax you right out of business,” he says. “However, if yards and marinas disappear, our customers pick up golf. Besides, [zoning] impacts local economies that rely on the discretionary income of boaters.”

In contrast, Jarrett Bay Boatworks is part of a 175-acre industrial park that’s zoned for marine use. As the primary tenant, the company occupies 35 acres, while the rest is home to other marine-related businesses.

Newport Shipyard escaped residential zoning in 1998 when the facility was bought by the current owner consortium, according to Dana. “Today, location is our biggest asset because we are near town, not in town, and boats can get in and out quickly,” says the dockmaster.

All agree that consolidation in the boatyard business will continue, while remaining operations grow bigger and more integrated so that they can respond to the demand for specialized services. At the same time, yards must recruit and retain qualified personnel, keep up with environmental regulations, and work with legislators to shape zoning laws. None of that will come easy or cheap, so consumers shouldn’t expect fiscal relief. On the upside, yards also try to become more efficient by implementing better — and cleaner — practices.

“We need to make it more convenient to go yachting,” says Kaplan. “And while we do that we also must give customers the best value for their dollars.”