As I write this from my home just outside Milan, Italy has been hit the hardest by coronavirus (COVID-19) after China. The country has effectively been closed down in an attempt to halt the spread of the virus and its yachting sector provides some insight into how the crisis may impact the industry in other countries as the number of cases continues to rise throughout Europe and beyond. Photo: Tom van OossanenCertainly, events have moved on since the Italian Marine Industry Association (IMIA) claimed at the end of February that the Italian shipbuilding industry remains unaffected. “It is important to underline that the Made in Italy production continues without any problem and that orders are definitely guaranteed,” the IMIA statement said.
The crisis has already caused the cancellation or postponement of a swathe of international events, including the Dubai, Singapore, MYBA Charter Show and Palm Beach boat shows. At the time of writing, it appears next week’s St Barths Bucket is still on, but Perini Navi decided not to attend the regatta and has since suspended production at its shipyards in Viareggio and La Spezia until 25th March. Codecasa in Viareggio has also paused its activities and more yards are expected to follow suit.Photo: Merijn de Waard / SuperYacht TimesFollowing the lockdown, Italian businesses have scrambled to adjust to the emergency measures that are affecting the national economy as a whole. Many companies are paying employees from redundancy funds or encouraging staff to use their holidays to stay at home.
“Travelling is very much restricted and not advised, which has an impact on our industry, especially in terms of developing new business,” says Fabio Ermetto, CCO at Camper & Nicholsons International, who is now unable to commute to C&N’s Monaco office from his home near Venice. “Italy, with its large number of builders, is of course suffering because clients cannot travel to the shipyards. Some yards are also experiencing delays and complications in their production schedules due to the travel restrictions on suppliers and subcontractors. Most of the builders we work with are trying to overcome these delays and we are working to support clients who have projects underway.”Photo: Justin Ratcliffe / SuperYacht Times“It’s like a war,” says Vincenzo Poerio, recently appointed joint CEO of Tankoa. “We’ve created a system of rigid controls for entering the premises. All our staff and outside workers have been issued with face masks and have to respect the basic rules such as maintaining a safe distance between each other and washing their hands before and after work. Some of our suppliers from outside the region are not coming to the yard and about 10 per cent of our workforce are staying at home. Those who do come in are being asked to use their cars and not public transport.”Photo: AmicoRefit shipyard Amico&Co, also in Genoa, has introduced similar measures and posted information on its website aimed at instilling confidence in its clients and contractors. The office spaces have been reorganised into areas that are independent of each other and the communal spaces (entrances, lifts, internal routes, etc.) have been separated for use by crews and clients, suppliers and employees. All visitors to the shipyard are required to follow strict guidelines while on site.
“The last government decree [imposing further restrictions on movement] added more pressure on commercial activities, but production is continuing at the shipyard with due precautions,” says company chairman, Alberto Amico, who is confident they will remain operational. “I should also point out that the port of Genoa, like all Italian ports, is excluded from the lockdown and maritime health controls are in place. For the rest, we look to the future with realistic optimism. We have to be both courageous and confident.”Photo: AmicoMore worrying has been the dramatic effect of coronavirus on the money markets since coronavirus took hold in Italy. They reacted with the biggest fall in share prices since the 2008 financial crisis and slumped again when the World Health Organisation (WHO) officially classed the virus a pandemic and the Trump administration imposed a travel ban between Europe and the US. It’s still too early to tell what the long-term economic effects may be, but the threat of a global recession is now very real. The Italian government has responded by saying it will deploy a “massive shock therapy” to protect the economy and is setting up a support package for families and businesses affected by the crisis, although who exactly will benefit is unclear.Photo: Amico“It’s difficult to have a long-term view when we’re reacting in the short term,” says Poerio. “The real effect of coronavirus is not yet known and it all depends how long it will go on for. We build products with long lead times and shipyards rely on subcontractors travelling to the yard from outside the area or abroad. Obviously, clients have had to cancel their trips to the yard and negotiations are being delayed, although we are trying to continue discussions by other means such as teleconferencing. If the situation lasts for a month or two then we can recover quickly. If goes on for longer there is a big risk of losing contracts.”
“I feel this is just a pause in our business,” says Ermetto optimistically. “The more seriously we take the restrictions, the sooner we will get back to normal life. What I’m hearing from most of our clients is that they’ve not changed their minds about their yacht projects, they’re just postponing and are in ‘stand-by’ mode. Unlike other crises, we will know when this one is over and consumer spending can return to normal.”Photo: AmicoPrivate jet charters have seen a spike as wealthy individuals seek to escape from high-risk areas, while some yacht charter companies are promoting a few weeks aboard a superyacht as a safe haven from contagion. This overlooks the fact that the crew may well outnumber the guests and that yachts have to dock somewhere to refuel and take on fresh provisions. If a guest or crew member were to be taken ill during a charter the luxury vacation could quickly turn into a quarantine nightmare. This much is clear from the coronavirus outbreaks on cruise ships.
“Our company position is not to speculate at a time when people’s health and safety is the most important thing,” says Ermetto. “We are doing everything possible to support our clients, whether it’s trying to figure out what to do this summer, manage crew travelling issues or dealing with new-build delays. Our teams are working to assess and understand each situation and propose shared solutions.”Photo: AmicoThe pandemic is yet to peak, but one issue that will have to be addressed is how the many boat shows and other industry events that have been postponed can be rescheduled without overlapping.
“Realistically I think we’re looking at the period from September to December,” says Ermetto. “Concentrating a year’s worth of events into four or five months will be… interesting.”
SuperYacht Times - The State of Yachting 2020
Being the intelligence partner for the top shipyards and yacht brokers in the world, we have learned to analyse and track the market in great detail. Each year our leading market report is used by investors, CEOs, owners and other key decision makers to inform themselves on the state of the market and future developments. Find all the information you need on the market, fleet, construction book, ownership nationalities and much more in our report.
#weknow - do you want to know? Buy the report now for only €299!