Made in America: A closer look at the American new build market

Written by Ellie Brade

The American new build sector has been the subject of frequent scrutiny over the past decade since the onset of the 2007 global financial crisis (GFC) having endured challenging years that left the country’s construction book significantly depleted and many key players having departed the market altogether. Back in 2007 and 2008, when the American order book was at its peak with an impressive 30 deliveries a year, it would have been hard to imagine that just a decade later delivery numbers would have dropped to just four yachts delivered in 2017. But, looking to the future there remains plenty to be optimistic about and those still building in the USA remain positive about the potential for American superyacht construction. So, what happened, and what next?  

American flag from article in SuperYacht Times newspaper issue 19

PAST & PRESENT

Before looking to the future, it is important to look to the past for some context. Historically, American shipyards were always a leading force in the global construction book, having delivered an impressive 763 (704 motor, 59 sail) yachts of 30-metre +, or 13% of the entire superyacht fleet. The top builder by number of 30-metre + (98’)+ yachts delivered is Westport Yachts with 122 deliveries, followed by Broward Marine (94), Palmer Johnson (56), Trinity Yachts (52) and Delta Marine (37). Of these five, just Westport and Delta Marine currently count orders in the construction book. 

Taking a look at a slightly wider size bracket of 60’+, the top yards by numbers of yachts delivered since 1946 are slightly different, with Burger Boat Company in the lead with 215 deliveries, followed by Broward with 178, followed by Westport with 153 yachts. According to yacht historian Malcolm Wood, an interesting point to note is that of all the 60’+ deliveries made by these top three yards, less than a dozen were built for overseas owners. In other words, historically top American yards were building American yachts for loyal American buyers.

Once the GFC hit, customer confidence took a plunge and with austerity a new look the American order book suffered. Where once yards were busy with orders – both from American and international clients – a strong dollar, weak economy and lagging customer confidence all played their part in the downturn. Other major issues also had an impact. “Government regulations were the biggest challenge faced by American yards in the past decade,” says Daryl Wakefield, president of Westport Yachts. “The previous administration had no respect for our industry, had a dim view of yachting and portrayed any wealthy individual as a crook and that severely hurt the yacht and private jet industry.

With the average American-built superyacht 38.5-metres in length, American yards were also competing in the busiest build bracket, but without the price advantage, they once enjoyed. Owner buying trends noticeably changed and clients who once might have built American were turning to core European brands to build their yachts. Not just that, but many leading European yards were investing in USA-offices, focusing their attention capturing a share of this hugely important buying market. 

Today the American construction book counts 13 projects, representing just 4.5% of the construction book. Given the challenges faced by American builders, it is unsurprising that today’s order book is much reduced on past figures. Those 13 yachts in build are underway at four yards (eight at Westport, two at Christensen, two at Delta Marine, one at Nordlund). While these are the yards with actual orders, it is worth noting that there are additional yards that are actively bidding for work - Burger Boat Company is one example with recent activity counting the 2015 order and 2017 delivery of 32-metre Northland and new orders being actively sought and 26 yards in the USA have delivered at least one yacht in the last decade. In stark contrast to this small 4.5% share of the construction book, 21% of all new build projects are in build for American owners (SuperYacht iQ Report 2017) – a clear reflection in the shifting of buying trends. 

Aspen Alternative in Fort LauderdaleThe Trinity yacht Aspen Alternative - Photo by Matt Barnette

Few people are better qualified to comment on the American new build sector than Ken Denison, whose parents founded Broward Marine and Denison eventually working in the business himself before going on to work as a prolific and highly-respected yacht broker. According to Denison one notable huge change that affected American yards and their ability to remain competitive was a shift in how yachts were being built, with the use of greater numbers of subcontractors affecting profitability. “It’s not uncommon for most European yards to subcontract a large percentage of their work out and keep their payroll small, which is a smart thing, but in America, the opposite was true with most yards doing almost everything in-house,” says Denison. “Overnight that then seemed to change with many former employees starting their own companies and subcontracting and a boat we would once sell for $5,000,000 suddenly cost $7,000,000 to build, which very quickly meant we were on a par in price with Europeans and we found ourselves losing out to them.” 

Retaining quality workers in the workforce was also a challenge. “Unfortunately the kind of mentality in America is that if you are successful you are a doctor, lawyer or professional and people that labour with their hands and craft are looked down on,” says Denison. “By contrast, Europe admires this type of work, they’ll pass their craft from father to son, whereas I think today many American yards struggle to find qualified people within their own range so they have to subcontract work out, which in turn reduces the profit on a boat.

US shipyards deliveries infographic from SYT Newspaper issue 19

FUTURE

Despite the many challenges, when looking to the future there are still so many positives around the American new build sector. Yards remain and there are still orders and a good reputation for excellence in construction. Ask anyone to name the top most influential countries in the superyacht industry and it would be safe to say that America would always make that list. Other positives include a stronger economy and confidence in the market, meaning buyers are more seriously considering investment in hard assets, complemented by a new administration that is more supportive of luxury sectors.

With the economy moving in the right direction, it is important for superyacht builders in the USA to capitalise on this positive movement and remind potential buyers why the prospect of owning an American built yacht is so appealing and emotive. “The goal is to revitalise the industry and it's unfortunate that our industry has not done a better job of making it known that much of what it takes to produce a superyacht is highly skilled and capable people and hundreds of thousands of man-hours per copy, much of which is truly handmade and we need to get that message delivered,” says Wakefield. There is growing action around promoting this message and the United States Superyacht Association (USSA) is one organisation that has played a part in working towards voicing the value and high economic impact of the superyacht sector within America, under their mission statement “To promote and support the US superyacht industry and its members worldwide through advocacy, marketing and education.” 

Recapturing the market of American buyers, as well as appealing to non-American buyers, should be the biggest proactive goal as this is a source of high potential to rebuild order books for American new build yards. This involves promoting boating as a shared family activity and appealing to the next generation of buyers while also trying to attract first-time yachties. Yards are also fortunate that boating is a huge part of American culture, with nearly 12 million recreational boats registered in the USA. 

There is no doubt that the potential pool of American buyers is huge, many of whom have an intrinsic love of the sea and boating. The USA is the top country in the world by the number of billionaires (620), with 654 billionaires in North America and New York the top city by the number of billionaires (102) (Wealth-X Billionaire Census 2017). A strong combination of a more stable dollar and robust tech sector means the net worth of US billionaires is growing and the pool of American potential superyacht owners is only going to get bigger. 

There are a lot of Americans that take pride in ‘American Made’, and take pride in the product,” continues Wakefield. “They are right to believe this as the USA is capable of building to a standard and quality level matching anything being built in the world today.” Denison agrees, stressing that American yards are, and always have been, capable of incredible things. “Back in the 1980s and 1990s the styling of Europeans outflanked us at every level; American boats were very traditional, you just wouldn’t build anything else. But then Jon Bannenberg came to our [Broward] yard and things changed overnight,” he says. “We hired talented people to do our stylings, like Richard Hein who was fresh from Guy Couach and who took our product and elevated the styling while still keeping the all-important layouts and American essence. Business went through the ceiling. I think the time has come where American yards need to once again look to Europe for styling ideas, whilst still keeping the yacht layouts that so appeal to American clients.W Westport 130Westport's 39.6m W

Creating a product that is not being replicated is also crucial. “If you look at why the successful American yards, like Westport and Delta Marine, are doing well, it’s because they are bringing in craftsmen and retaining those people who have worked for them for years; they are inventing and engineering; they are investing in infrastructure; they also work quickly and efficiently, and that is reflected in the price for the client,” says Denison. “Importantly, no one is building in Europe what they are building.” Understanding the target audience is also key, with American yards traditionally building yachts that are almost wholly driven by the environments they will be used in, particularly excelling in semi-displacement style models suited to shallow cruising grounds such as the Bahamas. The evolution of product ranges is an important aspect of this, with successful yards constantly thinking outside the box and presenting new ideas to market. “Westport has stepped up to also building larger yachts to service our current clients as their requirements continue to grow,” says Wakefield.

American yards must also look to remind the world of their capability for driving innovation. “The USA still has a competitive price point over the Europeans and we still have an opportunity in custom yacht building yachts of 40-50m,” says Denison. “We still have a great playbook for a lot of people to look at in the American market and it’s going to continue to be a good spring of innovation in our product sector – I still believe that very strongly. We build beautiful boats that are truly innovative.

In speaking to interview subjects for this article it was clear that one thing that the American new build sector is not lacking in is passion, which certainly remains, and those American yards that are in the game are doing an excellent job. Developing product ranges, listening to customer requests and investing in the development of designs and technologies to match, while promoting quality American construction and the boating lifestyle are all key goals. If recent positive boat shows are any indication, with FLIBS, Miami and Palm Beach show all reporting strong events, then there is much to be optimistic about. Signing new orders is the goal, it’s just a question of whether American yards are ready for the challenge. 

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This article is featured in the most recent edition of the SuperYacht Times newspaper - the USA Edition. Subscribe now to receive your copy straight to your door and never miss another issue. 

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