Economic Outlook - January 2005

Decks are stacked for boat builders

Boat builders and related manufacturers employ more than 20,000 in North Carolina. Consumers here spent about $446.8 million on boats and boating products in 2003, according to the National Marine Manufacturers Association. The state’s industry is growing, Mike Bradley says, and is attracting companies to North Carolina. Bradley is director of Marine Trades Services for the Small Business and Technology Development Center, part of the University of North Carolina system.

BNC: How big is the boating industry here?

Bradley: North Carolina has about 3,000 businesses that fall into six sectors: boating service, marine construction such as docks and boathouses, marinas and boatyards, boat sales, boat-construction products and boat building. The growth is in boat-construction products and services and in boat builders, of which there are more than 120. Can you put a dollar value on the sectors? No. With one exception, the companies are privately held. Of all boats made in North Carolina, we know the value to be in excess of $200 million a year. More than $100 million of that is custom sport-fishing boats.

How much has boat building grown?

When I started as director in 1990, I could find about 75 boat builders. Since then, we’ve seen several major boat builders come into the state: Mako, SeaCraft, Rampage, Cruisers, Tiara and Fineline. These six alone employ a little more than 1,000 people. Then you have custom builders that are small — anywhere from five to 30 people. Those companies have started from within the state. About 10 have started since 1990.

What types of boats are made here?

Most are fiberglass recreational boats. Fiberglass boats range from 16- and 17-footers that cost $20,000 to 24-foot family boats that cost $30,000 to $60,000 to Hatteras Yachts’ 100-foot fiberglass boat — the biggest boat built in North Carolina — that costs more than $6 million.

What does the state excel at?

The best-known boats out of North Carolina are sport-fishing boats. To give you an idea how big this sector is: There are more than 17 custom sport-fishing boat builders in the Manteo, Wanchese and Mann Harbor area. They currently have under construction more than 30 boats over 55 feet long that have a retail value approaching $60 million. These are small companies that are building two to 10 vessels at a time. The majority of them are backlogged for one to three years.

Why sport-fishing boats?

Our boats win major national fishing tournaments where prize money exceeds $1 million. They’re faster, and the design of the boat is built for the waters where tournament fishing happens. We’re building the sport-fishing boat to get the fish fast but with the creature comforts that used to be known only in yachts. When people are paying $6 million for a boat that does nothing but fish in tournaments, they are looking for functionality and a showpiece.

Where are the boat builders?

The coast is home to 84% of our boat builders. But 4% are in the Piedmont, and 12% are in western North Carolina. The boat makers are there because of the lakes. The new ones — Mako and SeaCraft — are there because some of the facilities can be converted to boat building at minimal cost. They moved to Forest City, up in the foothills. They’re starting off with 120 jobs and going up to 300 jobs. They were interested in taking over buildings that were used in the textile industry and had a quality work force sitting around them.

What attracts companies here?

It’s halfway between the big markets of the North and the big markets of the South. It’s just more cost-effective in handling the distribution of the boats. The average size and depth of a boat is getting larger and larger, and where you have to build it is getting pretty restrictive. North Carolina offers a better value on waterfront land zoned commercial or for manufacturing and building, plus taxes and incentives.

What other sectors are growing?

The companies providing the materials, equipment and accessories that go on this boat — the cup holders, the fish finders, the electronics, the radios. There’s also metal fabrication and machine parts. Engines aren’t built in North Carolina, but companies that assemble the engines get a lot of their parts from here.

What hurdles does the industry face?

We are hearing from employers that they are hurting for a supply of workers ready to go to work on time every day with a work ethic that incorporates pride in product and company. There also are vague and sometimes conflicting environmental regulations. For boat builders, the calculations of the amount of volatile organic compounds and the ability to know what degree of compliance you’re in are extremely complicated. Air-quality regulation is divided up into regions, and some regions are more familiar with boat building than others. Water-quality regulations affect mostly boatyards and boat repair.

What about the industry’s future?

Across the board, the industry is encouraged that the tax policies of the Bush administration will continue the growth in the boat-building sector. This industry is dependent on the discretionary dollar. North Carolina is going to see some substantial growth in those companies that want to be closer to where boats are actually built.