When commercial fishing and seafood processing foundered in the mid-’90s, industry hunters turned to another traditional maritime trade to help buoy the coastal economy. But now boat building — 2,500 businesses statewide, including parts and service suppliers — faces foul weather after high gasoline prices, then recession knocked the wind out of its sales.
Now in its 30th year, Washington-based Fountain Powerboat Industries Inc. was forced to seek harbor in Chapter 11 bankruptcy in August. After hoisting sales to a record $79 million in fiscal 2006, it hasn’t made a profit since, losing about $1 million in its most recent quarter, with revenue down 60% from a year earlier. Manufacturer of some of the most expensive powerboats in the world, it owes $20 million and is seeking an investor to bail it out. Founder Reggie Fountain Jr., the speedboat racer who still runs it, hopes the company will emerge from bankruptcy this fall.
“More of the smaller companies are going to face what Reggie faced,” says Mark Bradley, director of boating-industry services of the N.C. Small Business and Technology Development Center in Raleigh. “The industry will eventually turn around, but no boat-building entity is going to ever be back where they were.”
Statewide revenue for the sector totaled about $500 million in 2007, the last year for which a firm estimate is available. Employment in boat building and supporting industries fell from about 30,000 in late 2007 to fewer than 20,000 now. Last year, Fountain Powerboat told the state it planned to add 250 jobs, boosting employment to 700, and was promised a $12 million grant spread over five years. Instead, it began cutting jobs and has only about a dozen employees.
Even custom builders are taking hits. “It took longer for them to feel the pressure because their boats take a year or two to build and they have contracts from buyers,” Bradley says. “But now we’re seeing cases where the boat is 60% completed and the purchaser says, ‘That’s it, I’m done. I can’t pay for it.’” The state has about 40 custom builders, whose boats sometimes cost more than $5 million.
Bradley is advising builders to diversify. Those using molded fiberglass or composites, for example, might produce automobile components or seek military and aerospace contracts. He’s also courting foreign builders who want to locate in the Eastern U.S., and he’s had interest from South Africa, Germany, Australia and Canada. But he expects tough times to continue. “We’re already down about 20 companies. We’ll be down a few more before this is over.”KINSTON — Sanderson Farmsbegan construction of a $121.4 million factory. The Laurel, Miss.-based poultry processor had delayed the project 13 months because of the poor economy. It will begin production in 2011 and employ about 1,500.