Shipyards in Crisis

31 March 2009

Over the past year, the small boat-building industry has suffered the worst financial downturn since the fuel crisis of the 1970s – perhaps since the Great Depression. So it is no surprise that the current global economic situation has begun to affect large yacht builders as well.

On March 30, Reuters news agency reported that French yacht builder Couach had applied for court protection from its creditors. “The group had been in negotiations with banks about its 23 million euros in debt for over two months,” Reuters wrote, quoting the shipyard’s statement that, “the current financial and banking crisis annihilated all our efforts…” to restructure the debt. Company Chairman Andre-Jean Goimard has resigned.

Couach, which had yachts up to 50 meters in length on its order books, is a 112-year-old shipyard (formerly known as Guy Couach) located in Gujan-Mestras on France’s Atlantic coast. It employs over 300 people, which Reuters reported have been temporarily laid off.

While filing for court protection is a drastic step, Couach is not the only European yacht builder affected by the worldwide economic crisis. Reuters also reported that the Rodriguez Group, which builds the Mangusta and Leopard ranges as well as custom projects, spoke with banks this winter regarding restructuring its debt, and has postponed its annual general meeting.

Newswires have been buzzing over the past several months about the fiscal health of Italian boat-building giant Ferretti Group, which owns nine different yacht brands including Bertram, Apreamare, Ferretti Yachts, CRN, Customline, Pershing and Riva. On March 26, Reuters reported that a proposed management buyout and debt for equity swap was on the table. “The new proposals will see Ferretti’s management, headed by [CEO] Norberto Ferretti, put 70 million euros of new equity into the business, which will be topped by a further 15 million euros from Mediobanca,” wrote Tessa Walsh of Reuters.

The current fiscal difficulties in the superyacht world are not confined to Europe, of course. Rumors of financial distress at Sensation Yachts of New Zealand have been circulating since fall of 2008. On March 13, The National Business Review reported that the builder of such sailing superyachts as Mari Cha III had dodged two applications to the High Court in Auckland to have the shipyard liquidated (both were withdrawn). “The future of Sensation Yachts has been uncertain in recent weeks...sole owner Ivan Erceg has just been ordered by the Court of Appeal to pay $US 21.5 million to a former client for three unfinished superyachts,” wrote Lucy Cramer inThe National Business Review.

While most privately held custom yacht builders are not disclosing their financial health, industry sources say that orders for new projects have slowed at some of the shipyards. This has led to a situation some owners and captains might call a “silver lining” – the increased availability of new-build slots.

“In the past few years, brokers had to call the shipyards to try to find building slots,” said Laurent Perignon, director of marketing for Camper & Nicholsons, Inc. “The trend has more or less reversed, or balanced, and the shipyards are now calling brokers more than they used to. The situation is more collaborative than in the boom years.”

He said that the time between placing an order and cutting metal has shortened considerably, depending on the shipyard, and that opportunities to buy new yachts on speculation have increased.

“It has brought things back to a normal speed of business,” Perignon said.