THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, June 18, 1995 TAG: 9506170274
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Long : 173 lines
Smudged by a pasty mix of fiberglass dust and sweat, Eddie Moore smiled and waved quickly to visitors eyeing the 114-foot yacht he was helping build.
Moving along the yacht's foredeck, 30 feet above the floor of the massive manufacturing building, Moore doesn't have time to chitchat while working.
A short, powerfully built man, Moore is one of two crew leaders overseeing an 18-person fiberglass lamination team at Hatteras Yachts' plant in New Bern, N.C.
Three years ago, Hatteras Yachts was handing out pink slips to stay afloat. Now the premier boat-builder has enough work to keep Moore and 750 others busy more than full time.
Make no mistake, boat-building is back. The rebound from a double whammy of a painful tax and the recession has meant the return of good jobs to some coastal communities in North Carolina.
For proof, look no further than Hatteras' 95-acre plant just outside New Bern on the Craven River. There, the giant aircraft hangar-like manufacturing buildings are bristling with boats under construction and bustling with workers.
The scream of power saws punctuates the scene as the nearly overwhelming smell of resin hangs in the air.
Workers are logging 50- to 60-hour weeks, and Hatteras is hiring to keep up with new work, aiming to boost the plant's payroll to 900. The company builds about 200 boats a year.
Moore's happy today. He's hard at work and earning plenty of overtime to support his family in Ernul, N.C. That wasn't true four years ago.
Reeling from a 10 percent federal luxury tax on new-boat sales of more than $100,000 and the recession of the early '90s, Hatteras Yachts saw its backlog of boat orders run dry and began slashing employees. Employment at the New Bern plant fell to a low of 473 in 1991 from more than 1,000 a few years before.
Moore was one of those handed walking papers. A burly, mustachioed father of four with a bright smile, Moore, 41, was laid off shortly after the luxury tax was enacted in late 1990. He'd been working at Hatteras Yachts since 1976. A shift supervisor in the lamination section then, he saw layoffs coming. From 1990 to 1991, Hatteras saw its sales drop 65 percent.
Moore ``was one of those guys you just hated to lose, but each department had to cut a certain percentage of people, so we were losing people with 10 to 15 years of experience,'' said Benjamin T. Snead, sales manager at the New Bern plant.
Moore was lucky - he got recalled after little more than a year. But many others in North Carolina's boat-building industry were permanently displaced in 1991 as orders fell and companies closed their plants.
The luxury tax took effect Jan. 1, 1991. The ruinous legislation never generated enough revenue to pay for collecting it, let alone to replace lost payroll and corporate income tax from boat-builders.
In May 1991, Carver Boat Co. closed its Wilmington, N.C., plant, which built boats priced $300,000 to $600,000, putting 600 people out of work. Also in May of that year, OMC Corp. closed the former Chris-Craft plant in Swansboro, N.C., laying off 250.
In an attempt to eke by, Buddy Davis, a renowned custom sport-fishing boat-maker, cut employment at his Davis Yachts Inc. in Elizabeth City to 70 in 1991 from a high of 270 two years earlier. The effort was for naught as Davis Yachts hemorrhaged cash for several years and ultimately closed in spring 1993.
Congress repealed the luxury tax, part of President George Bush's 1990 tax hike, several months later. Meanwhile, the recession had eased.
``The whole industry was buoyed by that combination of events,'' said Gregory Proteau, spokesman for the National Marine Manufacturers Association.
The repeal was retroactive to January 1993, but it came too late to salvage what proved a disastrous year for the boat-building industry.
The first indication of a recovery appeared in 1994. Sales of cabin cruisers jumped to 4,200 in that year, from a low of 3,375 in 1993, according to the boat-builders association. ``Indications are that 1995 is going to be better,'' Proteau said.
Still, 1995 orders will probably be well below the peak of 13,500 new cabin cruisers sold in 1988.
``It's nothing close to what it was,'' said Davis, who has started a much smaller boat-building operation in his native Wanchese. ``I doubt it's 50 percent of what it was.''
Still, the market for big boats is booming, and that's been good news for Hatteras.
A decade ago, building a boat bigger than 65 feet from fiberglass was difficult, if not impossible. Most boats that size were wood or steel.
Hatteras was the first U.S. manufacturer to break that 65-foot barrier by using fiberglass. It began selling a line of custom motoryachts, ranging from 92 to 130 feet long, right before the luxury tax was enacted.
Hatteras recently launched the 12th yacht in the series, the ``Victory Lane,'' purchased by Charlotte businessman Felix Sabates. It also sold and started the 18th hull.
These posh vessels can cost up to $10 million and are built entirely to the customer's specifications. They take up to 18 months to build; Hatteras can produce only about four a year.
These monolithic crafts are appointed in only the best fabrics, with custom cabinetry of the finest cherry and oak and gilded furniture in the salons. The massive owner's suite of the ``Victory Lane'' features two bathrooms adorned with golden fixtures. Some crafts even have a hot tub on the flying bridge.
The lower cost and greater strength of fiberglass has helped make Hatteras the top builder of yachts longer than 90 feet in the world, according to the January issue of Showboats International.
Sales of such so-called megayachts helped sustain Hatteras through the lean years. They attracted the interest of overseas buyers, who didn't have to pay the luxury tax, and the superwealthy, who didn't care.
Two and three years ago, the ``small'' production lines, building 59-to 82-footers, were empty at the Hatteras plant, said Snead, the sales manager.
Even the Internal Revenue Service admitted that the typical buyers of those boats were simply refusing to pay the tax.
Hatteras also builds 39-to 54-footers at a plant near its headquarters in High Point, N.C., that employs about 400 people. Its base 39-foot cruiser costs more than $350,000.
Sales in those lines are taking off again. Indeed, one of Hatteras' biggest problems is finding enough workers to keep up with demand. Unemployment in Craven County is low, and skilled laborers, carpenters in particular, are hard to find, Snead said.
``It's the best job for me,'' Moore said. ``Sure, there's good jobs in the county - at Weyerhauser (a paper mill) and Cherry Point (Marine Corps Air Station), but I'm not there.''
Hatteras' best-selling model is a 65-foot ``convertible,'' which doubles as a yacht and a sport-fishing boat, Snead said. It has also sold 14 boats in a new series introduced last year of 84-to 100-foot custom motoryachts that cost $3 million to $5.5 million.
With estimated revenues of between $80 million and $120 million, Hatteras builds and sells fewer than 200 boats a year. The company is privately owned by Minneapolis-based Genmar Industries Inc.
Buddy Davis is running a substantially smaller operation in Wanchese at his Davis Boat Works. Employing about 55 people and selling about seven boats a year, Davis Boat pulls in revenues of about $5.5 million, Davis said.
Davis Boat's specialty is fiberglass sport-fishing boats of the classic Carolina hull. The design directs spray from the bow out instead of up. The boats range in size from 38-footers selling for about $400,000 to a 73-foot boat that costs about $2 million.
Like Hatteras, Davis Boat has a substantial backlog of orders. A buyer today would have to wait until 1997 for delivery, Davis said.
A lot of those orders are for its bigger models. The market for 35-to 55-foot boats is still weak.
``I think we're competing with ourselves in that market,'' Davis says of the huge market for used boats built in the 1980s. ``There's no obsolescence in fiberglass boats.'' ILLUSTRATION: TAMARA VONINSKI/Staff color photos
Hatteras Yachts' Tommy Henshaw, left, supervisor of quality
assurance, and Harold Griffin, general supervisor of production,
check one of the yachts built at the company's plant in New Bern,
N.C. The firm is the top builder of yachts longer than 90 feet in
the world, trade publication Showboats International says.
Eddie Moore, a crew leader on Hatteras Yachts' fiberglass lamination
team, was laid off in 1990 during a rough period for the
boat-building business. He was rehired about a year later.
Linda Nelson, a 17-year employee of Hatteras Yachts, works on a boat
at the company's plant in New Bern. The plant employs more than 750
and hopes to boost its payroll to 900 to keep up with new work.
Photos
DREW C. WILSON/Staff
Benjamin T. Snead is sales manager for Hatteras Yachts at the
company's New Bern plant.
Bob Gagewski of Nags Head applies epoxy to a window molding on the
cabin of a Davis Boat Works yacht in Wanchese, N.C.
With estimated revenues between $80 million and $120 million,
Hatteras Yachts builds and sells fewer than 200 boats a year.
by CNB