Viking Yachts CEO Pat Healey gave the keynote presentation at ABBRA’s business leader reception yesterday at Fort Lauderdale International Boat Show. In a 2012 article, he was quoted as saying “You have to go out and use your boats to understand what your customer wants.” He practices that philosophy, working during the week, fishing on the weekends. Here are the highlights of his presentation and conversation with attendees, mostly business owners in the boat building and repairing part of the industry:
Healey: I love boat shows. This is an amazing industry; it’s all I know.
At 13, I was sweeping the floors, and going to the plant on Saturdays with my dad. I just fell in love with fishing. After college, I joined the company in sales.
In the late 1980s, we bought the Gulfstream brand and were building in St. Petersburg as well as in New Jersey. We were successful until we ran into the luxury tax. It’s something we all have scars from.
But going through that gave us the blueprint on how to succeed in the last six years. With the luxury tax, we were down for a count of nine, but we got up. We didn’t building less than about $500,000 at that time, so it hit us hard. Smaller companies building about $100,000 did OK.
We came out of ’91, shut down St. Pete and put everything on a barge back to New Jersey. That’s when we created a new convertible model and new sportfishing boats.
What it taught us was that development was the way to go. We’ve got to be innovative and come out with new designs. We invested $50 million to create 15 new models over the past six years, and we now have a $200 million backlog in retail sales.
We’ve got to reinvest in our companies, bring our facilities up, get our people where they need to be. Having the right people is how we get to success.
Of the nearly 80 boats we’ll build this year, 40-45 are going to customers who already have our brand. We’re taking the time to build our brand and our company. Patience and time is what it takes.
I don’t have any friends outside this industry, and that’s OK with me. I work all week and go fishing on weekends. I’m all in.
What do you see as the future of the industry?
I think we’re going right back to the great days of the early 2000s. In ’91-’93, all the big manufacturers were absolutely knocked down. We never thought we’d ever see in a million years that the industry would come back from that. The ’70s were hard, too, with fuel prices, but it did come back. And it will again. I’m bullish that we will absolutely come back. Three years from now, this business will be as crazy as it was.
We built 110 boats in 2007, and we’ll build 78 this year. About 95 is our top, because of size. Profits are squeezed, there’s no doubt. But that’s where your employees come in.
As a builder, I sit down with the CEOs of all kinds of industries. Big business has never been in a better position than it is today. They’re driving entrepreneurial development. There might be a player or two less, but there will be stronger companies.
In 1991, we had 22-23 dealers all across North America. Now, we have nine dealers with 30 locations. We have relationships with fewer, stronger dealers versus having every geographical area covered.
There’s lots of foreign investment in the boating industry today. We call that love money; they’re hobby investments. And it will be the undoing of several businesses. You can’t come in and say you like boats and invest in a company. It won’t work. You’ve got to live it, eat it and sleep it.
You are looking for 150 employees. Where will you find them?
We are 18 miles from Atlantic City, so my job file of applicants has never been bigger. All those casinos had electricians and construction workers. Job fairs are tremendously effective. You have them on a Saturday and you market them well. You open the yard on a Saturday, why? Because you want the employed, not just the unemployed, the employed guy who is working but who might not be the happiest where he is. And you do a lot of training. Turnover is tough. It’s hard for us right now in fiberglass. After years of long-term guys, we’re seeing turnover of 50 percent in fiberglass.
How does someone get to be an approved vendor?
Not one of our models in the show today was in the show in 2008. We can’t do that without our vendors, bringing us new ideas. But they’re always systems. I’m just trying to control warranties. Fifteen years ago, there were 150 systems on a boat. Today, there are 800-900 systems.
What’s the future of Viking Yachts?
My kids are getting ready to take over. My sons are 20, 21, and they love the business. They’re in college. One’s an accounting major; he’s outgoing like me, a surfer and fisherman. The other’s a marketing major.
I was a marketing major for one day at Rutgers when my uncle called me in. He told me to be an accounting major. He said, “We’ll teach you all the marketing you need.”
My cousins and I bought the company from my dad and uncle in the last two years. It’s sad but you can’t gift a family business anymore because of the corporate taxes.
So 25 years from now, it’ll be even better than ever. It’s our job now to teach the young guys and make it happen for them.
Lucy Chabot Reed is editor of Triton Today, firstname.lastname@example.org.