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Uncertainty of U.S. election affects yachting, but it’s a cycle

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By Dorie Cox

Yachts and their support industry are affected by many types of global events including this month’s U.S. presidential election. It is a show that has turned up its volume on the world stage, but no matter how raucous it is, captains, crew and professionals in the industry remain level-headed about effects to their industry.

Their opinions cover a range of topics including finances, taxation, customs, immigration, security, travel, GPS and business trends.

Here are some thoughts from inside yachting:

“The yacht industry is fueled by business owners,” said Capt. Wes Armstrong, who has seen patterns evolve around elections after more than 30 years in the industry. “A lot of yacht owners may hold back on buying, or building and operation budgets when they are not sure how things will change. It affects how active the yacht schedule is and how much spending there will be.

“It is hard to quantify the effects of the elections; you never can,” he said. “Plus there is an emotional aspect that is even harder to gauge. And it happens every election cycle.”

Financial markets are funded by people such as business owners who have yachts, and how deeply they are affected depends on where their money is invested, he said.

“For example, if a yacht owner is invested in the medical side and there are changes to Obamacare [Affordable Care Act], that will affect his money,” Capt. Armstrong said. “The economy has been on a growth cycle, but if there is a correction, that can be a trigger.”

And sometimes, he said, elections have an effect not grounded in any actual facts or events at all.

“It may just be a perception,” he said.

Often the results of the U.S. election have gone the opposite of what people think it should, said Matthew Fisher, owner of Hydraulics Unlimited in Ft. Lauderdale.

“Take this simplified look: people think businesses should boom in Republican years, but it has actually been the opposite,” Fisher said. “The election may affect perceptions, but it might not be the reality.”

Business has been good at Bradford Marine in Ft. Lauderdale, but elections can put a damper on spending, said Tim Griffin, purchasing department manager at the yard.

“Right now, the whole town is busy, even through slow times, like this summer,” Griffin said. “We even had a run where we had to hire people. But people are scared to spend money big time around election time. They’re watching what happens to Wall Street.”

The election can affect the budgets of their customers, said Jodi and Simon Addrison of Longbow Marine in Ft. Lauderdale.

“The election affects the rich owners of our yachts because tax breaks to them make a difference,” Addrison said.

The yacht provisioning company uses a customs agent to navigate regulations, tariffs, duties, permits, licenses, or other certifications required for buying and selling yacht products.

“Changes to those policies affect yachting,” Addrison said. “It absolutely affects pricing, which in turn affect our customers. Businesses have to cover costs.”

Boyd Tomkies said the company he works for takes advantage of trade acts and business may depend on the election results. He works for Sirocco Marine, which sells and services rigid inflatable boats (RIB) including BRIG, which are manufactured in Ukraine.

“The U.S. election matters, absolutely,” Tomkies said. “We do business with the world from New Zealand to South Africa and Ukraine. It makes a difference how sympathetic the next president will be with trade relations with different countries.

“We’ve seen huge hurdles when country relationships change,” he said. “We’re 23 miles from the warfront with Russia. These relations affect trade with the U.S.”

He said current business is good.

“Now, there is so much foreign interaction, especially in South Florida where everyone comes to buy boats,” he said. “This could affect distributors and retail market. The U.S. elections can’t change things, but there are repercussions.”

Diesel Doctor owner Sherry “Sher” Ouellette said the election can have a huge effect on travel.

“Country borders won’t care if it’s a $10 million yacht,” Ouellette said. “You still better have your papers in order. It could be a positive or negative. And businesses and boat owners don’t talk about who they hire, legal or not, but that could be affected also.”

Yachts use a variety of refrigeration systems and Richard Beers supplies them as president of Beers Group in Ft. Lauderdale. He thinks the election affects business in general and his company in particular.

“One way is it could be a labor cost issue,” Beers said. “If labor goes up too fast, yacht refits will move elsewhere, or if they hear refits are cheaper somewhere else.”

He said the election may affect taxes, which, again, affect his customers.

“If taxes change for the wealthy, they will move their money around,” Beers said.

Beers’ father, Rich Beers, has seen many elections affect yachting. He previously owned Rich Beers Marine and now consults for Beers Group.

“We have seen how other elections affect the industry,” he said. “When Hugo Chavez was in power in Venezuela, all the boats came here [to the United States] for refits. And remember up until about 2008 when owners were buying boats and at the same time putting in an order for the next one?”

U.S. elections can also affect products he works with, he said.

“Trade and regulations are big issues,” Beers said. “Many products require the CE certification to be used in Europe. And like the outlawing of different refrigerants; when things like this change, it affect our business.”

Because yachts travel, the support industry works in various countries and crew carry diverse passports. Capt. Roy Hodges of M/Y Match Point, a 161-foot Christensen, said election results could affect those relationships.

“It seems like they may want more scrutiny on foreign businesses and foreign crew,” he said. “If it winds up being an issue for crew, some boats may bypass the U.S. Yachting is meant to be fun for the owner. If it ends up being difficult, then everything changes.”

Capt. Hodges said the Fort Lauderdale International Boat Show is usually quieter on election years and posts fewer sales.

“No matters who wins, uncertainty makes people hold off until they know what will happen,” he said.

Capt. Bernie Altmeier runs several boats, including M/Y Lady M. He expects that the election outcome might affect foreign travel to the United States.

“There is a very strong concern for non-Americans,” Capt. Altmeier said. “If they don’t feel welcome here they will take their business elsewhere.”

U.S. elections often bring changes in taxes that can affect the use of the yacht, for a while, he said.

“Everyone is concerned until after the election settles,” he said. “But then the yacht use won’t change.”

Med Yacht Services’ main offices are in Italy and Gustavo Hamui manages the U.S. office. He works daily with international yacht issues.

“Yachting needs open economies, open minds and open borders,” Hamui said. “Now the U.S. has good relations with the foreign workers, and it helps yachting.”

He believes that some yachting decisions are put on hold during major elections.

“Of course people are waiting to see who wins and what happens to make decisions to buy or not,” he said.

Lourdes Delgado works with Hamui and agreed.

“Yachting is big in the business of foreigners,” Delgado said. “People will think twice whether they want to build their business with the U.S. or whether they want their clients to come here.”

Security policies are on the mind of Chief Officer Rob Cutler. He recently bought a sextant to use for celestial navigation at his job on M/Y Drew.

“Policies from the U.S. can affect things like satellite navigation systems,” he said. If the U.S. decides it wants to, it can change the accuracy of GPS because the U.S. military controls the satellite navigation system, he said.

“If it’s off, and we’re near a rock without accurate ways to navigate, we’re in big trouble,” Cutler said.

Capt. Todd Rapley has always been aware of security issues when it comes to yacht travel.

“The elections do affect world security,” Rapley said. “America is seen as the police.”

He said relationships with some countries could change depending on the possibility of new policies.

“The uncertainty makes people wait to see what will happen with places like Cuba and Mexico before making travel plans,” he said.

The Addrisons, from Longbow Marine, also agree that people that use yachts are affected by changes to security policies.

“When you use your yacht, you want to feel safe,” Jodi Addrison said. “The election will have a big impact on global security. Also with tourism, how we handle the Zika virus, ISIS [Islamic State group], terrorists and racism affect who will come to the U.S.”

“Foreign people see Americans at a crossroads,” said Patti Trusel, charter broker at Pier One Yacht Sales. “This election will affect the world because we are one of the strongest in economics and the environment. This election could leave people dismal or hopeful.

“The U.S. has been a stable, unifying force. How can it not affect world economics?” Trusel said. “Smaller countries are affected by our stability. We cut a big wake.”

Capt. Wendy Umla said she has seen fluctuations in how yacht owners spend during election cycles.

“Every election we go through this,” Capt. Umla said. “People use the election to create an excuse. We can speculate all day long what the market will do and what owners are going to do.”

She said no one can be sure, but yacht owners are mindful of possibilities.

“The main impact is how it can affect the economy,” she said. “The difference could be how willing people are to expose their money. We have seen when people were nervous and scared.

“Yes, U.S. elections matter,” Capt. Umla said. “But in the long run, does it matter? No. The world is the world.”

At SMM, the maritime trade show in Hamburg, Germany, this year, Chris Jones said the U.S. elections were on people’s minds.

“That’s all they were talking about; people are nervous,” said Jones, part-owner of Spurs in Ft. Lauderdale. “There will be some shock and awe, but at the end of the day, people will do business as usual.”

But yachting is unique, said Capt. Brad Helton of M/Y Bella Lisa.

“Yacht owners are heavily invested in the U.S. elections, but not in reference to their yachting life,” Capt. Helton said. “Either way the election goes, owners will continue yachting.”

And Capt. Juan Carlos Villanueva, of M/Y Petrus II, agreed that overall, the U.S. elections don’t make that big of a difference.

“I don’t think so, we’ve been running boats through many election changes,” Villanueva said. “Whether Bush or Obama, the industry has stayed the same,” he said. “Maybe there have been some new rules and regulations, but overall, nothing will change.”

 

Dorie Cox is editor of The Triton. Comments on this story are welcome at dorie@the-triton.com.

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About Dorie Cox

Dorie Cox is editor of The Triton.

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