Could boatyard buyouts mean changes ahead for contractors and captains?

Oct 25, 2021 by Kevin Koenig

There is a sea change occurring in the South Florida marine industry. Boat sales have soared over the past few years, coinciding with a similar boom in waterfront housing. The pairing has made savvy investors — perhaps most famously Safe Harbor Marinas, the largest marina owner and operator in the U.S. — see the value in preexisting boatyards, as limited commodities uniquely poised to service and house all those big, beautiful boats.

In the past two years, Dallas-based Safe Harbor bought Lauderdale Marine Center and South Fork in Fort Lauderdale, Florida; Rybovich in West Palm Beach and Riviera Beach, Florida; and Newport Shipyard in Newport, Rhode Island. OneWater bought Rosicioli Yachting Center in Fort Lauderdale; while Bradford Marine, with facilities in Fort Lauderdale and Grand Bahama, was purchased by a private owner. Recently, another private owner bought American Custom Yacht Center in Stuart.

But the yacht business is a notoriously fickle and complex thatch of wants and needs negotiated by owners, captains, vendors, and others. Will big-business buyouts be able to keep everyone happy, and the South Florida economy booming? And more specifically, how will changes in ownership at yards like Lauderdale Marine Center and Rybovich affect the captains and crew who depend on them? Triton reached out to captains and other industry insiders to get their takes.

Doug West signed on as president and general manager at Willis Custom Yachts in Stuart, Florida, this past June after six years working as president of Lauderdale Marine Center. He felt strongly about what he labeled the marketplace business model championed by LMC in his time there. “At LMC we were like a shopping mall,” he said. “We had 32 tenants, plus 300 more companies who were local that did work for us. Carlyle [which owned LMC before the Safe Harbor buyout] didn’t used to charge many fees. They just charged for space and power if the boats wanted to plug in.”

And this is where West begins to speculate about the future, voicing the fears of some in the marine community who have a somewhat skeptical view of the shifts in ownership. “With Safe Harbor, I think LMC will bring a lot of services in-house: electrical, plumbing, things like that. And they’ll start charging project management fees. If contractors come in, Safe Harbor can charge head fees, per person, per day. I’m speculating here, I don’t know if they’re doing that initially, but they could do it down the road.”

Despite West’s speculations, it should be made clear that Safe Harbor has made no official indication of any major overhauls, specifically at LMC. When contacted by Triton, Safe Harbor declined to comment for this article. But in May, CEO Baxter Underwood told Megayachtnews.com, “Lauderdale Marine Center takes [the] approach [of offering] hundreds of contractors, excellent painters, excellent electricians, and more. For the captain or owner who wants to take that helm and control the different trades, Lauderdale Marine Center is the best at that.”

Dennis Foster, who runs Foster’s Yacht Services, is a repair contractor who has worked at LMC for decades. He told Triton about a meeting Safe Harbor had with the contractors to tell them how the model would work. “They’ll be offering project management. They prefer that we bill through the yard. If we don’t, they aren’t going to force us to, but they prefer it.” It’s not in place yet, Foster said, but it’s in the process, and he thinks it’s a good relationship for the yard and vendors.

“Much like Rybovich, if a boat comes to the yard and needs work, they’ll get a project manager and bill through the yard. That way boats can’t leave until the marina is paid and the subcontractors won’t wait an inordinate amount of time to get paid. The yard never got involved before, now they will be,” he said. “And they have some really top end project managers in here to make sure that goes well. I think it will be a good thing, but it’s all going to depend on how the customers like it. To be frank, it’s a big change.”

Others in the industry are also quite positive about the ownership changes. Phil Purcell, CEO of the Marine Industry Association of South Florida, doesn’t view potential head fees as a problem.

“Transparency with head fees is key,” he said. “These companies have huge infrastructure costs. They’re providing the platforms, the land, the insurance, etc. — so, tacking a fee [on for] allowing a business to grow, I don’t think that’s a bad idea. Transparency is the key to having a happy customer. You can’t lose the customer, and the only way you do that is by having standards and providing good straightforward cost estimates, doing good work, and then having good warranties after that.”

Purcell also sees crew benefiting from the added capital infusion at the yards, particularly during longer refit stays. “I think all these changes will be positive for captain and crew,” he said. “Rybovich led the way. They treat the crew like they treat the owner. And now other companies are realizing that the crew will be at the yard a lot if they’re going to be doing refits. So, they have fitness centers, restaurants, and transportation around the yard and to downtowns. These big companies don’t want to change the yards, they want to grow them. And what will grow them is positive word of mouth from the crews.”

Purcell and Foster are far from alone in their positive assessment of the developments. James Brewer is an industry stalwart with 42 years in the business, 30 of them at Derecktor and the rest at Rybovich, Broward, and most recently Roscioli, which itself has been purchased by OneWater, a public company that trades on the NASDAQ. This is not his first rodeo; he worked at Rybovich when Wayne Huizenga Jr. bought it in 2004. “I experienced the first iteration of these sorts of buyouts with Huizenga at Rybovich,” Brewer recalled. “The capital infusion helped raise the bar to improve the capability and the capacity of the shipyard and improve the overall customer experience. At the end of the day, I think that’s what all these acquisitions will end up doing. Our goal, and the goal of every company that’s been acquired, is to make sure there is an outstanding customer experience.”

Like most of the businessmen to whom Triton spoke for this article, Brewer sees no losses for either the yards or their clients. “The big companies come around because boat sales are at an all-time high, both new and pre-owned, and the companies realize that these boats will all need to be serviced. But for customer retention, the customer experience, of course, needs to be outstanding. Plus,” he added with a chuckle, “waterfront property is never a bad investment.”

But what about the captains, the sought-after customers that will bear the brunt of the changes, be they positive or less than that. How do they feel?

Well, as with most things in life, opinions vary.

Capt. David Marks has been wheeling the 150-foot Westport Bouchon for three years. He shares some of his fellow captain’s concerns. “We’ve used Lauderdale Marine Center for our last few refits because of convenience and cost. I worry that with Safe Harbor taking over, they may lose some good people that we’ve worked with for years. My greatest concern is that once they have a monopoly, they might not want to play ball anymore. But that remains to be seen.”

Not every captain shared similar reservations, however. Alan Tookey is a Lauderdale-based skipper with 34 years in the industry. He currently works freelance on anything up to 3,000 tons. “I don’t see Safe Harbor and them affecting the yards too much. It depends who you speak to, though. I understand the business models may complement each other and adjust accordingly,” he said. “I don’t think, for example, it would be great if LMC switched to full service. People go to LMC so they can use their own vendors. I don’t see any need to change that. But if the yard were to switch to a more full-service model, and the prices go up, will that really change anything? The boat owners are richer than ever. And there’s nothing out there that will drag away the business from South Florida. They’re not going to Europe. I look at it this way. It will be like in Nantucket, where if you want to stay on the island, it’s $12 a foot to dock. If you want to stay 50 miles away, it’s much less. It’s a free market.”

Tookey’s comments point to something that has always been a boon for the yachting industry. It’s a place inhabited by smart, business-minded people, many of whom that have mastered the machinations of capitalism and capitalized on inefficiencies in the market. And in the end, the buyouts may very well be great for everyone involved. But if they aren’t great and the customer isn’t happy, rest assured, this is a world that relishes a good market correction.

 

 

 

 

 

 

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