Strong euro drives foreign sales of U.S. yachts
By MARTHA BRANNIGAN
Tom Lewis, CEO of Broward Marine, has been courting new business in Europe lately, two trips in six weeks, making meetings in London and boat shows in Monaco, Genoa and Cannes.
The turf is a bit new to Lewis, a South Florida developer turned yacht builder, who pauses and wonders aloud whether the French resort 'is `kahn' or 'can?' '' But he's clear about his mission: Seize the moment to expand the company's reach as the dramatically weakened dollar makes U.S. boats look like outsized bargains overseas.
The U.S. dollar has plunged 20 percent against the euro since the beginning of last year to hit an all-time low last week and is down about 4 percent since the beginning of September. It's taken similar big dips against other currencies, making U.S. goods cheaper to export.
Consider Broward Marine's $17.8 million yacht: Earlier this year, it cost about 13.5 million euros. Now, it goes for about 12.5 million euros. ''I haven't changed the price,'' says Lewis. "It just doesn't take as many euros today.''
Much of the U.S. boating industry is in a slump, with the number of boats sold expected to sink about 10 percent this year on top of a 5 percent decline last year, according to the National Marine Manufacturers Association, a Chicago-based trade group.
WELL-HEELED FOREIGNERS
But as many American boaters retreat to the sidelines to lick their wounds over the housing slump and the subprime mortgage meltdown, well-heeled Europeans, Canadians, Latin Americans and Middle Easterners, whose currencies are stronger and economies often faring better, are taking advantage of attractive U.S. prices.
''We're selling a lot more product in Europe, Australia and the Pacific,'' says Thom Dammrich, president of NMMA. "The export market is what's keeping a lot of manufacturers in good shape.''
It's not only new American yachts that are in the international spotlight. Many foreigners are scouring U.S. marinas for used yachts, especially foreign-built vessels that have the electrical systems and other design details they're used to -- and shipping them back.
''We imported them three, five, six years ago. Now Europeans are buying them and bringing them back to Europe,'' says George Jousma, president of Allied Richard Bertram Marine Group, a Fort Lauderdale-based yacht dealership. "It's worth the freight and duties because of the exchange rate.''
Tony Ellis, a British businessman, came to Fort Lauderdale in March to shop for a used yacht to take advantage of South Florida's large selection and the favorable exchange rate. He settled on a 66-foot Symbol Pilothouse built in Taiwan and shipped her to Turkey, where he has a home; he keeps his boat on the Aegean Sea.
''Fort Lauderdale has a good choice of secondhand boats and the dollar was at two to the [British] pound,'' says Ellis. "So financially it was very attractive.''
Keith Maling, a Miami yacht broker with Ocean Style, says foreign clients such as Ellis "are coming in droves. They're keeping our industry afloat. I'm sure you're going to see a lot [of international shoppers] at the Fort Lauderdale boat show.''
HIGH-END IMMUNITY
Maling, who is getting referrals from his firm's London office, says the bulk of interest is in three- to six-year-old yachts in the 60-foot to 120-foot range. The top end of the market is largely immune to the vagaries of the economy, as the richest shoppers simply buy what they want without regard to price.
Most recently, sales of U.S.-made yachts were brisk at the 2007 Genoa Boat Show, which ran Oct. 6-14, according to Steve Gow, a Genoa, Italy-based broker with Mayfair Yachts Ltd.
''The weak dollar is making it very attractive for Europeans to buy American-built yachts,'' says Gow. "The yachts built in America are sought after. It's a bit like why you like an Italian suit or tie or handbag. It's a quality product.''
Despite the boost expected from overseas, most industry insiders are cautious about the prospects for the Fort Lauderdale show, which is one of the industry's most crucial in initiating sales and relationships.
While the super wealthy continue to snap up ever bigger and fancier yachts, many of the more modest sports fishing boats and cruisers, especially those below $700,000 in price, are going begging.
The big reason is the boating industry tracks the housing market. As that market has soured, many U.S. consumers feel less affluent and are less willing -- or able -- to borrow against the equity in their homes. One of the first things to go are the toys.
INTERNATIONAL SALES
''I'm not overwhelmingly optimistic. I don't think it's going to be one of the best shows,'' says Jousma, whose company has been offsetting tepid U.S. demand with solid sales to clients in Central and South America.
''We've had multiple sales into Brazil, Chile, Ecuador, Venezuela, Mexico and Panama,'' adds Jousma. "That's been a trend over the last 18 months.''
Boat makers and brokers around the country are similarly boosting their international business. Erik Nelson, national sales manager for Carver Yachts in Pulaski, Wis., says the weak dollar has ''substantially helped sales'' at its sales facility in Monaco, which showcases its Carver and Marquis brands. ''We're seeing the same thing from Canada,'' he says.
The Canadian dollar recently hit one for one with the U.S. dollar, its strongest level in more than 30 years.
Carver's international sales now account for roughly a third of the company's business, compared with 10 percent to 15 percent in years past, Nelson says.
NO LAYOFFS
Viking Yacht Co., in New Gretna, N.J., says a spike in international business has helped the 43-year-old private boatmaker stay busy enough to avoid laying off skilled workers who would be hard to replace when domestic demand rebounds.
Viking, which builds yachts in the $1 million to $5 million range, estimates its international sales have doubled to 25 percent to 30 percent of total sales over the last 18 months as it has stepped up its foreign focus.
Peter Frederiksen, Viking's director of communications, says the company is making a promotional video in English, Italian, French and Japanese. ''We have dealers in Spain, Australia, Dubai, Venezuela, England, Italy, Panama and Japan,'' he says.
U.S. boat makers do face some hurdles in marketing overseas. Europeans and other foreign buyers have different tastes and needs in boating. For one thing, the electrical service throughout much of the world is 50 cycles, versus 60 cycles in the United States. And Europe adheres to different certification standards.
Even layout preferences differ. U.S. models often have an open galley, for instance, while Europeans tend to prefer a more separate cooking area, brokers say.
OVERSEAS IMAGE
Having a presence overseas is also key. Broward Marine is in the process of hiring a sales representative who will be based in the south of France. The company had a display in the lobby of the Hotel Carlton Cannes for the boat show last month and ran its first ad in a French yachting magazine. Next year, it intends to have models on hand in Europe for shoppers to eyeball.
''U.S. yacht buyers are 30 percent to 35 percent of the total world market,'' says Lewis. "That leaves a big segment of buyers in Europe and the rest of the world.''
Broward Marine, whose yachts start at around $14 million, sold a fancy yacht last year to an Englishman who plans to keep it in the south of France. That buyer in turn has steered another prospective client to Broward Marine.
Says Dan Goodstadt, the yacht maker's vice president of sales and marketing, "He's become our best cheerleader.''
-PowerBoat Guide Newsletter
