In Uncertain Times, Yacht Industry Keeps Afloat

(Milwaukee Journal Sentinel/MCT ) -

For about $150 million, Wisconsin yacht builder Palmer Johnson Inc. will sell you a mansion on water that’s six stories tall and has eight guest cabins, a swimming pool with waterfall features, a retractable helicopter pad and a docking station for a six-man submarine.

The Palmer Johnson World even has water cannons to defend against pirate attacks.

The primary living quarters cover three decks on this 267-foot yacht that’s still in need of a buyer. There also are accommodations for 27 crew members.

Although the World was built in Norway by a sister company to Palmer Johnson, other Wisconsin-made yachts have remarkable features of their own. Yacht building is an important niche in northeast Wisconsin, where the brands include Palmer Johnson, Carver, Marquis, Burger, Cruisers and Rampage. The industry also supports dozens of suppliers, including companies in the Milwaukee area.

And after the global financial crisis that hit yacht building hard, the high-end boat business is experiencing a slow recovery. Innovations include the use of carbon fiber materials, to complement new hull designs, and the creation of smaller yachts appealing to a new breed of customers in China.

Many of the wealthy buyers come from overseas, including Russian billionaires in the oil and gas industry.

“We have always said thank G-d for the people who can afford to have these kind of luxuries, because it keeps us working in our little town in Wisconsin. When they stop spending, it hurts everyone,” said Palmer Johnson President Mike Kelsey.

 

DESIGNED FOR SPEED

Palmer Johnson unveiled one of the largest carbon-composite motor yachts in the world this summer, built at its 96-year-old shipyard and valued at tens of millions of dollars.

The company wouldn’t reveal the exact price or the buyer’s name, but said the 150-foot yacht was on its way to the Mediterranean Sea after some tests on Lake Michigan.

Designed for speed, the yacht was made from lightweight carbon materials that help reduce by 50 percent the power needed to propel it through the water. It has a top speed of 32 knots, or about 36 mph.

“In order to realize what this new hull design is capable of, we needed to use the lightest, strongest material available,” Kelsey said.

It took 18 months to complete the carbon-fiber yacht. Palmer Johnson has a contract to build a second one, and it also has several aluminum-hull boats under construction at the shipyard that employs between 165 and 200 people depending on the workload.

That’s about half the number of employees the shipyard had in 2006, before the yacht industry practically sank in the global financial crisis.

Palmer Johnson’s business hasn’t recovered to pre-recession levels, but neither has anyone else in the industry, Kelsey said.

“I am not certain that we will ever again experience what we had (in 2006), but … we are all happy that there’s still work and jobs to be had in this industry,” he said.

China, with more than 90,000 lakes and 11,000 miles of coastline, represents a huge potential market for marine-product companies, according to a U.S. Commerce Department report.

Brunswick Corp., the parent of Mercury Marine, developed China’s first private boating club. Chinese delegations have come to Wisconsin, once visiting the Milwaukee Yacht Club, to learn more about recreational boating.

Many of the recreational boats in China are midsize sports cruisers, or entry-level yachts, that don’t necessarily leave the dock often. Instead, they’re used to entertain guests at the water’s edge.

The boats are big enough to have a climate-controlled cabin and other creature comforts such as a retractable sunroof. Those are selling points for Cruisers and its Cantius series of yachts, which range in length from about 31 to 54 feet.

Chinese boaters can do everything they want in a boat under 50 feet, said Jon Viestenz, Cruisers product manager.

Another Wisconsin yacht builder, Burger Boat Co., makes custom yachts more than 100 feet long. It typically takes a couple of years to complete one of the vessels, which cost millions of dollars.

Burger has built yachts for clients in the Middle East and Russia, as well as some of the world’s richest sports stars. Sometimes called the Rolls-Royce of boating, the yachts have been adorned with gold fixtures, marble floors and exotic-wood interiors.

It’s been about four years, though, since Burger finished a custom yacht. Meanwhile, the company has turned its attention to commercial passenger vessels, including a sightseeing boat in Chicago, and it’s also building a U.S. Geological Survey boat.

“We made a decision that commercial vessels need to be part of our future, and we started a marketing campaign around the Great Lakes. We don’t have a yacht under construction now, but we are seeing an uptick in inquiries,” said Burger spokesman Ron Cleveringa.

Naval architect Bill Prince Yacht Design does projects worldwide. The firm’s designs have been featured in SuperYacht magazine, and one of its designs, aimed at the Asian market, was modeled after “gill net” fishing boats that once plied the Great Lakes.

 

A VERSATILE VESSEL

And then there’s Palmer Johnson’s World, which CNN said was on the market for $150 million a few years ago.

Powered by four Rolls-Royce diesel engines, the steel-hull vessel has ice-breaking capabilities, meaning it could traverse polar waters as easily as lay anchor off the Mediterranean coast.

The World can travel up to 10,000 nautical miles on 69,000 gallons of fuel, making it suitable for ocean crossings. It’s a luxury home on the water, complete with comforts, rooms and amenities, including a piano foyer, and plenty of space for toys such as a Jet Ski, sailing dinghy, kayaks, bicycles and fishing gear.

Final design touches on the World won’t be made until the vessel is sold.

“We are working with a couple of clients, but what each client wants is completely different. So we can’t do anything further with it at this point, until we have a contract,” said Palmer Johnson’s Kelsey.