Saturday, July 5, 2008

Some Parts of the Economy are Booming - Like Yacht Building

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Since I don't want to make the blog a place of constant sour news I'm always on the look out for slivers of good news.... we've been talking for a long time about the weakness in discretionary spending and just hit recently on the troubles of those (normal folk) who buy normal boats for normal fun [Jun 30: Listen to the Companies, Not the Government Reports - Brunswick Corp (BC) and Smithfield Foods (SFD)] However, there is always a bull market somewhere! Such as the nuevo rich [Jun 27: Global Millionaires - the Shift from West to East] and the booming market for super yachts. Our global gilded age continues - the gap between rich and middle class will widen. (poor - non starter unfortunately - falling farther and farther behind). I look forward from writing this blog from my super yacht a decade from now ;)

While writing this piece, my research let me to such fascinating sites as The International Superyacht Society, Superyacht.com, and Superyacht Times.com. In case you are in the market here are some for sale. Follow Me 4 caught my eye as a potential purchase... in 2028. (grin) If any Super Yacht owners find my blog, have I mentioned I'm looking for pledges for my future mutual fund? ;)
  • Fuel prices are soaring and credit markets tightening, but the super-rich are still lining up to pay tens of millions of dollars for mega yachts. The well-heeled buyers of the floating mansions are increasingly coming from emerging economies — in the Middle East, Russia and South America. The source of their wealth runs the gamut — technology, venture capitalism, new industries. And, yes, oil.
  • These days, the biggest problem at Trinity's shipbuilding yards is having enough workers to handle the 24 custom contracts the company currently is working for the luxury vessels.
  • "Nobody is buying these yachts because they need them," said William S. Smith III, Trinity's vice president. "They're buying them because they want them."
  • Another builder, YCO Deuxil PLC, has nine yachts under construction — more than double from last year. Sales for the first five months exceeded the entire amount for 2007, the London-based company said.
  • There are about 3,800 yachts over 80 feet in service around the world now. About 1,800 of those have been built since 2000. The study predicts that that by 2010, there will be 5,000 such yachts on the water.
  • "There's not enough supply," said Ed Slack, editor of International Boat Industry. "It takes two years to build some of these yachts and the demand hasn't slowed down."
  • So far, Trinity's largest vessel has been a 192-foot yacht that would carry a replacement price of $60 million to $65 million. The company is working a 242-footer that will have a price tag in excess of $90 million.
  • Francois van Well, chief executive of Feadship America, said about 50 percent of his company's business comes from the United States, but more buyers are coming the rest of the world.
  • And it's not old family money. "Most of our clients have earned their wealth in one generation," van Well said.
  • And these vessels don't depreciate in price. "We have one owner and this is his fourth boat and he's never taken delivery," Dane said. "Rich people don't want to wait on a boat and they'll pay a premium. This owner has taken that premium and moved to the back of the line."


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