Visions of growth and transformation

Posted on Written by Jim Flannery
Speakers gave conferees advice about adapting to rapidly changing times.

Speakers gave conferees advice about adapting to rapidly changing times.

An improving economy should create more opportunities for the marine industry to grow this year, Maria Espino, professor of economics at St. Thomas University, said in an economic update at the Jan. 29-31 International Marina & Boatyard Conference in Fort Lauderdale.

She forecasts 3.2 percent economic growth, 2 percent inflation and 6.2 percent unemployment in 2014, compared with 1.8 percent growth, 1.8 percent inflation and 7.4 percent unemployment in 2013. Consumer confidence is up, housing prices are rising, oil prices are dropping, and indebtedness across the board — federal, state, local, business and consumer — is declining. (The Congressional Budget Office has projected a 2014 federal deficit of $514 billion, down from a high of $1.4 trillion in 2009). “What this really means is we are well placed to go into next year,” Espino says.

The U.S. growth rate is leading the industrialized world. Its projected 2.8 percent rate in 2014 compares with 1.7 percent in Japan, 2.4 percent in the United Kingdom and 2.2 percent in Canada, and far outstrips rates in Europe: Germany 1.5 percent, France 0.9 percent and Spain 0.6 percent. Asia and Latin America continue to offer good export opportunities, and China and India are expected to see 7.5 percent and 5.4 percent growth, respectively, this year.

Other expected growth rates: Peru 5.7 percent, Chile 4.5 percent, Colombia 4.2 percent, the Dominican Republic 3.6 percent and Mexico 3.0 percent. This all portends “continuing improvements in the business environment,” although Espino sees some dark clouds. She says job growth has lagged in this recovery, suggesting to some economists that we may be in a period of “stagnation” — an economic recovery without a jobs recovery. She says, too, that although the federal deficit is falling, over the long term it will balloon because federal revenue (tax collections) will remain flat while expenditures — Medicare costs and Affordable Care Act subsidies, especially — continue to grow.

Reclaiming a waterfront: the Harbor Shores development in Michigan.

Reclaiming a waterfront: the Harbor Shores development in Michigan.

“It is medical costs that are driving increased spending over the long haul,” she says. “As a society, we have to do something about it.”

She says economists also are concerned about the European recovery grinding to a halt, leading to stagnation and deflation, and the flow of capital to emerging markets shutting down as U.S. interest rates return to normal and draw that capital away. “That’s the biggest concern of the stock market right now,” she says.

The 12th annual IMBC, produced by the Association of Marina Industries and held this year at the Greater Fort Lauderdale/Broward County Convention Center, saw a 12 percent increase in numbers, making it the most successful show in five years. AMI introduced some new features this year, among them a marina design course organized with the American Society of Civil Engineers, a trends board on the exhibit hall floor where conferees could answer questions about lifestyle and business trends, new-product demos at exhibitor booths, and a marina trends exhibit based on the results of a survey of 260 marinas and boatyards. The conference featured a new marina design and engineering breakout track and 25 seminars, including six hands-on workshops.

Coping with change

Featured speakers addressed essential practices for businesses to navigate sea changes expected during the next 10 years. “There’s going to be much more change in the next 10 years than we’ve seen in the last 25 years,” Correct Craft president and CEO Bill Yeargin says.

Best-selling author and motivational speaker Steve Donahue says businesses must change their story to change their business and keep up with shifts in the marketplace. “Our stories create and perpetuate our reality,” he says. “That’s why people and businesses poke along with the same result. Their stories never change.”

Donahue, author of “Shifting Sands: A Guidebook for Crossing the Deserts of Change,” says there are three storylines a business owner should look at: the story you tell yourself about yourself (who you are and how you interpret your personal history); the story you tell others about your business (how you are unique); and the story that others (customers) tell you about yourself and your business. “These three stories can trap or transform your business,” he says.

Organizers say the event was the most successful IMBC in five years.

Organizers say the event was the most successful IMBC in five years.

Yeargin says companies need a “secret sauce” to differentiate themselves, set themselves apart. A company’s culture and the way it maximizes revenue — through creativity, innovation, quality products or services, effective marketing, a strong margin and good relationships with customers — are the main ingredients of that secret sauce, more so than managing costs and manufacturing processes, although a business must tend to those, as well.

He says it’s also essential to stress quality over a cheap price in your business strategy. “There’s some magic that goes into a higher price for a good product,” he says.

Good leaders, he says, are pragmatic. “They’re not tied to old ways or to ideologies.” They listen to others and are willing to admit they don’t know everything, even admit when they’re wrong. “What you think you know may be wrong. In fact, it probably is wrong,” he says. And they are willing to take risks — get out of their comfort zone, even way out of it — and guide the company into subscribing to a higher mission that takes its values beyond just earning profits. “You’ve got to have something bigger for your organization than coming in every day and punching the time clock.”

China’s growing pains

In a seminar on marina development in China, Frenchman Emmanuel Delarue, founder and CEO of the NDA Group and China’s pre-eminent architect of marina developments, says developers are still searching for development models that work. “Leisure boating is not part of the culture,” he says. “The yachting market is at its very beginning.”

He says several models have been tried with varying degrees of success: mega-marinas with 5,000 slips, luxury marinas for superyachts, residential marinas, resort marinas and harbor models.

“The big trend is the development of yacht clubs,” he says. The clubs are luxurious and expensive to join.

The Sanya Visum Yacht Marinas, developed by billionaire real estate magnate Wang Dafu on China’s Hawaii-like Hainan Island, has a five-star hotel, 104 villas, a posh clubhouse, a spa, a 195-slip marina and high-end restaurants. Sanya Visum is both a destination for visitors and a 700-member yacht club. A 20-year membership costs $160,000 and includes a berth, Delarue says, $324,000 for two berths. He says the marina is 90 percent full.

Many join the club but don’t buy a berth or boat. “People are looking for social status more than [boat] ownership,” he says. A lot of developments such as this are starting to appear on man-made islands and around man-made lakes, he says.

Another development on Hainan is Sanya Serenity Marina, a port of call for the 2014-15 Volvo Ocean Race with 325 slips, a yacht club, cafes, restaurants, a hotel, a shopping district, marina services, a boatyard, swimming pools and a sailing academy. The exclusive yacht club has 30 slips, a cigar bar, a quiet bar, private rooms for business meetings or private parties, a pool, a business center, a fitness center, a movie theater, a game room and a children’s playground. The cost of a 50-year membership is $275,000, including a berth for an individual; the cost is $390,000 for a corporate membership.

Delarue says mega-marinas in China are struggling and many of the yacht clubs are built on man-made lakes “out in the middle of nowhere,” so they aren’t doing well, either. Many are developer-driven, not demand-driven, and are “totally empty.”

Marinas such as the Sanya St. Regis, which is “totally integrated” with a beach, a high-end resort, a six-star hotel, resort cottages and villas, and entertainment and shopping districts, do better, he says. Wealthy Chinese “are not enjoying the boating experience so much as what is around the boats,” so the amenities support the docks, he says. China’s boating market is not mature enough for marinas to make it on their own without other attractions.

Repurposing waterfronts

In this country, industrial waterfront is receding, and communities are reclaiming those waterfronts, cleaning them up and repurposing them as mixed-used developments with marinas, homes, businesses and parks, according to landscape architect Gregory J. Weykamp and civil engineer Ronald Shults of Edgewater Resources in St. Joseph, Mich.

After years of planning and discussion, the Port of Rochester, N.Y., is turning an old steel mill property into a mixed-use development, starting with a $16.5 million, 80-slip marina. Plans are to add 157 slips later and use more of the 15-hectare mill property for a 280- to 430-unit residential development, along with a hotel and commercial and retail space. The redevelopment will be financed with a mix of federal, state and local seed money, but most of the investment will be private. The development is expected to create 300 permanent jobs and 2,500 construction jobs, and generate more taxes.

The pair say there are similar opportunities and developments under way in this country and around the world — at Keppel Bay in in a busy commercial port in Singapore; at Grand Harbor, a busy commercial port since Phoenician times in Malta; the Harbor Shores hotel/marina, golf course and residential development built on a steel foundry on the St. Joseph River in Benton Harbor, Mich.; GreenTown in Curacao, a marina and waterfront city planned to replace an oil refinery and create 16,000 jobs; and the Brooklyn Bridge Park Marina in New York, a $300 million, 120-slip marina and community sailing program at Pier 5, adjacent to the 85-acre park.

In a redevelopment, the “new transformation has to have equal or greater economic benefit than what was there before” and which is usually defunct, Shults says.

Speaking on “Preventing and Responding to Spills,” BoatUS Foundation vice president Susan Shingledecker says BoatUS is inaugurating a free online spill prevention training course for entry-level marina employees. Registration for the three-hour course is at boatus.org/spill-prevention.

Funded with a $150,000 grant from the National Fish and Wildlife Foundation, which receives restitution after spills, the training is mainly for new or seasonal dockhands who need to know first-echelon oil-spill prevention and response. The National Fish and Wildlife Foundation “wanted to do something for recreational boating regarding spills,” Shingledecker says. Training fuel-dock hands seemed a more effective way of addressing spills at the pump than trying to train boaters.

“At the end of the day, we hope this will give us cleaner waterways, reduced risks and happier boaters,” she says.

This article originally appeared in the March 2014 issue.

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