Viking stays steady in rough waters - Trade Only Today

Viking stays steady in rough waters

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70-foot convertible boosts business at New Jersey builder, which has recalled 275 workers

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Sitting at a table under the Viking Yachts display tent, Pat Healey had 12 good reasons to smile broadly on the last day of the 2010 Fort Lauderdale International Boat Show. His team had sold 12 Vikings, and only one had gone to a current Viking owner. The others bought boats across the Viking sportfish line — at least one of every model from 42 to 82 feet, priced from $1 million to $6.2 million — totaling $33 million in sales. “This show has been tremendous,” the Viking executive vice president said that day.

As the 2011 show in October approaches, Healey can look back on a pretty good year despite the late-summer debt crisis and stock market volatility. Viking introduced its 70-foot convertible last October at the Fort Lauderdale show. It expects to deliver its 11th hull of that model this October. The New Gretna, N.J.-based builder has called back 275 employees during the last year, increasing its work force to 875. The turnaround has been welcome at a company that had seen its labor force dwindle from 1,400 to 600 during the recession.

Owned and managed for all of its 47-year history by the Healey family — brothers Bill and Bob, and now Bill’s son Pat — Viking has prospered in good times and weathered bad ones with a potent mix of brand loyalty, continuity of family involvement in the business, and strong personal relationships between the family and its customers. “Through good times and bad, these factors are a constant and will remain so,” says Peter Frederiksen, Viking’s communications director.

Pat Healey says Viking has been fortunate. It had a backlog of big-boat orders when the bottom fell out of the market in the spring of 2008. Most of those orders held firm, carrying the builder through 2008 into 2009. He says orders in the fall of 2009 were pretty good, but that purchases came to a “screeching halt” in January 2010 amid the national debate about health care. “That put my customers in gridlock,” he says.

It remains to be seen what effect the debt crisis and market jitters will have on business.

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The economy of the last few years has dealt Viking a blow, as it has every builder. Healey says his customers can afford to buy his boats in good times and bad, but they get skittish when they think government is overextending its reach. “They say, ‘Here we go again. Government’s getting into my business,’ ” he says.

Healey says politics affects business for good or for ill.

Market leader

The market for convertible sportfishermen is not large — maybe 300 boats in a good year, 100 in today’s economy, Healey says. He says Viking has about half of that market.

Healey, 52, sees Viking as an industry bellwether. Its boats are at the top of their class. They are tough, yet luxurious. Their customers are affluent. They are serious boaters and anglers. They are loyal Viking owners. Healey says his clients are among the first to get back in the game and look for a new boat when bad times wind down.

He believes greater stability in the used-boat market has helped fuel an uptick in demand for new boats. “Prices of used product stabilized last spring,” he says. “In some models, we’re actually seeing boat prices rebound 5 to 10 percent.” This enables new-boat buyers to get better trade-in value, an important incentive for buying a new boat, he says. His prediction: another year of slow growth, followed by an industry-wide upswing in sales by the 2012 Fort Lauderdale show.

Healey says these are not the worst times Viking has seen. During the luxury-tax era of the early 1990s — an era in Viking lore as disastrous to its fortunes as the Mongol invasions were to 13th century Europe — Viking had to shut down its plant for nine months. A 10 percent tax on luxury goods, including yachts, though aimed at the rich, led to job losses for many workers in luxury-product businesses, as higher prices drove down sales.

During the recent recession, “We kept at least two product lines going all the time,” says Healey. Just as important, Viking has prepared for the recovery since the recession started, investing $7 million in research and development, he says. All but two of its convertibles are new designs introduced since 2008.

Viking launched a 42-foot convertible with Cummins MerCruiser Diesel engines and Zeus pod drives and a conventional-drive 70-foot convertible at the 2010 Fort Lauderdale show. The builder will debut a 66 convertible at the show this year (Oct. 27-31) and an enclosed-bridge 66-foot convertible in February at the Miami International Boat Show.

Healey says a new 50-foot convertible with ZF 4000 pods was at the Mid-Atlantic $500,000 and Pirates Cove tournaments in August, and will be showcased this year during the Fort Lauderdale show. The pods are fuel-efficient and make sense at the smaller end of the line, he says, where they give an owner/operator greater maneuverability and ease of docking and the confidence to move up in size to a Viking sportfish.

Healey says the Viking formula for success isn’t complicated: good construction and performance, attentive service and a tireless drive to innovate. Upholding the family reputation also is a strong motivator. The Healeys are proud of the boats they build. “We’re boatbuilders,” he says. “We just build boats. We make the best boat we can. We go out and sell them and fish them. The business side has turned out OK, but we’re driven by boatbuilding, not a boardroom.”

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Remarkably, Viking never operated under a rigid budget until this year, Healey says, stressing that the family makes decisions nimbly and entrepreneurially.

Investing in service 

The Healeys also have made some shrewd moves. Viking is vertically integrated, making as many of the boats’ components as it can in-house for quality control. Its latest acquisitions: Palm Beach Towers, which builds aluminum tuna towers, and Atlantic Marine Electronics, which installs and services navigation, communication and entertainment systems from offices in New Gretna, and Riviera Beach and St. Petersburg, Fla. The St. Petersburg office does installations from the west coast of Florida to Texas, and in the Caribbean and South America.

The builder also has invested in three service yards: the 250-slip Viking Yachting Center in New Gretna, the Viking Yacht Service Center in Riviera Beach and the nearby Viking International Yacht Center, which houses the tower and electronics businesses and Viking’s boat export center.

The yards give Viking owners North and South locations for warranty, repair and renovation by company-trained technicians, again reflecting Viking’s practice of doing as much work itself as possible. The Florida yards alone represent a $30 million Viking investment in serving its customers, Healey says.

The company also hosts its own Viking VIP boat show at the yacht service center in Riviera Beach before the Miami show. Healey invites 600 to 800 potential customers to go out on 60 to 70 sea trials on Viking yachts and browse the displays of about 40 vendors. Viking serves breakfast and lunch and gives invitees the royal treatment. “It’s a wonderful event,” he says. “It allows us to service our customers.”

Viking is a strong supporter of sportfishing tournaments, which showcase its boats while raising money for the Recreational Fishing Alliance, an organization that advocates for sport anglers — again, with energetic support from Viking. The Healeys believe it’s their job to make sure their biggest customer can keep fishing. “We want to make sure the angler has an active voice in Washington,” Healey says. “We are the Bill O’Reilly of fishing.”

In 1995, Viking partnered with Princess Yachts International, a Plymouth, England, builder of luxury performance cruising yachts from 42 to 130 feet, and began distributing the sleek, Euro-styled cruisers in North America, the Caribbean and Central America through its Viking Sport Cruisers division, which customizes the yachts for the U.S. market.

The partnership has worn well, giving Princess entry to the United States and Viking entree to clients who like the look and feel of European cruisers. Before the 2010 Fort Lauderdale show, Viking announced that Princess would market the yachts under its own name instead of as Viking Sport Cruisers, as had been the case. Viking remains the Princess distributor and provides warranty and repair support from its service centers.

Viking also is going green at its plant and adopting alternative energy technology that could save the company money. By the end of this year, Viking will complete a solar cogeneration project that will install 17,000 square feet of solar panels on the roof of two of its buildings. The solar array is expected to generate 250,000 kilowatt hours of electricity a year and reduce carbon dioxide emissions by 3,000 tons. The company also is installing a natural gas-fired turbine to heat water and generate electricity.

The family way

Healey’s father, Bill, Viking’s president and COO, still comes to work daily to help keep the plant humming. His uncle Bob, chairman and CEO, drops in a couple of times a month to oversee the family’s business investments. Both still schmooze with customers, but it’s Pat who keeps his finger on the pulse of everyday operations now, spearheads development of new models and brings them to market.

At 13, he started working summers at Viking, sweeping floors and driving the company trash truck, among other chores. After graduating from high school, he worked three years in Viking’s service and fiberglass departments, then earned a business degree from St. Joseph’s University in Philadelphia. He returned to Viking to work six years on the production line, three in service, six as plant manager and four as vice president of sales before becoming executive vice president in 1999. He has learned the company from the ground up. “It was a great experience,” he says. “I wouldn’t have done it any differently.”

Now his sons Sean, 18, and Justin, 16, are learning the ropes the way he did. “They’re going to become boatbuilders, too,” Healey says. “The key word is ‘boatbuilder.’ We keep it going from generation to generation.”

They’ll also need to hone their political instincts. Bob and Bill Healey led the opposition to the luxury tax, which Congress repealed in 1993. Pat Healey continues in that tradition, advocating on behalf of the sport angler.

A vibrant economy and a builder’s commitment to quality construction and customer service are key to selling boats, but he says politics is also part of the equation. He thinks the boating industry still has a lot to learn about speaking with one voice in the nation’s capital. He has been beating the drum to amend the Magnuson-Stevens Fishery Conservation and Management Act so it can’t be invoked to close fisheries until better scientific data are available and to allocate money to gather better data.

At a time when the economy is the nation’s priority, rallying the industry behind fisheries policy reform has been tough. “I’ve never seen a more fragmented industry in all my years,” Healey says. “The only thing that ever brought this industry together was the luxury tax.”

This article originally appeared in the October 2011 issue.

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