Business

Houseboat makers get sinking feeling

SOMERSET — The nation's ailing economy has caused choppy waters for Southern Kentucky's signature houseboat industry, which employs several hundred people and builds most of the houseboats sold in the United States.

Officials at several of the 10 makers of luxury, aluminum-hulled houseboats clustered near Lake Cumberland said business fell off over the last year and orders are down. Several have had layoffs and temporary shutdowns, and one closed.

Those houseboats can be floating palaces, with hot tubs, home-theater systems, premium appliances and hardwood floors. Prices vary by size and features, but it's not unusual for them to list new for $400,000 to $500,000, or more.

"The biggest problem I see is people are nervous. They don't want to spend that kind of money right now," said George Roberts, president of Sunstar Houseboats in Wayne County.

At FunTime Luxury Houseboats in Russell County, owner Tim Abernathy said sales sank about 45 percent in the past 18 months.

"We've just really had to fight for every order we get," said Abernathy. "We still have some orders, but it's a lot slower."

Majestic Yachts Inc. laid off all 26 of its employees at the end of August, said Bill Padgett, vice president for sales.

Since then, the three owners have been the only ones working at the Adair County plant. They're repairing a boat damaged in Hurricane Ike and building a floating pump station for a water system.

New owners often order their houseboats in the late summer or fall so they can take delivery by the next boating season. By early January, Majestic usually would have had contracts to build seven or eight boats, Padgett said.

As of last week, it had none. "It's like somebody turned off the fountain," Padgett said.

The industry hadn't seen a slowdown in years but is affected by the same economic issues as the rest of the country.

The uncertain economy, shrinking investment values and tight credit have made potential customers reluctant to buy a big-ticket luxury item, or unable to get a loan.

"You just don't see as many inquiries as you normally do," said Brent Fothergill, vice president of sales at Sharpe Houseboats in Somerset. "The market's hurt some of my people."

A custom industry

Houseboats typically are custom-built, meaning manufacturers wait to start construction until they have an order. It can take several weeks to complete a boat; manufacturers ship them to lakes across the country and even overseas.

Shawn Heinen, president and co-owner of Thoroughbred Houseboats in Clinton County, said he had one customer who made a deposit on a boat, but couldn't get a loan to complete the purchase.

Thoroughbred's production dropped from the usual 24 boats a year to 18 in 2008. The plant will probably turn out 15 or 16 this year, Heinen said, not great, but enough to keep Thoroughbred afloat.

"We've been fortunate to sell a boat here and there and keep going," he said.

Marie Tucker, who owns a houseboat-sales business, said the current downturn appears to be one of the most significant manufacturers and brokers have seen.

"It's bad," said Tucker, who is attending more boat shows than usual this winter to look for sales.

American Waterways, a Wayne County houseboat maker, closed last year.

Starlite Luxury Houseboats closed in mid-November, but has a new owner and is scheduled to resume production in February, said Tucker, who markets boats for the company.

With Starlite, there would be 11 houseboat makers in five lake-area counties, most of them in Wayne County.

The factories employ skilled workers such as carpenters and welders, and the jobs pay relatively well.

The downturn has local officials worried about job losses in the industry.

"There's always concern when you lose jobs," said Gale Edwards, who has worked on economic development in Wayne County for years.

Reason for hope

Wayne County Judge-Executive Greg Rankin said officials and business interests are working on drawing more people to the lake, which will mean not only more spending at a variety of businesses, but could also create more customers for the houseboat industry.

"It's a big part of our local economy," he said.

Some in the industry said they have seen increased inquiries in recent weeks, raising hopes for increased sales.

David Barrett, president of Stardust Cruisers in Wayne County, said he'd had more inquiries about houseboats in the past 30 days than in the prior six months.

The company built about a dozen boats last year, its first full year under new ownership. That's about half the number he would have liked, Barrett said, but Stardust used the slowdown as an opportunity to retool and prepare for better days.

The company has signed a deal to market houseboats in Europe. The first boat was scheduled to be shipped to a marina in the Netherlands last week, Barrett said.

"We're optimistic that things are going to turn around," he said.

Tucker said she also had had more calls about boats in January than she did last July.

Thom Dammrich, president of the National Marine Manufacturers Association, said the entire boat-building industry — not just houseboats — is down, but that things could begin turning around later this year.

"My sense is there is pent-up demand," but people are waiting to see how the economy fares, Dammrich said. "It'll start turning around when the economy starts turning around and consumer confidence starts improving."

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