Status of Hatteras Yachts

[spindrift]

Anyone happen to know how the new team at Hatteras Yachts is doing?

I have heard from the owner of a large shipyard that does some mega yacht work that the Healy Family at Viking are doing extremely well with their large sport fisherman. It is good to see a good family company stay the course, come out of the slump, and do well.

I have heard nothing about Hatteras. I do think that in the sportsfish arena, that Viking is one tough competitor.


Spin

 

[jim rosenthal]

I think they are doing well with the MYs. I don't know about the convertibles. I heard that they had sold several into the Middle East, but that was just third-hand info.

I hope they are doing well. I have the impression that the new owners of the company have streamlined things a bit, which would be good. And all the effort is going into Hatteras, Cabo seems on hold for the moment.

 

[Cricket]

Taking over the production sportfish market over the past 10-15 years has been a perfect storm for the Healy's. They've done an unbelievable job improving their boats over the years because they're totally hands on, personally use their boats a lot, and don't have to deal with bloated corporate structure and revolving ownership to make decisions. Hopefully Hatteras will be able to become relevant in the sportfish and MY world, and the turnaround firm from here in Philly that bought them gives them enough time and latitude to do so.

 

[capttonyf]

I'm a firm believer that they need some entry size models. A 3 to 4 Stateroom 42 to 48 ft MY with a 4 1/2 ft draft or less and that can be cruised comfortably and efficiently between 20 to 25 Knots. They had them in the past and the boats served the cruising family or Couple Perfectly. They also need a New Design, "Not a Cabo w/ Hatters Badge" 45 to 48ft 2 or 3 Stateroom Convertible. It should have a 4 ft draft and power Options ranging from 700HP Cummins QSM 11's for an efficient 28 to 30 knot Cruise and Possible a 1000+HP CAT C-18 option for the speed demon group that doesn't care about efficiency.

I know some people say you can't put 3 staterooms in a Tourny Caliber Convertible that size but Viking, Ocean and Cabo all do or have done it.

I've said this before, I believe a quality builder wanting to grow should reach out to this market and start to build Brand Loyalty with young buyers. There may not be a large profit margin in a small boat but if you give them a Quality Product, include them in Factory events, factory cruises, and make them feel like part of the family when and if they do move up some day they will stick with what their comfortable with.

A friend of mine started with a Sea Ray 21 Bow Rider, Every few years Sea Ray made him a fair trade offer to move up, his business grew and 6 Sea Rays later he has a I think it's a 58 Sundancer now. If a buyer takes delivery of a 42 Viking convertible and then moves up a few years later to a 48 Viking becuase there are no other options what do you think he's going to buy when he moves up to a 55, 60 or 65ft boat? He's going to buy another Viking, why not? If he was treated well, invited to the factory to meet employees, met the Healy's at their Key West Fishing Toun, Met some new Viking Friends on a scheduled Viking cruise. Why switch to a Hatteras. He is now comfortable in his choice, his Viking friends and support system, It's a quality product with great net working. He's not switching, Hatteras is not pulling that customer away. Hatteras needs to find that customer early on and build that same type of relationship. In order to do that they need some entry level boats. Just saying.

Tony

 

[sandspur1966]

I understand they are doing the expected organizational work that needs to be done to clean up the legacy mess from the brand bouncing from one corporate group to another. They have been hiring back some skilled labor and instituting manufacturing and financial controls to set a foundation for growth. What isn't immediately apparent is a clear product plan. The warmed over Cabo that is the new express, while understandable as a way to sign some new orders cheaply, does not a plan make.

I too think the Healy/Viking story is one that needs to be told more loudly. With all the big investment banks, PE and VC vultures out there trumpeting that a company needs them in order to grow... it is a pleasure to see Viking turning them back and beating them... not to mention the Flemming and Marlowe independents.

Brands like Hatteras and Hinckley were nearly wrecked by the "Master of the Universe" jackasses, leveraging the brands up and hoping to rely on incumbent brand loyalty to pay back the money they leached out of the companies in the form of disbursements. Just shameful... especially when it is us bailing them out a la programs like TARP, when they inevitably fail.

This Philly groups reputation is pretty decent, they have made a record of buying distressed enterprises and creating value through operational reform... hope they do so here.

I just fear it won't happen without a true visionary at the helm and not a team of sales and accounting executives. While those skill sets are also imperative to a successful plan, it will be a combination of innovation and quality control that will win the day IMOP.

 

[Boatsb]

Maybe look back at the roots and ask why?

The original 41 was an innovative change. There were other boats that same but not as well suited for hard core fishing.

I still believe the 41c series 1 to be a great boat for affordable use. 1/2 the fuel consumption of the 45 and big enough to comfortably carry a crew of 6

Maintenance on a 41 seems significantly less than the larger boats leaving more time and money for using it.

Do I wish I had a 52 or a 65? Sure. Who wouldn't but I think the balance between family and fishing for a working person is from 34 to 40 or so. That's why so many were made. That's why so many are still running today.

I don't see anything wrong with more sales of smaller and simpler vessels if the profit is there. The 45 express should be alot more manageable for people than a 50c.

Also resale of a 40 something should be easier to maintain as a $100,000.00 engine rebuild is not for everyone.

I'd love to see a 36 or so with cummins 6.7 diesels. 480 to 550 hp each is no slouch. Either a convertible or an express would do well and compete with the big centerconsoles. Also it's something I would think is affordable 20 years later as a 70 is just too much upkeep at 20 years old.

 

[Walter P]

All good comments... I particularly agree with Tony regarding brand loyalty. Years ago when I bought my first Hatteras (43 DC), Hatteras Yacht Co. was only about 15 years old but they had it all.... just as Tony said about Viking. Actually I believe that the Healy's are very smart business folks.....they didn't have to invent how brand loyalty works. They only had to copy the Hatteras business philosophy. Hatteras did in fact sponsor factory gatherings, published a company magazine, organize factory tours, sponsor fishing tornaments and many other ways developed a fantastic brand loyalty. I am now on my 4th Hatteras which I bought used and in my opinion is a great boat in both form (looks) and function. I strongly agree that it would probably be necessary for them to consider returning to their roots and offering smaller "entry" level boats from the mid 30 ft range to the mid 40 ft range. Believe it or not there are not as many folks out there that can afford to buy, operate and maintain a boat of 60 ft plus, which has a base starting rate I suspect of well over 2 or 3 milliion dollars. Oh well....my 2 cents..

Walt
AMB GUPPY, 1982 Series !, 48' MY

 

[pizzazsdaddy]

Excellent points on this subject by all. I too hope Hatteras can recover to it's former glory.

If Hatteras can compete on a level of measurable quality to the marketplace, they can turn it around eventually. Viking has already built itself a strong lead in the Sportfish market, no matter what Hatteras does.

I find the Sea Ray business model interesting. If Sea Ray does one thing most successfully, is the production of a full spectrum product line for every need. Consider for a moment that the outboard center console today is the most purchased boat out there. Business is booming in that segment. Where do all these people go when it's time to move-up?

Not having an entry-level Hatteras of premium quality out there, along with models to move-up to, is a missed long term opportunity in my humble opinion.

 

[spindrift]

I am glad to see all of the comments to my post. I do have to disagree with one major point that many of you are making, namely with respect to the smaller yachts in the 40 foot range.

I was close friends with the team at Legacy yachts before they close up and also as noted advise a large shipyard that is involved in very large mega yacht production.

There is one item that has become very clear to me from listening to the production and marking guys at these operations. It is that the smaller yachts are quite a bit more expensive to build per / pound. There is some threshold which you cannot go below unless a company is really prepared to drop the quality of components and labor down significantly (such as extensive use of full pan interiors). This is the only way to really reduce the labor cost. For example, the man hours on a 32 foot Legacy (despite using some pan construction in the interiors) was over 2,500 hours. I now there is now way that Sea Ray is putting those kind of hours in its 32 foot boat. You can mechanize heavily, such as Group Benetau's varnish machine for interior parts, but this calls for massive investment in expensive capital equipment.

The Mega Yacht yard advises me that to construct a 120 foot 5 stateroom yacht is not much less than a 145 foot yacht due to labor. Wether the yard puts 5 staterooms / 6 heads / and galley in the 2 different hulls is not much less cost in the smaller hull. Leaving the layout the same and pushing cabin size up a bit seem to produce the best boat value. Some of you will disagree, but honestly the people I have spoken with in the industry know what they are talking about.

If you assign some credence to the above facts, then I think the only way Hatteras could do smaller yachts is to keep the boats quite a bit simpler in layout and thus reducing man hours. Also, they need to start with diesel powered boats from the outset (no gas please) and offer engines that provide reasonable cruise speeds. Not everybody has to be able to do 40 knots.

Take a look at what the Sabre Group has done with its Backcove line of yachts as well as the Sabre Express. The Backcoves in particular are well designed, high quality boats, but with very simple mechanical systems (single screw) and straightforward layouts. They start at 30 feet, are hard to find in the re-sale market because their owners love and tend to hold on to them.

I hope that the Private Equity firm in Philly will support and encourage Hatteras to have a good strategy to move down the size chain. If Sabre, and Mercedes Benz can do it, then so can Hatteras. It would be lovely to see buyer move up from 36 feet to 70 feet over 30 years of boating.

Too bad that Brunswick Corporation screwed the Company up so badly. I think there is a lot of hard work for Hatteras but with a good strategy and careful capital investment it can be done. Let's see where the company is in 5 years.

Spin

 

[Boatsb]

Spin,

While the point of smaller yachts being not much less costly to build labor wise makes sense the market for 50 foot vessels is 1/10 the size of 40's.

I do not believe a 50+ foot boat is manageable for many with family and work obligations until you get to the very wealthy owners.

I chose a 41c not on cost but on the ability to run and maintain it without having to forgo everything else. The 52c is about the biggest boat I could imagine running without lots of outside help.

 

[krush]

3d printers will save them!

 

[spindrift]

Hello Scott

I agree with you on size. The biggest boat I have operated myself was a 52. Frankly while it was at times easier to handle than my previous boat, a 40, it was much more expensive to operate.

I am not arguing against smaller boats for Hatteras. Rather, the boats will have to be much simpler in layout and systems in order to be affordable without sacrificing quality.

My daughter just bought a very nice classic 38 foot sailboat, built in Holland by a top yard. It is a lovely but very small 38 footer. A simple boat that is a joy to use due to its straightforward and uncomplicated systems.

Spin

 

[saltshaker]

Hatteras lost the SF market to Viking a long time ago. Viking took it when the SF market was strong and there were plenty of buyers to go around. Many loyal Hatt buyers ended up buying Vikings because they knew the Vikings were outpacing the Hatts from a demand perspective. Catching up or even regaining a fair chunk of that market will be challenging in this market. As for smaller boats, it's does seem logical that they build some smaller yachts both SF and MY but I don't see that being much of a market right now. Carver, Silverton, Meridian etc took over that market as the majority of those buyers were driven by price, comfort and efficiency. I would think a new 40ft Hatteras would cost nearly 3 times that of a similar sized cheap brand. Consider how many Silvertons were built and sold between 1995-2005 and now the company is gone. The market just isn't there. Look at the smaller SF. Very few were built since the mid-late '90s and those that built them sold only a few. There is a gap in the 36-45 range but there also seems to be a huge gap in demand. The CCs have a strong market up to around 35FT. Most buyers looking for a SF are looking for bigger and faster. Look at Viking's sales and you'll see they sell and build more of the big boats than they do the 50ft and under boats by a long shot. Same with the custom builders. Buyers are going big. Many will tell you that 55ft is the new 40ft or 70ft is the new 55ft as that's where those markets have shifted to.

 

[night0wl]

To be absolutely brutal and honest...the future of Hatteras is not in the US.

The future is likely in areas like Brazil or Middle East where there is a growing economy and cheap fuel. Those markets, however, are smaller...and likely will require local production to remain cost effective vs. shipping from NC.

Sad to say it guys, but the glory days of sportfishing in the USA are likely over. There just isn't enough demand for a company like Hatteras to remain viable. Say what you want about private equity, but they can squeeze a stone and get water....and if they couldn't eek out profits with a US centric sales model, I dont think anyone can.

Now, if the era of cheap fuel is here to say, then I see growth again in the USA...but look at the Saudi's and what they just pulled off. Everyone I know in the petro field is freakin' out.