Marine industry report
Shipbuilders ride steady tide of growth
by John Kinmonth

With its deep waterways, protected inlets, and freshwater estuaries, the entire Puget Sound region was destined to be a fixture of the marine industry. From native fishing villages to state-of-the-art shipyards, much of the area’s economy on land has often depended upon what happens in the water.
While an abundance of timber and the promise of Alaskan gold always created a need for seaworthy vessels, World War I and II really created shipbuilding booms in and around the Puget Sound. Although shipbuilding technology has changed with time, it still remains an integral business element that employs thousands of skilled workers throughout Whatcom, Skagit, San Juan, and Island counties. And right now, according to local shipbuilders, business is very good.
With a rebound in the overall economy and increased government spending on marine operations since Sept. 11, 2001 the local marine industry has received a boost in most sectors.

Demand shows industry’s health
“Already this year, we’ve seen an increase in the first quarter sales of recreational boats over last year,” said John Thorburn, communications director for the Seattle-based Northwest Marine Trade Association.
Thorburn pointed out that Whatcom, Skagit, and Snohomish counties have the highest number of boats per capita in the state, with nearly one in nine residents owning a boat.
“That number might be slightly skewed due to some residents owning more than one boat,” he said.
While boat sales seemed to lag in the last few years, Thorburn said sales are picking up along with the economy.
“When there’s a slowdown in the economy, it’s often the boats or leisure activities that go first,” he said.
Thorburn also said he’s noticed more, larger boat sales, particularly at this year’s Seattle Boat Show – although sales numbers aren’t yet available. He attributed some of the growth to the boater-friendly winter this year in the Northwest.
Likewise, port officials are noticing an increase in moorage demands.
“This winter I’ve had a longer waitlist than I’ve had in five years,” said Tami Hayes, harbormaster for the Port of Friday Harbor in the San Juan Islands. “Everything in the last six months has grown a considerable wait list.
“I think a lot of people boated early this year.” The influx of moorage customers to its 500-slip marina has been a welcome change.
Like most other ports in the region, the Port of Bellingham has had no problem keeping their slips full.
“We’re running right now at total capacity,” said Port Director of Marine Services Stephan Jilk.
At the Port of Bellingham’s 1,800-slip Squalicum Harbor, Jilk said there’s a waiting list for all boat sizes. However, the newly renovated 500-slip Blaine Harbor has limited slips available for boats 36 feet and smaller.
“You get up to the 50-foot class and you’re out several years,” Jilk said.
Port officials, however, hope to meet moorage demands through their recent acquisition of 137 acres on Bellingham Bay, formerly owned by Georgia Pacific West, Inc.
The port plans to convert G-P’s existing treatment lagoon into an additional 350- to 450-slip marina that will accommodate boats 40-feet and larger. Environmental remediation of the lagoon is expected to cost $23.5 million with an additional $16 to $18 million for the marina construction.
The Port also plans to add 1,200 feet of visitor moorage in the existing Whatcom Waterway. The projects are still in the planning phase, which Port officials expect to finish by the end of this year.
Both the Port of Skagit County and the Port of Anacortes are also dealing with similar moorage shortages.
“The only slips we have open are 26-foot covered,” said Greg Watson, Port of Skagit County marine operations supervisor for the La Conner Marina. Although they still have a waitlist, Watson said the list has lessened slightly over the past few years.
“We used to have a six or seven-year wait on 50-foot covered,” Watson said. He attributes the shorter waitlist to increases in the cost of boating such as rising fuel prices, as well as boat-owners being content with using trailers or their current moorage.

Government contracts: Big money
In the wake of Sept. 11, the Department of Defense and the newly formed Department of Homeland Security scrambled to beef up marine security, which created opportunity for at least one local shipbuilder.
“We anticipate we will triple our business in 2005,” said Tom Aitchison, president and chief operating officer of Aluminum Chambered Boats, Inc. in Bellingham. “We’re in a very strong growth phase.”
Although it’s only been operating for five years, Aitchison’s fledgling company landed a lucrative $18 million contract in 2004 with the U.S. Marine Corps to build an order of rugged “bridge-erection boats.” These 23-foot versatile utility boats are designed to help Marines set up temporary pontoon-style bridges in combat-like conditions.
“Aluminum, in and of itself, is extra durable, it’s almost impossible to break,” Aitchison said. “Because of the unique chamber design we have, our boats are virtually unsinkable.”
Various government organizations seem to agree. Aluminum Chambered Boats’ government client list includes the U.S. Navy, National Oceanic and Atmospheric Administration (NOAA), U.S. Border Patrol, and other law enforcement agencies.
“The largest growth right now is in the government,” Aitchison said.
Although most of their largest contracts have been with different military organizations, ACB didn’t originally plan on marketing their boats to government agencies at all.
“We started with recreational boats,” Aitchison said.
With the sport fishing market in mind, ACB displayed their boats at San Diego’s 2001 boat show and found they attracted a different sort of crowd.
“A group of gentlemen in suits and ties showed up at the booth and asked a lot of questions,” Aitchison said. All three days of the tradeshow, the same group collected in front of the ACB display and plied them with more questions including if they were U.S. General Services Administration approved, a necessity for contracting with the government.
“We didn’t even know what GSA approved was at the time,” Aitchison said regarding the certification process.
Eventually, one member of the group asked the question that’s music to any company’s ears.
“One of them asked, ‘How do I get these for my boys?’” Aitchison said.
The inquisitor turned out to be the commander of the U.S. Pacific Fleet for Naval Warfare and ACB subsequently broke into the government market.
“We were classified as urgent mission essential and we started building dive rescue boats for the U.S. Navy,” Aitchison said.
While they may have been in the right place at the right time for their initial contract, ACB now has specialists in government contracting who pursue large-scale contracts.
But their government division isn’t limited to just military and law enforcement vessels. Aitchison said they delivered a 29-foot research boat to NOAA in March.

Passenger ferries provide alternative to highway gridlock
ACB isn’t the only aluminum boat builder in the area staying busy with government contracts. Bellingham-based All American Marine, Inc. conducts about 30 percent of its business with government agencies, including three recent contracts with NOAA. But Chief Executive Officer Matt Mullett sees the company’s high-tech catamaran designs suited for a different market.
“More people ride ferries every year than they do airplanes,” Mullett said. “I think it’s one part of relieving some of the congestion on our highway.
“I think the companies that have cutting edge technology are going to take advantage of this groundswell of interest in ferry boats.”
In 1999, All American Marine teamed with Teknicraft Design Limited of New Zealand to exclusively produce its innovative multi-hull designs.
A Pacific International Engineering research project recently confirmed that one of All American Marine’s passenger ferries, the M/V Spirit, has a hull design that’s environmentally sensitive, fuel efficient, and smooth riding.
The goal of the study was to determine if a fast-moving passenger ferry could run through the Rich Passage between Seattle and Bremerton without damaging shorelines, and All American Marine’s 72-passenger ferry will now run the route regularly.
“Because of the hull shape, the boat is able to take on some heavy conditions, and still provide good passenger comfort,” said Mullett. “It’s really fuel efficient, you can get the same performance with a third less horsepower.”
Mullet said the company is currently working on landing a deal with the San Francisco Transit Authority, which plans to implement 30 ferries as automobile alternatives in the near future.
“We go down monthly to the meetings in San Francisco,” Mullett said. “I think we’re the most well-connected boat yard, and we have high hopes that we’ll get to play.”

Specialty vessels fill recreational industry niche
When the going gets tough, the tough get creative. Several local shipbuilders have seen steady growth from the uniqueness of their vessels.
San Juan Composites LLC of Anacortes operates under the principles of quality not quantity for luxury yachts.
“We make boats for people where money is not really a factor,” said Donald Campbell, one of the company’s founders. “We see ourselves as the Rolls Royce of the industry.”
Campbell said the company just opened a new 36,000-square foot construction facility on the Anacortes waterfront and they expect sales to jump in 2005.
Founded in 1998 by Campbell and Randy McCurdy, the company now hand-builds yachts entirely in-house, using resin-infused composites and draws clients from all over the country.
“Eighty-percent of our boats are shipped to the East Coast,” Campbell said.
Both Campbell and McCurdy worked for Admiral Marine Works in Port Angeles prior to founding San Juan Composites. Campbell said they aren’t as affected by industry trends because they serve such a select market. The company utilizes boat shows throughout the country – and a small amount of advertising – to market their boats, which range from 30 to 58 feet.
Campbell pointed out that most of their customers could afford much larger boats, but would rather have something in that size range.
Nordic Tugs, Inc. of Burlington also falls into a specialty market. Founded in 1979, the company spawned a line of power yachts modeled after traditional tugboats. The idea came out of the 1974 fuel crisis, when boat owners could not afford using fuel for pleasure.
The tug design gave an excuse for boaters to drive slower, thereby saving fuel. At its unveiling at the 1980 Seattle International Boat Show, 54 orders were made on the spot for the 26-foot Nordic Tug. Since then, the manufacturer has diversified its lineup and offers several sizes up to a 52-foot cruiser.
Although Aluminum Chambered Boats is currently doing a majority of its work for government agencies, their aluminum hulls, unique boxy styling and fuel economy have also proven popular with recreational users and commercial entities.
“We have a recreational division for fishermen who are looking for a fast, durable fishing boat,” Aitchison said.
The company has found success marketing to Alaskan guide owners, tour operators and oil response. Like other specialty boats, ACB has found success outside of the industry norms.
“We really don’t follow the trends and the balance of the industry as much,” Aitchison said. “I think the marine industry as a whole has been growing very slowly.
“The segment of trade that we serve, we see a tremendous amount of growth primarily because we’re taking market share away from other suppliers.”
Although their boats have a higher price tag than more traditional fiberglass hulls, Aitchison said customers see lower operating costs in maintenance and fuel.

Location, location, location
Like many other industries in the state, shipbuilders are not immune to the higher costs of running a business in the region.
“We are burdened by significantly more operating costs and overhead than other areas,” Mullett said. “The Northeast and Northwest have the highest labor rates. It’s cheapest in the gulf coast states.”
Campbell at San Juan Composites said one of its only disadvantages is the higher shipping cost of delivering their boats to the East Coast, where most of the company’s customers reside.
While shipbuilders may not experience the legislative breaks of the shipyards in Louisiana, they all cited a higher quality of life as an advantage to the area.
“It’s a place where you want to raise your family,” Mullett said.
Besides quality of life, Aitchison said the varied sea conditions of the Puget Sound allow for productive testing of their boats.
“In Bellingham and the San Juan’s we can experience almost any sea condition known,” he said. “We can demonstrate our products to customers in a wide range of conditions.”
San Juan Composites officials boast to potential customers that they have access to some of the best cruising in the world from their Anacortes facility. They encourage buyers to take their new boat for a spin in the San Juan Islands before heading home.
Manufacturers also benefit from the large number of marine-industry oriented business.
“There’s probably a greater concentration of skilled boat workers in the Northwest than in any other part of the country,” Aitchison said.
Mullett said this concentration, which includes large manufacturers such as Dakota Creek in Anacortes and Nichols Brothers Boat Builders on Whidbey Island, contributes to a wide availability of parts and materials.
Although there’s a large amount of boat workers, both ACB and All American are currently seeking skilled aluminum workers. Aitchison said they received a small boost from layoffs and downturns in the aerospace industry, specifically Boeing, because they were able to draw from a larger employment pool.
As new government contracts and an upbeat economy breathe new life and steady growth into the local marine industry, little seems to have changed since the first timbers from these shores were used for wooden ship spars in the late 1700s.
“The Northwest has always been a center for boatbuilding,” Aitchison said.