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By TOM BELL, Staff Writer Sunday, February 4, 2007

Maine's boat-building industry is poised to grow, but only if boatyards can operate more efficiently, according to a new industry study.

The vast majority of Maine's boat-building firms employ fewer than 50 people, and nearly half employ fewer than five people. Many of those firms must add more workers before they can achieve an economy of scale that allows them to be competitive, according to a report commissioned by Maine Built Boats, a nonprofit organization working to help the industry market itself.

"If they can cross the threshold into the 50-plus employee-size category, Maine's industry will grow," said the report, prepared by Planning Decisions Inc. "If they struggle or fall by the wayside (as many are at risk of doing), the industry will not realize its promise."

The report comes as the industry is getting a $15 million grant to chart a regional strategy, and as trade groups are embarking on a marketing campaign to promote the industry regionally and globally.

Because the industry is so fractured, it's always been difficult for businesses to share resources or get a sense of its role in the economy, said Paul Rich, president of Maine Built Boats.

Rich said the industry can grow if companies can work together to make some of the recommended changes.

"For 400 years, we've been tooling away in our own little shops," he said. "If we pool our resources and start doing things together, we can bring enough work to the state so we are all more than busy."

But the owner of one small firm expressed skepticism about some of the report's conclusions.

Richard "Dick" Vermeulen, president of Maine Cat, which builds catamarans in Bremen, said he doesn't support the study's conclusion that bigger is better.

Vermeulen's company employs 23 people. He and many other boat builders don't want to grow much bigger because managing more people brings more headaches.

"I don't think the small boat builders should be blamed for being inefficient," he said. "It's not like building cars. Boats are built one at a time."

GROWTH POTENTIAL

The state's shipbuilding industry is getting a lot of attention these days because it is seen as one of the few manufacturing sectors in Maine that has the potential for growth.

Maine's coastal region was one of 13 areas nationally to win funding through the U.S. Department of Labor's Workforce Innovation in Regional Economic Development initiative.

The North Star Alliance, a coalition of boat builders and state agencies, will be getting $15 million to develop a regional economic strategy centered around advanced composites and boat building.

The money will be spent on research and development projects, training programs and initiatives to help businesses raise capital.

North Star is spending $2 million from the grant on a three-year marketing campaign to promote Maine's boat-building and composites industry to global consumers and to also expose young Mainers to careers in the industries. The marketing campaign highlights Maine's maritime heritage and its role as the birthplace of American shipbuilding.

That industry began in Maine 400 years ago, in 1607 when colonists at the short-lived Popham Colony at present-day Phippsburg built a 30-ton ship they named Virginia. The ship, the first ocean vessel built in America by Europeans, was a marketing device as well, built to show that the colony could be a good site for ship building. The colony failed, but the ship was later used to supply colonists at Jamestown, which was settled the same year.

Other than the military vessels produced at Bath Iron Works, Maine yards no longer build ships. Rather, the state has developed a niche in high-end yachts and sailboats.

It's that industry that has the potential to grow, the study concludes. Working in the industry's favor: the weak U.S. dollar and the rapid growth of the consumer boating market.

Brooklin Boat Yard in Brooklin on the Blue Hill Peninsula is an example of a company that is growing. It makes custom sailboats and power boats using composite wood laminates.

In 2000, when the company had 35 workers, it took on one big project every year. But the dependence on that one project made the company vulnerable, said its presidcnt, Steve White. If the boat's owner died suddenly, for example, White said, the project would suddenly end, and there would be nothing lined up to take its place.

Now, the company has 58 employees and can manage three or four projects at the same time, allowing for better planning and lower risk.

White said he can now deliver boats to customers more quickly, making it easier to get new orders.

"This company is now poised for continued growth," he said.

The Planning Decisions study provides an overview of an industry that has been difficult to catalog because it is largely made up of small businesses scattered along the coast. Of the 73 boatyards it documented, only eight employ more than 50 workers.

When boat repair shops are included, the industry has 112 businesses, 2,100 workers and $300 million in total sales. In addition, the state has 85 marinas employing 400 people. Planning Decisions includes marinas in its study because many boat builders also repair boats and provide boat storage and are sometimes classified as marinas in federal statistics.

Maine's boat-building industry is the third largest manufacturing sector in the state, behind metal fabrication and wood products. The industry directly affects tourism, fishing, composites, fabricated metals, lumber, financial services, transportation and research industries, producing a total state economic impact of $550 million in sales, $160 million in payroll, 4,500 jobs and $25 million in state and local taxes, the study found.

SMALL YARDS STRUGGLING?

Maine Built Boats commissioned the $25,000 report, which was funded with a grant from the Maine Technology Institute, because it wanted a baseline of information about the boat- building industry so it could develop a strategy for growth.

The study also looked at some of the obstacles facing the industry, including an aging work force and the lack of trained workers.

For many small yards, every day is a struggle, said Charles Lawton, a senior economist at Planning Decisions who conducted the study. But once a boat yard has more than 50 workers, it can achieve a level of efficiency and specialization that allows it to operate more smoothly.

The study found that nearly 90 percent of Maine's boat-building companies employ fewer than 50 workers. Yet between 2000 and 2005, more than 90 percent of the new jobs in the industry were created by companies that had more than 50 workers to start with or grew to be larger than 50 workers.

"That's where the job growth really is," said Lawton, who is a columnist for the Portland Press Herald/Maine Sunday Telegram.

The industry also needs to do a better job training its work force and attracting more skilled labor, the Planning Decisions report concluded.

Matt Maddox, the human resources director at Washburn & Doughty Associates in East Boothbay, concurs with the study's findings that the lack of trained workers is holding the industry back.

His company makes tugboats, which are the largest nonmilitary vessels built in Maine. The company has 80 production workers, but a quarter of those employees are temporary workers from southern states.

Maddox said there aren't enough welders and ship fitters in Maine. He said there are more skilled workers in the south because the shipbuilding industry is much bigger in Florida, Virginia, Alabama and Mississippi.

He said his company wants to train unskilled Mainers and hire them rather than use contract labor from the South.

"We want people invested in this company and producing quality boats."

Staff Writer Tom Bell can be contacted at 791-6369 or at tbell@pressherald.com