Making Refit Shipyards Work
Twenty Questions for James Brewer
Director of Business Development, Derecktor Shipyards, Florida
James Brewer has been involved in the yacht refit business since the late 1970s, when he arrived on the Florida waterfront as a crew member racing in the SORC. A “competent rigger,” as he puts it, he soon found himself doing contract work at the Derecktor Yard in Fort Lauderdale, where refits were being conducted as a somewhat lesser aspect of the Yard’s work. Within two years, as the need for greater “structure” on that side became more evident, James was promoted to the role of Project Manager, bringing an increased measure of oversight and organization to refit and repair work there. In the decades since, James Brewer has become one of the most widely respected and admired professionals in the refit industry worldwide. REFIT Report sat down to talk with him about his perspectives on the Refit industry in general.
—Jon Wilson, Editor
1. REPAIR & REFIT Report: How long have you been working professionally in this industry? Did you find it, or did it find you? How did it happen?
James Brewer: Well, my father’s family were originally fishermen in Devonshire, going back two or three generations, in Brixham Trawlers—that sort of stuff. The family owned the winner of the last Brixham Trawlers race, back in the 1930s, I think. But then my father became a colonial policeman in Rhodesia, of all places, where he exposed me to sailing. We eventually finished up in Capetown, where I attended high school, and we had a small quarter-tonner that he sailed recreationally, and I raced with him. I started racing more seriously, and I was selected to sail for South Africa in the Admiral’s Cup in England, so I did that, all the while acknowledging the graybeards at the yacht club who were always saying, “You can’t make a career out of this.”
But I always hoped that I could, after I finished the Admiral’s Cup. I always wanted to come to the USA and do the Southern Ocean Racing Circuit (SORC). I took the long way around, via Brazil, but I came to Florida, and did the SORC, and met my wife-to-be. But I was in and out of Derecktor’s because that’s where all the race boats congregated.
2. R/R: Did you expect, as a young man, to find yourself doing what you’re doing now? Or here?
James: When Derecktor’s offered me a job I figured I would do it for a year and see how it goes. That one-year thing turned into a career, working for the Derecktor family, but it wasn’t a “grand plan” by any means. It was just, I came here with the expectation of doing a little ocean racing in the states and it grew from there. Being a racing sailor, I was a competent rigger. So I was hired in 1979 as a contract rigger. I did that for the better part of a year, and then they realized that I had some management experience and I was drawn in as the first Project Manager. This yard was run in the eighties by a single Yard Manager and a bunch of foremen, but we were trying to do refits as well, and they weren’t going well because nobody was controlling them. I thought, “Why not do that?” So I started managing the large-scale projects in 1980-81. And then in 1983 the Yard Manager left rather suddenly, and I was put into a management role pretty quickly, taking over as Yard Manager in 1983, and then running the yard until 1999 as General Manager.
I was hired away by a competing facility for ten years or so before being drawn back into the CAKEWALK project, because I’d stayed in touch with Bob Derecktor’s son Paul. I’d left here on very amicable terms, and I was asked to come back and help with that building project, and I finished up running the last two years of that job. Again, it’s an evolution, but I’ve basically been in this market doing this sort of thing since the late seventies.
3. R/R: If you had been able to foresee where your professional career would lead, would you, in retrospect, wish to have done anything different to better prepare yourself for this?
James: I was thrust into an operations role because that’s what the need was. Would I have liked a little bit more formal project-management experience or engineering training? Yeah, I think I could have benefitted from that because it was a lot of on-the-job learning. That said, I’m a pretty quick study, so you learn by doing, and that’s really where my experience came from, and why I’m so passionate about the apprenticeship side of things. Because I think there’s a tremendous benefit.
The four-year degree still doesn’t qualify you. It’s a very, very expensive “introduction.” It’s fascinating that the educational process went in that direction so hard. But it’s just tragic that so many kids were thrust in a direction that was not necessarily the perfect fit for them. It’s a real shame, but I think we’ve turned the corner. I think society has realized that there is another option because we’ve saddled so many kids with huge debt. That’s the next bubble. When that bubble bursts, it’s going to hurt.
4. R/R: What do you feel are some of the things that make Derecktor good at attracting and managing large-scale refit projects? Obviously, it’s a number of factors, including your experience, but can you put into words what it is about the Yard’s – and your – experience that is particularly important?
James: The big thing to understand is that Derecktor is very much a team enterprise – we cannot achieve anything without the guys around us, and we are blessed with a really strong group of tradespeople and managers, all of whom pull on the same end of the rope. But this is my 42nd year in this market, so while that doesn’t mean I’m necessarily smarter than your average bear, I’ve been involved in this market for a long time. We’ve been involved in refit work here at Derecktor’s throughout that period. We were involved in refit work long before it became popular. We built some boats here in the very beginning, but this has never been a boat building center. Even when boat building was a strong employer in Florida, Derecktor was a repair, maintenance, and refit yard.
The thing that we have to acknowledge is that no two clients, no two vessels, no two refits, are really alike. There are some similarities, but for the most part each client has a different hot button, a different desire for this process, a different “value coefficient.” Not to say one’s better than the other, but each one has a different relevance. We’ve had clients who are very involved in the process, and we’ve had clients who really just want to pick the boat up when it’s done.
So how do you equate those two, how do you operate with those two? They’re two completely unique clients that have to be managed completely differently. A lot of the ultra high net worth guys who own many of these boats are obviously captains of industry. They’re extremely talented in their own fields. But it’s interesting how many of them will enter into a contract and will purchase a boat—about which they know very little. The checks and balances they would consider normal in their own business environment seem to go out the window, sometimes. That’s why the advice he gets from his team—whether that be a broker, a captain, a manager, a lawyer, an accountant—is crucially important, but it’s also important that those players be educated, and able to give good, realistic, sensible advice. There are some expectations that a client will come into the shipyard with that are simply not achievable. We like to say we’re not in the “no” business, but sometimes it’s in the client’s best interests to say no because we all want the same thing. We all want to try and develop a relationship with a client that’s bigger than just this job, bigger than just this refit, and hopefully bigger than just this boat.
A long-term relationship to not just fix the boat one time, but fix the boat a multitude of times, and hopefully the client will move up from a smaller boat to a bigger one. A long-term relationship with that client, and developing value for that client that is not just nuts and bolts, but a long-standing relationship that is technical, that is providing recordkeeping, all the things that a client may need when the vessel’s on the other side of the world and he may need something.
So, it’s incumbent upon the owner to surround himself with people that he trusts, but it’s also incumbent upon the industry to provide that client with good advice, particularly when we have new clients coming in who are not necessarily experienced, and whose team members are new to him. Those are opportunities to make sure that the client is not misled, that he understands that operating costs are what they are—no matter what the purchase price of the vessel may be.
Certainly, through the recovery from the Recession, we had some new clients coming in and purchasing boats at a price which was below market, and who were then surprised at what it actually costs to refit them and to operate them. Fuel is fuel and crew are crew, and operating costs are what they are, despite the fact that one may have purchased the boat at a lower price than normal. If the client is not adequately educated at the beginning, that can cause some surprises, and nobody likes surprises. So that client may be put off, and he may be a one-boat guy. But we’ve served him poorly if that’s the case. We as an industry have to try and make sure a client comes in and has an opportunity to become a sustainably involved one.
5. R/R: In some ways you’re describing a need to educate some clients. Some clients come in with experience. Some don’t, and those who don’t, it’s incumbent upon you or any representative of the industry to provide that client with education. To some extent I’m sure there are clients who are resistant to being educated, who—even though they don’t know much—don’t want it to be obvious that they don’t know much. I’m assuming you encounter clients like that once in a while. How do you handle them?
James: Well, there obviously has to be a fit between any two parties trying to come to contract to do anything. If there’s no fit, that contract should not go forward. It needs to be a win-win, and if the client is resistant to what we’re telling him and persists in asking for things that we can’t deliver, it’s incumbent upon us to say, “Look, we’d rather have you as a friend than have you as a client—and at the end of the day an enemy. That’s just not good business, sorry.” Certainly, we run into the occasional client who is resistant to advice, but it still means that, as professionals, we are morally and ethically bound to provide that advice. If the client chooses not to follow it, that’s certainly his privilege, but it’s also our privilege to decline the contract. Which is why planning and the work that comes on the front side of the refit is so important, because having that conversation three weeks in, it’s kind of too late because in many cases you’ve torn the boat apart.
6. R/R: Let me ask about another scenario: there’s a resistant-to-advice client, and there’s also the one who isn’t resistant – until suddenly he is so deep into it that now, when the shock has arrived, he’s completely unprepared. Nobody could see it clearly in advance because there wasn’t an opportunity. There should have been, but there wasn’t. What about that situation?
James: We are becoming much more proactive in trying to have that conversation at the beginning, and we’ve seen particularly post-recession where we’ve had clients who’ve come into the bargain boat, the deal that couldn’t be refused, right? The old adage, “if it looks too good to be true, it probably is.” We’ve seen a few of those, and clients who have gone against advice or who’ve rushed into a refit and they’ve gotten hurt. Or, as I said in the very beginning, it’s about managing expectations. If the client’s expectation is, “Well, this can be done in three months because my broker said so,” and actually, “It’s a five-month job, sir, and we’re not going to undertake it unless that’s clearly understood because you’re not going to be happy at the end of the day.”
We try to lay out our objectives, and one of them is a long-term relationship with this client. Accepting a job essentially under false pretenses doesn’t do anybody any good. It certainly doesn’t do us any good as a shipyard. It doesn’t do the industry any good because everybody gets painted with that brush. So we try to be proactive, and I’ve had many conversations around this table where I’m simply saying, “Look, I’m talking myself out of a job here because I’m telling you that your expectation on price is too low. Your expectation on time is too low,” whatever the criteria may be.
Many cases the client will hear and will listen and will understand that, okay, we need to rethink this a little bit. In some cases, the client doesn’t want to hear it. If I’m able to communicate directly with a client or with a client’s right hand, generally it’s not a problem. If there are too many people between me and the client, it’ll get muddy and I don’t know that my message is ever getting from them up the line.
7. R/R: Typically, how many people are between you and the client, which is to say the Owner?
James: Well, one likes to think that you’ve only got one representative—but sometimes, one is dealing with a captain who will indicate that he has control, but he really doesn’t because there’s actually a Manager upstream. There may be a personal assistant of some sort, or an adjutant, or a chief of staff or whatever, between that person and the client. So the captain actually only talks to the client when he’s on board the boat. So that starts to get a bit muddy because each person in that chain has concerns. They all have the owner’s best interests at heart, but that may manifest in a different way in each case. So, for us, we’d like to be as close to the client as possible, because that assists us to fully understand what the client’s real desires are—without being run through a number of filters. But it’s not always possible. And it’s important that one has respect for that owner’s team. He or she selected that captain, and there’s obviously a chemistry that exists between the captain and the owner that we shouldn’t try to interrupt.
8. R/R: That chemistry between the captain and the owner may not always be well placed, but the fact is, it is the chemistry. It’s the relationship the owner has. The captain is the person the owner trusts, but sometimes, in the view of other professionals, that trust may be misplaced. But that’s the relationship. That’s the customer. Does this happen once in a while?
James: To a greater or lesser degree, it’s present in about 30% of the refits we do. I would say that the more complex the scope of work, the stronger the relationship usually is between the owner and his team. A successful refit will have a strong owner’s team, and if we are entering into it we need to make sure that the boundaries are clear, the communication is clear—and particularly that expectations are manageable from the outset. If you do run into a hiccup it has to be communicated early and communicated all the way up the line.
We try to be as proactive as we can to review the specification beforehand and try to say, okay, this is an older boat. Has it been adequately surveyed? Has every void been looked at? Is there the potential for this scope of work to increase through situations we’re not aware of or haven’t been exposed to? For example, an older steel vessel may have points of concern that may not appear in the scope of work anywhere. If that void space underneath the chain locker hasn’t been looked into for 20 years, is that good or is that section of the vessel really suspect? Areas of plating under freezers and below tiled bathrooms, where there could be a long-standing leak or other moisture problems typically create unseen degradation to the plate work. But it’s not in the spec. Nobody says to go look at that, but it’s going to get looked at at some stage, and if there’s a problem we’ve now suddenly got a broader scope of work with a longer timeline.
That type of unseen damage is something that we’ve certainly seen before, and it should be raised as a maybe. We need to have the owner’s team aware of the fact that this is a potential unanticipated problem. We’re not trying to expand the scope of work, but clients need to be aware.
9. R/R: That’s the dilemma, right? It’s providing the owners with potential for places that work is going to be needed that can’t be seen now, and yet not wanting to scare them off and not trying to increase—
James: Hull penetrations or main engine exhausts, all these sorts of things that look really good on the outside if the vessel’s been properly maintained over the years are probably fine, but they’re certainly areas where there could be delays, or where “scope-creep” could be lurking. And that’s another thing: if a client comes in and he’s been told this boat he’s just purchased is “perfect,” well, it’s also a 20-year-old steel boat, and no older steel boat is “perfect.” How good is good, and how well maintained is it? Have guys been painting over rust for years and it looks really good at first glance—but you start digging a little bit and you’ve suddenly got some issues? That’s the sort of thing that having the conversation before you come to contract, so that the client can look at your motives for having that conversation. He can think you’re trying to do him a solid, and educate him and alert him, or he can think you’re trying to set him up to upsell him, which is the other side of it.
We want to build a relationship with the client to build trust on the front side of the contract, before you actually start putting signatures down and tearing the guy’s boat apart, that’s the right time to do it. Because otherwise, there’s too much potential for a client to feel that he’s been misled.
10. R/R: Right. So, I’m assuming there are too many times when you have to help the owner—or the client, whoever the person is that’s communicating with you—understand that number one, it may not be as described by the broker and it may not be as described by the surveyor. Does that happen much?
James: Yeah, it happens. I think the advice that we always have for a new client is to make sure the vessel is surveyed by a professional. So we will advise him to bring additional members onto his side of the table. These are experts not employed by the shipyard, and who have no relationship with the shipyard. So you have a surveyor. You may have a Naval Architect if there are substantial modifications anticipated for this refit, an independent Naval Architect who, again, is working directly for the client. Each one of those guys has the opportunity to inspect the boat and alert the client and the shipyard to unseen conditions, but they’re all on the owner’s side of the table. They’re all impartial people, which allows the client to have a comfort level with what he’s requesting—while trying to “check as many boxes as possible” to eliminate the unknowns.
You can never eliminate them completely, but certainly it’s incumbent on the shipyard to provide alerts, if they have knowledge of the vessel, or type of vessel. You know, a 20-year-old steel boat has some commonality no matter who the builder is. There are certain things that degrade faster than others. Very rarely will we have more than two boats from the same manufacturer in the yard at a time. But there are certainly commonalities through the method of boat building or the medium out of which a boat is built. What’s more common for us is to suggest that we need to look under the freezers and look under the chain locker, and places like that. The same is true of installations, like exhaust systems and shaft tubes, which—inside the machinery space—they look great. But it’s not always the case once you start looking deeper inside, because a lot of these things degrade from the inside out, so it’s often very difficult to see the damage until it more fully manifests, by which time it’s often too far gone to repair.
11. R/R: Does the Shipyard itself have a surveyor, or do you tend to utilize independent surveyors?
James: We encourage an independent surveyor in all these situations, because if it’s a yard employee, the question of “upselling” comes up. It becomes the “big bad boatyard”, right? It’s much better for us to allow a client to bring in his independent surveyor and let him do his job, and then we all sit down with that survey as an impartial document and one can then work through it. The challenge is that the survey is usually done non-destructively, so it’s very difficult for a surveyor to see everything. He will do what he can do, but in many cases, it may be the third time he’s surveyed this boat, so he’s probably pretty familiar. The best surveyors are very familiar with what they’re surveying, and we’ve found for the most part they’re an excellent voice on behalf of the owner, to give him a clear picture of what he has.
12. R/R: I’m not sure how to ask this, exactly, but your skills and experience are somewhat unique, and the same could be said for several great Shipyards. But if you suddenly had a stroke or something and you couldn’t communicate the way you do, what sort of succession plan exists for yards like this?
James: It’s a valid question, and it’s not just common to us. Any significant shipyard has to have a guy who’s in charge. Ken Imondi is that guy here. He’s the COO and he runs all the Shipyards. In his absence, I step in for him, but I don’t have the same operational role that I had in the past. I’ve been in the business a long time, but so has he. We have similar skill-sets, and we complement each other well. But if either one of us gets hit by a bus, the other one is able to step in. So, we’re pretty well covered, here. That’s not necessarily true of every shipyard, and as an industry we have aging management. That’s great from an experience standpoint, but the succession plan is a challenge. In America the whole marine labor pool is aging, and it’s a big problem. Something I’m heavily engaged in is workforce development, not just for Derecktor but for the industry at large. We’re trying to figure out how we solve that problem, because apprenticeships and the tools that used to be the way the pump was primed in days gone by have largely fallen by the wayside, and they need to be re-established.
There’s a willingness to do that, but it’s probably ten years too late. So, we’ve got a lot of work to do to preserve the skill-sets that exist amongst the older tradespeople, and to make sure that tomorrow’s managers are being educated and brought along today because it’s not a fast process. To be an effective manager you’ve got to understand boats. You’ve got to understand the process. You’ve got to understand boat building to some degree. You’ve certainly got to understand your workforce, and you’ve got to understand the principles of Project Management.
One thing that Bob Derecktor did was to try and surround himself with strong guys, and also to make sure that skills were shared and passed on, and he had a pretty good sense of how to do that. You learn by doing, and he made sure that guys did. It was something that varied from yard to yard, but I think the real problem is that the number of shipyards diminished over time—because they were all in prime locations for waterfront development. The working waterfront has diminished dramatically in recent years. It’s incumbent upon us as an industry to try and figure out ways to keep the industry attractive for people who want to work with their hands, and to provide training and a career path for new tradesmen.
13. R/R: Are there Job Fairs for this industry here?
James: That type of thing happens. The challenge is that we’re still a relatively small industry, 130,000 jobs in Palm Beach, Broward, and Miami-Dade Counties, the majority of which are here in Broward County. But there’s $11 billion a year in economic impact in the Tri-County area so it’s a significant part of the local economy. But are we able to have job fairs specifically with the marine industry? Not so much. We’re competing for the same graduate from a trade school who might be drawn to aviation, or might be drawn to automotive. We have to compete for that same pool of candidates, and yet we’re asking them to come and work outside—in the sun. Whereas in aviation and automotive they’re not. We have to provide other incentives like training support. It’s a more difficult challenge today than it was in the past because social media, and the way to get to young people, has changed dramatically in the last 10 years.
The Salty Jobs initiative started locally through MIASF has been extremely well received. It started as a “let’s see if it would work as a way to reach young people.” It’s been very well received around the country, and Salty Jobs may go national. Sean Smith, who works for MIASF and who’s the host, walks into classrooms and he’s a rock star! So it’s had successful outreach and is evidence of the new methods we have to employ to reach young people. That’s something I would never have thought of 10 or 15 years ago.
14. R/R: It’s a different world. When you think about training and drawing young people in, assuming they get charmed by the world that this is, in terms of training them on the technical side, obviously it’s on-the-job.
James: On the job training is a very critical part of learning by doing, but we also now have much stronger relationships with the trade schools. Up until probably five, six, seven years ago we were still bound up in this education system that was pushing every high school kid toward a four-year college. Vocational career training was a dirty word. There was a stigma associated with going to a trade school. But as student debt has risen, as parents and students realize that one can earn six figures as a welder with a year or two’s training, and one can do that with zero debt, one can have a very comfortable career. So, if one enjoys working with one’s hands, it’s certainly something to look at. Slowly apprenticeships are becoming more popular The administration has mandated that the number of apprentices in America will double within the next four years, which is a great goal, an encouraging goal. To figure out how to do that is a little more problematic, but certainly there’s a willingness to put federal funding out there to try and support that initiative, and apprenticeships are the way to go. So a kid can earn a living, can learn by doing and augment that learning with trade school training. There’s Broward College that has a marine engineering program for kids to come in and get meaningful training, augmented by some sort of On the job training.
The apprenticeship has to—at the state level—be registered and provide a certification that is transferable. At the end of the day, I want to make sure that the guy I train, who may finish up going to work at a different shipyard, has decent skills, because I may also inherit employees from other shipyards. We have to agree on standards and make sure that any apprenticeship does support them.
15. R/R: How close is the industry to developing such standards?
James: Closer than it was. Not close enough. It takes support of the trade associations and support from the educational community. Five, six, seven years ago that wasn’t there. This problem has existed for 30 years. But I think the realization has come that there are many good career paths in the marine industry that guidance counselors were unaware of. But now that’s coming into perspective, so our education community is becoming much more aware and much more supportive. The trade schools are much more supportive because they see the marine industry as a source of placement for their students—in addition to automotive and aviation.
We still need to be able to help fund some of that training because other industries are significantly better financed than we are, and we’re competing for the same pool of people. I finally feel we have some traction. Now we have to work through curriculum to make sure that what they’re being taught is useful to us as an industry. It takes the shipyards coming together. And I keep stressing the shipyards because they are the core of the industry. Without the shipyards, there is no marine hub.
There is no marine industry as we’re used to seeing it. So it’s incumbent upon the shipyards to come together, and that’s an initiative we’re working on quite strongly to try and get everybody on the same page and try and clarify standards and develop a curriculum.
16. R/R: Can you talk about the way Derecktor Shipyard operates in terms of the trades? That is, staff versus contractors and subcontractors?
James: Well, I’ll give you a little bit of background on the industry in Ft. Lauderdale as it presently exists. The old school, traditional, full-service shipyard model, was where the vessel came into the shipyard, and the shipyard did everything. Or if they subcontracted work, it was the same as having a shipyard employee, because the shipyard would take full responsibility, and would manage the work, and the client in many cases didn’t even know that the work was being subcontracted. So you had a full service shipyard that, ostensibly, did everything. That still exists to some degree. The business model that, for example, Lauderdale Marine Center essentially started, involves having a large piece of real estate, on which they will haul vessels and rent space, and allow for certain subcontractors to work in their facility, but directly for the vessel.
So, the vessel would hire and manage the subcontractors. The shipyard would basically lift the boat out of the water, block it on the land, and charge a fee for rental of the space. What is the benefit of that? Well, it allows the client a lot of control. It mitigates or diminishes the risk to the shipyard because they’re really not doing anything other than providing space. What’s the potential downside? Well, the downside could be “responsibility,” because in the full-service model a shipyard takes full responsibility. The owner of the boat has one phone call to make if something goes wrong.
In the subcontractor business model, the client must figure out who did the work—who created the situation—and then call him, because there is no central responsibility. Derecktor started as a full-service shipyard, but it has morphed into something of a hybrid combination. We still subcontract work, but we’re open and transparent about that. In some cases, we may allow the vessel to deal directly with the subcontractor, if there is a pre-existing relationship that was established before the boat came into the Shipyard, or it’s a trade that we don’t actively participate in. A good example of that is diesel service. We don’t do diesel work, and therefore the client—who generally has a pre-existing relationship with a diesel engine manufacturer anyway—can have his own contractor come in and do the work.
From our standpoint, that mitigates our risk. So it’s a win-win, and that’s how it works now in most of the shipyards in Florida that were ostensibly full service yards in the beginning—and are now a little bit of both. Because the local industry relies on such a big hub of marine-related businesses—it’s the largest hub of its kind in the world, 600 businesses that service the marine industry in some way. Many of those businesses provide services to all the shipyards, so their overhead is diminished. Many are relatively small operations that are able to provide service to vessels in the individual shipyards. So that’s how the business model works. Derecktor probably has more full-service in-house capability than some of the other shipyards. For example, we try to keep all our welding, fabrication, pipefitting, ship-fitting, heavy mechanical—all the traditional shipyard skills—and protective coatings, the stuff that keeps the water out, like valves, propellers, shafts, all that sort of stuff, in-house.
And the more “discretionary” things like finish paint, interior joiner work, that sort of thing, we tend to outsource. So it’s the stuff that one really needs to have control over, that the client comes to us for. He knows that we’re going to be on top of the mechanical stuff. We’re going to be on top of the systems stuff. We’re the responsible party for the things that go bump in the night, with the exception of diesel engines.
17. R/R: The Shipyard has chosen to rely on subcontractors for the engines side of the service, repair, and refit realms. Can you talk about why that is?
James: Well, some of it’s risk, and some of it’s the fact that the level of training and the complexity of the modern diesel engine has now risen beyond the capability of any one technician. It’s become a specialist’s task. Most of the modern engines are computerized. The guys who work on themspend a lot of time in training. It’s expensive. Most of the work is supported by the manufacturers. For a shipyard to be in the middle of that equation, it’s just not good business. We don’t bring anything to the table, so why should we participate in the process? In the old days, a diesel engine took fuel, took air, and ran, but today’s diesel engine is not that way. Common rail systems and highly computerized engine management systems, they’re very complex pieces of equipment and making them run right is a specialist task.
That’s one area. Another one, for example, is marine electronics. In the old days we would have an electrician who would be reasonably well versed. He could keep things operational. Today’s navigational electronic suite is very complex and ever changing; it’s constantly being upgraded and updated. The modern marine electronics technician is a very skilled, very highly trained guy and constantly going through that evolution, so that realm is much better left in the hands of a specialist team. So again, that’s another area where we choose to not get involved because it’s simply not in the owner’s best interests for us to be in that loop.
18. R/R: The Derecktor model, focusing as you described on the things that customers come to you for, obviously works for the Shipyard.
James: Well, philosophically we feel that way. I mean, some clients have a comfort level with their captain that they feel that the captain is capable of selecting the tradespeople to come and do that work, and manage that work and supervise that work. And if there’s a cost savings, then that’s what he wants. As I said at the outset, no two clients are alike, and their value judgments are not necessarily the same. Not to say one’s better than the other. Certainly, there’s a shipyard experience that’s appropriate for every client. It also doesn’t mean that a client has to take his boat to the same shipyard every time. I often advocate that a client select a shipyard according to his scope of work. One shouldn’t take a vessel that’s got a highly mechanical scope of work to a yard that specializes only in paint. That doesn’t make sense. You need to choose the shipyard that’s best suited for your scope of work.
That said, we like to have long-term relationships. We like to try and bring value to a client that is not just tied to this refit. It’s maintaining its documentation. It’s maintaining the knowledge and intricacies of his boat so that if he’s in Bali and needs something we can help him out. So we believe that there is value to assisting with the engineering on the front set of a refit, doing the refit, and then assisting with after sales service. So it’s a long-term relationship that the customer gets more value from than just the nuts and bolts.
19. R/R: How do you describe that, is there a name for that after-sale service that you’re describing besides after-sale service? How would a stranger describe it?
James: Well, my hope for it is that there’s a level of trust and a business relationship, and it’s being part of the team that the client has contracted with to assist him in operating the boat. The shipyard becomes a service “partner” that the client or the management company should have the ability to relate to and work with. In the old days there was sometimes an adversarial relationship because of the “big bad boat yard.” I just don’t think that’s a sensible way to do business. It certainly doesn’t serve the client well. I mean, if the best interests of the vessel and the best interests of the client are the driving forces, then the various entities that are working in support of the vessel should be working together.
Ultimately, the goal is to keep this as trouble-free and as pain-free for the client as possible, because nobody needs a yacht. So, the minute it becomes a pain that client can just walk away. So as a lifestyle it needs to be a pleasurable recreational experience. For Derecktor, I think the proof in the pudding is that we do 60% to 70% repeat business every year, which is a very high percentage. So, that’s one indicator of value to customers. But can we be complacent about that? Absolutely not, the business is becoming more and more global, and more and more competitive. Our refit yard has been in the refit business for a very long time – fifty-two years in Florida. However, builders have recognized the fact that refitting their own boats is a great revenue stream, and a relatively profitable one. So, a lot of the European building yards are operating their own refit yards now. We have plenty of competition in Europe, all of whom do a pretty good job. So how do we maintain our position? We try and find ways to bring additional value to the client. That’s really why some of these things are worthwhile discussing.
20. R/R: A number of people have observed that the refit industry in Europe appears more robust, perhaps because the training and apprenticeship programs are more robust. Is that consistent with your sense of things?
James: Well, I think one has to look at the fact that the number of boats being built in Europe is still very high. A large number of boats are coming out of Italy. Certainly, European yards are all doing very well. They have very strong collaborative forces, particularly in Northern Europe, where the joiner shops and subcontractors will be serving a variety of different builders. You do have very strong teams in each shipyard that are supported by apprenticeship programs, and are supported by a multi-generational workforce, where dad works for the shipyard, and the son will work for the shipyard – that sort of stuff we don’t see as much of.
I think we have a much more transient workforce in the USA. So, the European apprentice programs have been in place for a long time, and haven’t suffered through the same peaks and valleys that they have in this country. We’re almost starting from scratch in many cases, so that would certainly speak to the strength of both boat building and the repair and refit industry in Europe.
R/R: Thank you so much for your time. That’s perhaps the best way to conclude this conversation for now. Our industry needs a well-developed, real-world-oriented, standardized national system for training and apprenticing, so that an engaged and reliable workforce has a chance to find real success and fulfillment in it. Thar’s our future.