Viking Yachts President and CEO, Pat Healey, recently chatted with Chris Ruisi, host of “Step Up and Play Big,” a segment on the Voice America Business Channel, about the long-term business strategy of Viking Yachts.
Celebrating its 50th anniversary next month, Viking has seen the effects of two recessions. In fact, Healey views today’s recession as a positive opportunity for boatbuilders to seize market share and experience growth in tomorrow’s downturn; possible as long as manufacturers like Viking Yachts apply the lessons their company has learned over the years and that above all else they value their workers.
Trade Only Today asked Healey how Viking has found success in the recent recession. He explained that Viking had learned many valuable lessons from the recession of the 1990s including the importance of avoiding overleverage as well as not extending commitments beyond the company’s reach.
However, Healey explained Viking’s financial burdens were far less in 2008 than they were in 1991.
“From 1988 to 1991, we bought a company, Gulfstar, a luxury motoryacht builder, and we wanted to provide our dealers with both sportfishing and motor yachts. It was successful, but it took capital,” said Healey.
Healey explained that in addition to their investment in another company, the luxury tax had put a 10 percent tax on any boat that cost more than $100,000, which was the price for nearly everything Viking sold.
“We were in a depression in 1990 and 1991. That was true for all of the boatbuilders building boats $100,000 and above. We went from 1,300 employees down to 80, from two plants down to one.” In the recent recession, Viking was able to keep one plant in New Gretna, N.J. and one in Florida. However, Viking did take a hit when they were forced to downsize from 1,300 employees to about 550 employees.
Viking runs a backlog of a year in a half during an up economy so they did not see any orders drop until 2009.
Healey noted that Viking fared better than many other boatbuilders due to their ability to safeguard the return of a trained work force once the economy had rebounded. Viking employees continued to receive medical benefits even when they were temporarily laid off. “We were able to get 98 percent of our people back, so when we came back we came back with a trained workforce,” he said.
Although Viking is currently at their hiring cap, Healey said the company would like to see a 15 percent growth each year.
Healey went on to tell about the unique way the Viking’s executive team discusses new ideas and designs: not in formal meetings but in informal creative circles in the cafeteria during lunch. “It’s a wonderful thing because decisions are made and implemented immediately,” Healey said. “We don’t have to go to a board of shareholders to get approval. We have a meeting and we make decisions, and we implement those decisions.”