Harbor Business Sinks in Recession : Ventura: Industry officials estimate that half of the marine-related ventures have failed since 1989. Slip vacancies are over 20% and jobs are declining.
The glistening water of Ventura Harbor and the picture-postcard seascape surrounding it are an unlikely backdrop for the battered Southern California economy.
The yachts tucked away in the marinas and the remaining marine-related businesses in this charming coastal city give the appearance that the recession has bypassed Ventura Harbor. But the endless summer once enjoyed here by boat owners and the marine industry has ended.
John Johnson, owner of Ventura Harbor Boat Yard, spent most of a day last week thinking of ways to drum up repair business, and debating how many employees he was going to have to lay off that afternoon.
“I’ve been on the phone trying to hustle work, but I can’t get any leads. We’re scrambling to find ways to stay in business. . . . We’re laying off some more people today, but I still don’t know how many of my workers I’m going to have to let go. It’s not an easy decision to make,” said Johnson, who purchased the business eight years ago in a bankruptcy sale.
Fourteen months ago, Johnson had 34 full-time employees, but this number had shrunk to 14 workers on the day when he was contemplating more layoffs. In addition, the revenue generated by Johnson’s company is down by 50% compared to this time last year.
But Johnson’s company has been luckier than most. Local industry officials estimate that half of the marine-related businesses in Ventura have failed since 1989.
Most of the failures have occurred since 1991, when the recession began hammering boating and marina businesses at Ventura Harbor. Back then, slip vacancies were running about 10%, but this has more than doubled to 25% at some local marinas. The surge in vacancies has led to a decrease in marine jobs, and the industry here is struggling.
Johnson, 53, and others who rely on the harbor for their livelihood only have to look out over the water for the cause of their economic hardship.
“Look at the vacant slips. There are fewer boats docked at the marinas,” said Richard Parsons, general manager of the Ventura Port District. “The vacancy rate is running about 20%. Three years ago everyone was full. In the past, the boating industry was insulated from the economy because of the shortage of slips in Southern California. But clearly, the law of supply and demand is working now.”
The slips may have been full in 1990, but port district officials became alarmed in early 1991 when they discovered the vacancy rate was suddenly 10% in Ventura.
The Ventura Port District leases land to four marinas and one yacht club. The revenue generated by the marinas has remained at about $900,000 annually over the past two years, said Parsons, after growing steadily in the previous five years.
Randy Short, vice president of Almar Ltd., which operates six marinas in California and Mexico, including Ventura Isle Marina and Anacapa Marina in Ventura County, put the current vacancy rate at 20% at his company’s two local marinas, up from 3% in late 1990.
It was not too long ago that boaters commonly waited years for a slip at the more desirable marinas from Ventura to San Diego. Today, marinas are competing with each other by offering incentives, including freezing rents and free rent for slips, in an effort to attract new boaters or keep the ones they already have.
“There hasn’t been an increase in slip rentals in three years, and some marinas are offering one month’s free rent,” said Short, whose company is the largest private marina operator on the West Coast. According to Short, the company has a total of 1,200 slips in Ventura.
Monthly slip rentals in Ventura range from $7 to $9 a foot, depending on the size of the vessel. But since the recession began in Southern California in 1991, more middle- and upper-middle-class people have decided they cannot afford the luxury of owning a boat.
“Yachts are people’s toys, and when you worry about how you’re going to spend your money, the last thing you’re going to spend it on is your toy,” said Johnson.
Frank Harris spent a sunny day last week doing some minor repairs to the cabin in his uncle’s sleek 27-foot boat. The uncle, a Pasadena banking executive, can no longer afford to own the boat, and is selling it.
“He’s sailed it only four times in the past year. He can’t afford to keep it,” said Harris.
The Pasadena banker’s story is a familiar one for Chuck Stanton, owner of the Anchors Way boat repair yard for 16 years. Stanton, who recently obtained a $25,000 bank loan to keep his business open, said there has been an exodus of boats from Ventura.
But the boats are not sailing away. They are being trucked away, mainly to the Pacific Northwest, where the economy is better and Southern California boats are selling at rock-bottom prices.
“Even wealthy people are taking a good look at their finances. When this happens, the boats usually come out of the water and are loaded on trucks and trucked away, forever. Three years ago, about six or seven boats were trucked into Ventura every week for repairs. There was plenty of work for my yard and the others at the harbor. Now, for every boat that comes in by truck, there are nine trucked away,” said Stanton.
A 1992 survey of boat owners and marinas throughout Southern California conducted by Almar showed that 38% of the private boats sold in 1991 were purchased by owners who live outside California, said Short.
Indeed, keeping a boat anchored in a slip can be expensive, especially when the vessel is used infrequently.
“Boats require a lot of maintenance to keep them running safe. Just painting a 40-foot boat costs about $12,000,” said Stanton.
While some repair yards have lowered prices in order to stay in business, Stanton, who has 10 employees, has refused to lower the labor rate he charges, which is $55 per hour.
“That’s what it takes to keep good people. I pay them well and we have paid dental and health insurance for my people. I owe it to them. I couldn’t do it if I offered bargain prices for repairs,” said Stanton.
But the gloomy economy, which has forced many owners to unload their boats, has also been a boon to some yacht brokers. Dick Kahn, owner of Ventura Yacht Sales Inc., said the company’s sales increased 43% in the fiscal year that ended Sept. 30.
He credited the company’s success to a “well-organized program to sell used boats.” In addition, Kahn said the price of newer model boats has begun to creep upward, after dropping for about two years. Part of the reason for the lower prices was due to the large number of local boats that were sold out-of-state in the last two years.
“There’s now a shortage of newer, clean, dependable boats. Nowadays the problem is no longer declining boat prices, but finding a newer boat to buy,” said Kahn.
