Two veteran boaters thought they had sailed into a great opportunity when they took over a custom boatbuilding business. But despite a smart strategy, the company was sunk by mounting debt.
The business: Custom boatbuilder Opened: 1987 Closed: April 2000 Causes of death: Owners' inexperience; underbidding for contracts
In 1987 Henry Cooper literally sailed into retirement on a spiffy, 50-foot ketch that he called the Palmyra. He was bound for a distant isle of the same name, a tropical atoll 1,000 miles south of Hawaii. After he returned to the States, he began to have second thoughts about retirement. In 1991 Cooper, then 69, and his son, Ted, a yacht broker and also an avid sailor, spent about $1 million to take over the company that had built Henry's ketch, Able Marine.
In some ways it looked like an auspicious beginning. Ted, the company's new vice-president, had worked in the boat business as a broker. His father, who became president, was a veteran manufacturer. Although Ted had limited experience managing a boatbuilding business and Henry had none, they knew boats inside out from a sailor's perspective.
As it turned out, however, the Coopers' passion for boats didn't translate into the nuts-and-bolts skills needed to keep their boatbuilding business afloat. "Custom boatbuilding," acknowledges 50-year-old Ted Cooper with a sigh, "is not for the faint of heart."
The Coopers had become financially entangled with Able Marine in stages. In 1989 Henry, a chemical engineer who had sold his multimillion-dollar adhesives-manufacturing company, lent money to the boatbuilding concern, which Ted had cofounded two years earlier. The father later became an investor in Able Marine and, by 1990, held about a 10% stake. When the company filed for Chapter 11 bankruptcy, in 1991, the Coopers and two partners bought the assets, seeing a chance to rescue their investment and to restore the 40-employee business to health. They moved Able Marine from Southwest Harbor, Maine, to nearby Trenton and rechristened it Trenton Marine Inc.
Initially, the father-and-son team had a seemingly sound salvage strategy. The business, which had a reputation for high-quality craftsmanship, had built only high-end sailboats that sold for as much as $4.5 million apiece. The Coopers commissioned Chuck Paine, a world-class yacht designer, to draw up plans for a new 44-foot Wolf class powerboat, which would allow Trenton Marine to tap into a far bigger market. The Wolf model debuted in 1992, drawing an enthusiastic preview in Yachting magazine. But a new 10% federal tax on boat purchases of more than $100,000 cut sharply into sales. "It was a crippling situation," recalls Ted Cooper, who says revenues dropped by 40% within two years, to less than $1 million.
Despite the tax's repeal, in August 1993, Trenton Marine continued to struggle because of mounting costs and an increasing need for investment capital. The burden of designing and gearing up for the Wolf and three other new boat models that Trenton introduced in the 1990s soaked up more than $600,000. And even with an experienced production manager on hand, the company underestimated the design and tooling costs for two large contracts. "It was absolutely amazing how inaccurate our estimates would be," says Ted Cooper. "We would have been better off not to have taken the contracts."
With Trenton Marine drowning in debt, the Coopers turned to Frank Kibbe, a veteran boatbuilding executive. But Kibbe, who assumed the title of chief operating officer in 1998, couldn't stem the losses.
The next year Henry Cooper died of a respiratory ailment, and Trenton Marine filed for Chapter 11. The company limped along until April of this year, when Tom Morris, owner of Morris Yachts Inc. and a longtime boatbuilder based in Bass Harbor, Maine, bought Trenton Marine's remaining assets. In Morris's view the Coopers didn't have the background to make it in the unforgiving custom-boat business, where even in good years net margins rarely exceed 5%. Still, he salutes them for their staying power. Morris notes wryly, "I would have given up a whole lot sooner."