Sunday, March 25, 2001

Sinking economy may have ripple effect on houseboat industry

Kentucky factories cater to luxury

By Roger Alford
The Associated Press

        SOMERSET, Ky. — Flames flicker from the holographic fireplace in the master bedroom, the Jacuzzi bubbles upstairs and a satellite dish pulls in the latest movies to the big-screen TV in the living room

        Welcome aboard one of the luxury houseboats built in southern Kentucky, a region where jobs historically have been so few that residents had to move to cities such as Detroit for work in the automobile industry.

[photo] Cecil Helton Jr. of Sumerset Custom Houseboats
(Associated Press photo)
| ZOOM |
        But over the years, Somerset and the surrounding towns have transformed themselves into the “Detroit of houseboats,” with 13 factories that keep workers at home building the increasingly opulent floating condominiums.

        Now business and political leaders here are worried that after a decade of economic growth the houseboat factories could take a hit like Detroit's automobile plants.

        There are predictions of a recession, which traditionally takes a bite out of luxury spending. And recent publicity about carbon monoxide poisoning on houseboats could deter some customers.

        “It appears that this year is going to be flat,” said Lyndon Turpin, chief financial officer at Sumerset Custom Houseboats in Somerset. “My personal opinion is that it's a short-term, temporary thing.”

        Mr. Turpin and other houseboat executives say it's too soon to predict doom and gloom for the industry. But in times of economic downturns, Americans traditionally have been slower to buy luxury items, and few items are as luxurious as these $300,000 boats.

        They come with up to five bedrooms. Lighted star fields are built into the ceilings. Bear or zebra skin rugs are optional for in front of the fireplace. Trash compactors and dish washers are standard in the top-of-the-line boats that often are more than 100 feet long.

        Todd Denham, executive director for the Somerset-Pulaski County Development Foundation, said if the houseboat industry hurts, towns including Monticello, Russell Springs and Jamestown would suffer.

        “We're not worried right now,” he said. “Let's face it, people looking for houseboats can afford houseboats. Those are high-ticket items.”

Exhaust scare
        Orders for new houseboats from Sumerset, the nation's largest houseboat manufacturer, and Sharpe Houseboats, a rival company, began slowing last fall after predictions of a recession.

        About the same time, the Arizona Republic newspaper in Phoenix reported at least seven people have died from carbon-monoxide poisoning on or near houseboats on an Arizona lake since 1994.

        A federal study found houseboats with rear exhaust systems vented dangerous levels of carbon monoxide near the rear deck and into a hollow cavity underneath the rear swim platform. Stardust Cruisers, a manufacturer in Monticello, has agreed to retrofit about 500 houseboats with side exhausts. Coast Guard officials have ordered a recall of all houseboats that vent exhaust fumes out the rear.

        Mr. Turpin and other houseboat industry officials acknowledged that carbon monoxide fears could have contributed to stagnant sales.

1,300 jobs in state
        In the competitive industry, neither Sumerset nor Sharpe would say precisely how much the market is off.

        In November, Sumerset eliminated about 30 jobs in a reorganization that company representatives said was not tied to revenues. No job cuts have been announced by any other manufacturers.

        Carlos Craycraft, a labor market analyst for the Kentucky Workforce Development Cabinet, said boat building and repair companies in the state provide jobs for about 1,300 people. Average wages last year were about $21,000 per employee. Houseboat Magazine lists 22 houseboat manufacturers in Kentucky, 13 of them in the southern part of the state.

        Mr. Turpin said he expects reduced interest rates and the arrival of warm weather to boost business.

        Typical buyers are lawyers, doctors and small-business owners, usually in their late 40s to mid-50s, with incomes of about $250,000 a year. Cecil Helton Jr., vice president for media services at Sumerset, said customers often buy their boats with proceeds from the sale of stocks.

        Frankie Girdler, a sales and purchasing representative for Sharpe Houseboats, blamed fluctuations in the stock market for the decline in orders for new houseboats. He said when the stock market drops, customers become cautious.

        Mr. Girdler said this year marks the first slow down in the industry at least 15 years.

        “We're not planning on laying anybody off,” he said. “We're looking at expanding. It looks good for us.”

        Tom Nechel, owner of Sumerset, said his company still has a waiting list of customers to buy houseboats. That waiting list, he said, has shortened, though not appreciably, since last fall.

Anything — for a price
        One boat takes six weeks to build in assembly-line fashion. But before even the aluminum hull is constructed, customers have meetings with staff interior designers to choose carpeting, cabinetry, room layouts, furniture and amenities.

        “Basically, if you can imagine it, and your pocketbook can stand it, we can build it into your boat,” Mr. Helton said.

        Competitive attitudes among customers have kept the boat sizes and amenities growing.

        “It's not uncommon, when a bigger boat comes to a dock, for people to go out and buy a bigger one,” Mr. Helton said. “It's a prestige thing.”

        Sumerset, with 200 employees, turns out only about 120 boats a year.

        “About 10 percent of our business is people buying boats to live on full time,” Mr. Nechel said. “When you compare the boats to a condo, it's no longer a luxury item. In many regards it's better than a traditional home. You don't have to worry about mowing the grass.”

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