Virgin on Business: Boatbuilding with ‘Vigor’

There was a maritime industry around these parts long before anyone thought of such concepts as distinct industries.

Building boats and doing stuff with them catching fish, getting around was a basic part of life, and remained so after more boats showed up bearing settlers, who proceeded to build even more boats, for fishing, trade and transportation.

The types of boats changed over the years; military craft became a significant segment, fishing boats faded as yacht construction took over, then fishing-vessel construction rebounded as yacht building faded. Materials changed, too. Wood was followed by steel and aluminum, then followed by fiberglass, with more exotic composite materials constituting the next generation. Names of the players changed. Some venerable names like Tollycraft, Tacoma Boat and, more recently, J.M. Martinac, disappeared, but new market entrants carved out niches and grew.

Whatever the changes and the upheavals of industrial evolution, boatbuilding has remained an important sector, even in an urbanized, deindustrialized region. A recent deal involving two relative newcomers to the sector helps to remind us of boatbuildings significance and gives us some hint about the shape of its future in this region.

Earlier this year, Portland-based Vigor Industrial announced the acquisition of Seattle-based Kvichak Marine Industries. The deal is interesting on multiple levels, starting with the fact there was a deal at all. Boatbuilding is a sector characterized, in these parts anyway, by lots of small to midsize independents. Merger and acquisition activity, compared with tech or aerospace, is scant.

The exception to that generalization has been Vigor, whose resume of acquisitions includes Marine Industries Northwest in Tacoma in 2010, Todd Pacific Shipyards in Seattle in 2011 and Oregon Iron Works, which has a facility on the Washington side of the Columbia River, in 2014.

The result of this acquisition binge is a company with $650 million in annual revenue, 2,500 employees and facilities stretching from Portland through Washington (Vancouver, Tacoma, Seattle, Everett and Port Angeles) to Alaska. Vigor operates what it says is the largest floating drydock in North America, one capable of accommodating a cruise ship for repairs.

For all its size and range of projects and services, Vigor was underrepresented in one segment that has done reasonably well even with the recession: small, nimble workboats and military craft, such as rapid-response vessels for the U.S. Coast Guard and pilot boats for ports around the world, as well as oil-spill-cleanup vessels. Since Vigors focus has been on larger projects, such as 144-car ferries for Washington state, theres little overlap between the two companies, making Kvichak an attractive and complementary addition to the portfolio.

A company of this sort of heft is a rarity in the Pacific Northwest boatbuilding trade, but that size will help with marketing Northwest watercraft around the world. Indeed, Vigor has already said it intends to go after additional business in two segments: fishing vessels and boats supporting offshore oil and gas exploration and production in the Arctic.

The marine business is a tough one. Companies are always scrambling to keep the order pipeline filled and employees and facilities busy. But the potential for growth in the industry makes interest in it more than an exercise in nostalgia. The state Department of Commerce appointed an economic development director with the specific assignment of the maritime sector. The Center for Advanced Manufacturing Puget Sound has sponsored a supply-chain mapping of the industry to figure out what opportunities could be claimed by local firms.

Boatbuilders are also generating growth with new designs that emphasize operational and energy efficiency, or new types of boats like submersibles and unmanned craft, or boats using new materials and technology. This all suggests an industry that is far from dead in the water and can still help float the regions economy.

Monthly columnist Bill Virgin is the founder and owner of Northwest Newsletter Group, which publishes Washington Manufacturing Alert and Pacific Northwest Rail News.