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Annual Report on the Sales Tax
Repeal Five Years of Success

 
1997was a monumental year for the marine industry. It has been a year of innovative collaborations, new technology and continued business growth. This is the year that marked the industry’s full-force momentum into the European Market and its expansion in all areas of business. New England Boatworks in Portsmouth acquired needed space totally 98,000 square feet for storage and purchased a second travel lift to raise and lower yachts from the water. In Newport, Brewer Street Boatworks added a new paint shop to their facility enabling them to hire more employees. Conanicut Marine in Jamestown has had a steady growth since 1995 when they had done a major expansion on their marina facility. They have increased their business substantially since the repeal. Some boatbuilders have introduced new lines of products, such as Little Harbor Marine in Portsmouth with their Whisper Jet series of power boats. The growth demonstrates the industry’s desire to keep competitive with the rest of the country and the world.

A $410,000 grant was awarded to the East Bay Economic Initiative (EBEI) to administer an International Marketing Program and Workforce Development Program for the marine industries of Rhode Island concentrated in the East Bay area. The collaboration of boatbuilders and other marine related businesses successfully developed a proposal to the US Department of Commerce Economic Development Administration (EDA) with the assistance from the RI Economic Development Corporation (RI EDC). The EDA has provided $300,000 with the rest of the funding coming from the Greater RI Regional Employment and Training Board ($50,000), Community Development Block Grants ($40,000), RI EDC ($10,000 in-kind) and EBEI ($10,000). These projects will expand the industry into the European market, increasing the demand for their products and creating more jobs for Rhode Islanders.

The EDA funds are used to contract a local marketing firm, Fleming & Roskelly, Inc., and develop strategies to promote the Rhode Island boatbuilders in Europe. With a limited budget and only a one-year time frame, the RI USA Building Better Boats campaign targets the United Kingdom, the Netherlands and Germany. To persuade Europeans to purchase Rhode Island-built boats, a $1,000 airfare reimbursement incentive is offered to anyone who purchases a locally built yacht before September 30, 1998. An interested person can come to Newport, visit tourist destinations and meet with the builders of their choice. All of the 12 boatbuilders who are participating in the campaign have agreed to provide the airfare reimbursement.


Building Better Boats
Rhode Island
Logo used in RI USA Building Better Boats campaign

There are several aspects of the RI USA Building Better Boats campaign. The first is the above logo, which will be used on every visible promotional piece including adhesive and removable stickers and flags. A color Manufacturers Guide has been produced of all participating boatbuilders. The beginning of the guide describes the reimbursement policy and visiting Newport and Bristol Counties. Three advertisements have also been purchased by local businesses. This guide will be sent to every inquiry to the campaign along with tourism pieces from the East Bay and the state.

How will the word spread about these world-renowned boatbuilders concentrated in a 15-mile strip of land? An advertising program will place ads in 5 foreign publications of the target countries. These ads will run during strategic times in the beginning of 1998 to attract visitors during the peak tourism months of the area – May through September. A web site is up and running of all the boatbuilders and links to their home sites. An inquiry page is set up to receive information from interested parties, which will be filtered to the boatbuilders that meet their needs. Invitations have been sent to foreign journalists, offering free airfare sponsored by American Airlines to come and experience this unique travel experience and tell their readers. Arrangements are also being made for RI USA Building Better Boats to have a booth at the Dusseldorf boat show early in 1998. This show is one of the biggest trade shows in the world, and extremely expensive to participate in. By having representation of all Rhode Island boatbuilders, the smaller manufacturers who could not afford to be in Dusseldorf now have the opportunity to show their products.

The Workforce Development Program training projects will be paid for by the CDBGs and the Greater RI Regional Employment and Training Board (GRI RETB). The cities and towns of the East Bay contributed $40,000 in CDBGs specifically for the training, $10,000 from Bristol, $20,000 from Portsmouth and $20,000 from Warren. Assistance will be offered to individual companies for the training sessions geared towards the specific skills their workers needed. Some companies will be working with the New England Institute of Technology to develop curriculums. These sessions will begin in March 1998.

Project-up grades were supported by the GRI RETB to expand the skills and knowledge of current employees and management staff. To assist the boatbuilders with their export efforts, a seminar was held on the CE Mark, a certification process for products in order to be allowed to enter the European Market. Recreational crafts would be required to meet CE Mark standards starting June 1998. On November 14, 1997, EBEI in collaboration with the RI Manufacturing Extension Services (RIMES), RI EDC and Roger Williams University had a consultant with expertise in the area address the group about the CE Mark, what it means to the boatbuilders and the application process. The boatbuilders were able to ask questions regarding their specific company.


This year’s report continues to demonstrate the ever-growing marine industry in Rhode Island. Gross revenues have increased $121,000,000 from 1996, approximately 6%. It is a cumulative increase of 52% from 1992, the year before the Sales Tax was repealed. In 5 years, the industry has upped its productivity to double its gross revenues. We can only see this trend continuing into the future. The collaborations that have developed for marketing and workforce training will support this growth.

Job Growth in the Marine Industry 1992-1997

Marine Industry Revenue Growth 1992-1997 - Annual Increase

The number of individuals working in the industry has also seen an increase from 1996. The labor force has risen another 4%. Unfortunately, there is still a need for skilled workers. Approximately __ trained persons are needed to fill the need. It has been difficult for the industry to locate workers, but with the training programs about to take place, the burden will lessen.

With growth comes expansion. Many companies have continued to look for larger space. Properties have come available and are being pursued by local businesses. The locations of the companies Bristol Yachts in Bristol and American Shipyard in Newport will maintain their past uses if and when they are obtained by the industry. It is also anticipated that two Rhode Island boatbuilders, Goetz Custom Sailboats in Bristol and New England Boatworks in Portsmouth, will be sought for the construction of about 5 America’s Cup challengers.

It has been an extremely busy year for the Rhode Island marine industry. Businesses cannot stress enough how important the sales tax repeal has been to their prosperity in the past five years. The industry has grown locally and expanded its outlook over the Atlantic Ocean. They have shown they will continue to work together to promote themselves locally, nationally and internationally. We look forward for the years ahead when Rhode Island sets the precedence for the nation as a state that fully supports its marine industry with training and other programs to enhance economic development and job creation.

Methodology

EBEI and RIMTA again sent surveys to approximately 50 firms in the industry, of which 27 responded. The sample is relatively small because most firms are privately held and are very reluctant to provide financial information on their business. Based on all of our contacts in the industry, however, we believe the responses are indicative of the overall performance of the industry. Since not all of the companies responding in prior years’ surveys, we could not develop a five-year comparison using the same companies. We have no reason to think that such a comparison would produce results any different from those presented here.


List of Respondents

Company Location
Alden Yachts Portsmouth
Brewer Street Boatworks Newport
Brewer’s Cove Haven Marina Barrington
Brewer’s Sakonnet Marina Portsmouth
Brewer’s Wickford Cove Marina North Kingstown
Brewer’s Yacht Yard Cowesett Warwick
Carroll Marine, Ltd. Bristol
Conanicut Marina Jamestown
East Passage Yachting Center Portsmouth
Goat Island Marina Newport
Goetz Custom Sailboats Bristol
Hall Spars Bristol
Holby Marine Bristol
Hood Enterprises Portsmouth
Jamestown Distributors Jamestown
J-Boats Newport
Johnson Motors East Providence
KVH Industries Portsmouth
Megrew’s Boat Inc. Charlestown
New England Boatworks Portsmouth
Newport Yachting Center Newport
Ocean House Marina Charlestown
Point Judith Marina Wakefield
Seaport Communications Narragansett
Shannon Yachts Bristol
Thurston Sails Bristol
TPI Composites Warren
 


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