Reviews & Articles Cabo Yachts,
Inc.
Boat Builder to the World
San Bernardino Sun - April 12, 1998
By Priscilla Nordyke Roden
Cabo Yachts, Inc. of Adelanto will build about 90 diesel sportfishers this
year, with sales approaching $24 million.
Greg Bourque stands above the
buzz of workers and machinery and tweaks the arm that helped bring the
High Desert factory to life. "Sometimes
I have to pinch myself," he says, referring to the success of Cabo
Yachts, Inc.
During the seven years since Cabo moved from Orange County to Adelanto,
the company - with its luxury high performance twin diesel sportfishers
- has dropped anchor among top manufacturers in the industry.
Cabo - which sold six boats during its first year in business - will manufacture
about 90 fishing yachts and have sales approaching $24 million in 1998,
says Bourque, the company’s sales manager.
Revenue is expected to reach $50 million by 2002, when Cabo plans to introduce
a 60-foot vessel. "Cabo is without a doubt the darling of the industry," says
John Buettner, president of Stan Miller Yachts in Long Beach. "One
thing these guys know how to do is manufacture. They go out and research
the market and are on top of every trend. They have almost eliminated all
the competition."
It’s little wonder, then, that Cabo Yachts - which last year shipped
16 percent of its product out of the country - recently was named national "Exporter
of the Year" by the U.S. Small Business Administration.
In 1997, the company’s Cabo 45 Express model was selected as Boating
Magazine’s "Boat of the Year." But even before Cabo’s
recession-timed startup by veteran boat builders Henry Mohrschladt and
Michael Howarth, the partners were winning awards
for the sail boats they were building at Pacific Seacraft in Dana Point.
Fortune Magazine named Pacific Seacraft among recipients of the "top
100 U.S. quality products" award in 1988. Soon afterward, an offshore
company came forward with a purchase offer and Pacific Seacraft was sold.
Not ready to retire - but prevented from building sail boats by a no-compete
clause in the contract with Pacific’s new owner - Mohrschladt, Howarth
and Bourque teamed up to launch what would become Cabo Yachts.
"
The objective was to build a sport fishing boat to compete with the finest
available," Bourque says. "Specific competitors were targeted
and we just went at it. We did a lot of research, talked to owners and
customers and fishermen. We simply were successful at coming up with the
Lexus of sports fishing boats" at prices ranging from about $250,000
to $750,000.
But before taking their new product with its vinylester resin hull to the
marketplace, they wanted to get out of Orange County. The builders of ocean-going
craft would choose, paradoxically, the desert.
After a decade of battling with the Air Quality Management District in
the Los Angeles area over the use of common boat building chemicals, Mohrschladt,
Cabo’s president, drew a line to mark the jurisdiction of the AQMD
and then picked the nearest town outside the boundary.
The pencil point stopped on Adelanto.
There, Cabo found a business-friendly city with industrial space to spare. "The
city has a very pro-business attitude and if there is a problem, they want
to work it out - what a difference than in Orange County," says Howarth,
Cabo’s vice president.
In a market that is sizzling Cabo should continue to reel in sales, one
analyst says.
"
The combination of luxury and sport fishing seems to be the combination
now at the top of the industry’s best customers and prospects" says
Greg Proteau, spokesman for the Chicago based National Marine Manufacturer’s
Association.
"
When you look at big boats as a segment - anything from 35 to 37 feet and
up - that market is on fire." Situated just down the road from
two state prisons, Cabo has brought the region nearly 200 jobs paying about
$6.50 to $25 an hour.
The original 30,000 square-foot factory more than doubled in size with
the addition of a new building several years ago, and 1998 will close with
yet another 50,000 square-foot expansion under way. Still, the company
can’t supply enough inventory to meet demands. A boat bound for Italy,
ordered in March, won’t be shipped for a year. It will be 13 months
before another reaches its new owner in Greece.
But exports to dealership in Europe, Asia and Mexico may be limited this
year, falling to 12 percent of production, Bourque says.
Last year, international sales accounted for 23 percent of the firm’s
revenue. "We’re almost sold out for the year. The U.S. market,
as our economy grows stronger, and the domestic demand for our product
has pretty much taken up the available production space. We’re pretty
much locked in to (the sales) we have made," he says.
Cabo has thrived, allowing the partners to put money back into the business
while achieving each step of its long-range business plan. A privately
owned company, Cabo does not release information on profits. "There
is no doubt we’re a profitable company because we’re here and
we’re expanding," Howarth says. "We’re one of the
best indicators of the economy," considering people are willing to
spend $250,000 to $750,000 on "a toy."
Proteau said the strength of the luxury sportsfisher market is a reflection
of a strong stock market and entrepreneurial successes.
"
A lot of individuals work their brains out every day and one morning look
up and say "Wouldn't it be nice to go fishing" he says. "The
number one reason people buy boats, whether large or small, is to get away
from what is going on onshore. And that is an incredibly powerful reason."
American boat buyers with desires for larger, more powerful, and more accessory-laden
pleasure boats sparked a 10 percent dollar gain in new boat sales to $8.6
billion and spent a record $19.5 billion on all boating market-related
purchases and services in 1997, according to the Marine Manufacturers Association.
Of the 350 boat manufacturers who are members of the association, about
one third build vessels in the size range of those produced by Cabo.
Historically a cyclical industry, captive of the general economy, boating
should see opportunities for continued growth over the long term. The benchmark
year for boats, 750,000 new unit sales, occurred a decade ago. In the interim,
the market was upset by a recession and critically wounded by the notorious
federal 10 percent excise tax on boats in place from January 1991 to August
1993.
"
Given a continuing economy and favorable investment scenario, industry
marketers believe boating can continue its traditional 4 to 6 percent growth
rate in the years ahead," Proteau says.
The upscale product focus of buyers reflects what’s driving the big
boat market. Research indicates that the typical boat owner is in his or
hers late forties with household income of $50,000 and up. Many don’t
have children living at home.
"
This paints a picture of classic boomers and older couples who have achieved
a measure of wealth and independence looking for a pay-back on a lifetime
of work," Proteau says.
"
At the upper tier, these people are less impacted by economic cycles than
those at the lower tier," he says. "They are not concerned about
a job, but rather about a lifestyle."
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