Luxury yachts to wind turbines: one story of diversification in MI

May 31, 2011

The recession forced many small manufacturers to find new products to make in an attempt to survive.  That was particularly true throughout the industrial Midwest. One Michigan yacht manufacturer is taking risks in new industries to keep its factory open and employees on the job.

Tiara Yachts was operating at full capacity in 2005 and 2006, turning out about 400 yachts per year, with prices ranging around a million dollars each. To keep up with demand, the company invested in an expansion at its manufacturing plant in Holland, MI, from around 500,000 square feet to 800,000.

President of the National Marine Manufacturers Association Thomas Dammrich said in 2009 boat sales plummeted with consumer confidence in the height of the recession. Dammrich said boat sales in the past decade have been driven at least in part by people’s ability to access their home equity.

“As the whole economy started to suffer in Michigan, and in the nation and in the world, the Tiara Yachts economy started to suffer as well,” Tiara Yachts Human Resources director Steve Busch said.

Tiara Yachts had to lay off roughly half its workforce, going from a peak of nearly 800 employees to now just over 320.

Fall 2008: Energetx Composites is born

Now the largest structure inside the newly expanded warehouse is a mold for a 45.3-meter-long (just under 150 feet) wind turbine blade. The blade mold belongs to Energetx Composites, a new spin-off of Tiara Yachts.

Energetx Composities began to share Tiara Yachts' manufacturing space and some employees in human resources, finance, information technology.

Energetx is now making parts for wind turbines, nacelle structures, spinner caps,and this summer for the first time, wind blades. All are made out of advanced composites: fiberglass, laminates, or carbon fibers.

Engineers who work with this material are always looking to make it both stronger and lighter. Bucsh says that’s what Tiara Yachts has been doing, too.

“We want a strong boat hull, we want a strong deck assembly and we want to decrease the weight of those for marine efficiency. So marine engineering and aerospace engineering in that application are very, very similar.”

Facing challenges

The wind energy industry in the US isn’t growing nearly as fast as Tiara Yachts had hoped.

Per Krogsgaard has been involved in wind energy for more than 3 decades. Speaking from Denmark, he says there’s a huge market for large scale wind farms in the U.S. But that market is hard to crack.

“All the years I’ve been in this industry we have seen the market in the U.S. as a boom-and-bust market. It is a very, very bad situation for everybody who is committed to the wind industry.”

The federal government provides wind energy developers with fewer tax subsidies than traditional producers like oil and gas.

Krogsgaard notes  the wind industry is still relatively new in the U.S. And because there’s no national policy, investors have to work through regulations in 36 states, each with its own renewable energy standards.

“But of course, everybody who has the willingness to make themselves attractive to the industry – they should try, of course they should.”

Krogsgaard says the hardest part of getting into the wind power industry is figuring out how to fit into its super complicated supply chain.

Putting the plan into action

Energetx Composites has a contract to sell its blades and parts to a wind turbine manufacturer. Vice President of Business Development Kelly Slikkers says they're also using their strengths to try casing for electric vehicles, solar panels, and smaller scale wind turbines.

Now some of the company’s workers (around three dozen depending on the project) are adapting from making complicated boats to complicated wind turbine parts. Nancy Jones has been making boats at Tiara Yachts for 32 years.

“There are a lot of same techniques, but there are a lot of things that are done different. And it is, you know it’s a learning curve. I want to work, and I’ll work wherever I’m needed.”

On the yacht side of the business, the market is stabilizing a bit. But on the wind side of the business, the outlook is better. Bucsh says Energetx will have enough work next year to go from about 40 employees to 300.