Traffic stops and restaurants empty when a big motor yacht on its low-loader trundles through the small Italian port of Viareggio. Cars are cleared from the streets for what is a regular but always breathtaking sight. Ships have been built here since before the Renaissance.
This ship comes from the Vitelli family-owned Azimut Benetti Group. Some of Italy’s most prestigious yacht builders have yards in Viareggio: the giant sheds of Benetti, Perini Navi, Rossinavi, VSY, Codecasa and Sanlorenzo dwarf the seafront shops and hotels.
Much of the town relies on the industry. Yet teams of specialists working in nearby La Spezia, fitting out two of Perini Navi Group’s latest yachts under the Picchiotti brand, are Austrian and Dutch. While Italy still commands the lion’s share of luxury yacht new builds, the market for skills and expertise is international, with strong competition from Germany and the Netherlands.
Every country engaged in building big yachts has suffered from the slump in sales since the 2008 financial downturn. Before then the luxury yacht market had been riding high, with demand outstripping supply and speculative buyers sometimes ordering a succession of yachts, believing they would find buyers for those they did not need.
At Perini Navi in Viareggio and La Spezia, new builds are still under way, but finding fresh orders in a tight market is tough and much of the new work involves refitting and customising existing yachts.
Fabio Perini, the papermaking machinery entrepreneur who founded the business, laments the tax interventions that undermined the domestic luxury yacht market. A mooring tax announced in 2011 was scrapped after protests. But a levy remains for Italian owners and a clampdown on tax evasion among wealthy Italian nationals has led to an exodus of yachts from Italian marinas.
“We are still feeling the effect of that,” says Mr Perini. “There doesn’t seem to be an understanding that shipbuilding here feeds through the economy to the thousands who depend on it for their livelihoods and to all the subcontractors.”
Italy’s traditional shipbuilding skills persuaded Angelo Bonati, chief executive of Officine Panerai, the watchmaker and sponsor of classic yacht regattas, to have the company’s 1936 William Fife III-built ketch, Eilean, restored in La Spezia.
“The Italian yacht industry can deliver the same kind of craftsmanship that goes into making our watches. The skills have been retained here and that’s important,” he says. “People here are passionate about the sea and about their craftsmanship.”
According to UCINA, the Italian marine industry body, the yacht sector generated €2.5bn-€2.8bn in 2012, with Italian yards and brands taking a 39 per cent share of superyacht building internationally.
With the internal market for superyachts at a standstill, Italian boatbuilders are looking to the export market and a loyal customer base. One of the biggest groups, Ferretti, which includes iconic brands such as Riva and Pershing, is majority-owned by Weichai, part of the Chinese state-owned Shandong Heavy Industry Group.
Ferruccio Rossi, Ferretti chief executive, is excited about the benefits of Chinese ownership as the company tries to break into an Asian market that has been difficult to penetrate.
“The argument goes that the Chinese prefer to take their leisure away from the sea and sun,” says Mr Rossi. “There are 1.3bn people in China. Even if we can get a tiny fraction of that market it will make a big difference.”
For now, the biggest markets remain Europe and the US. Azimut Benetti, which for most of its life has had a similar growth pattern to Ferretti, has clung to family ownership, led by founder Paolo Vitelli. The company believes this is a strong selling point where market uncertainty and long lead times from order to delivery have led potential buyers to look carefully at the financial stability of builders.
Azimut Benetti’s latest sales brochure contains some impressive statistics: nil debt, one shareholder, €300m in net assets and €600m in production value. “That says a lot about our business. It is important for potential owners to know a brand is secure,” says Giovanna Vitelli, head of corporate communications.
This is not to say the company has not endured financial pain in the past few years. In 2008, at the height of the bubble and the year that the economic crisis hit, turnover was €1bn. In 2011, this was down to €600m.
The company is bringing on new ranges and is cautiously confident. “An owner can come to our yard and see the yachts in build, knowing that after three years the boat will be delivered. This is our guarantee,” Ms Vitelli says. While smaller Italian yards that have relied on home sales struggle without an upturn, more established brands with good export markets remain optimistic.