Business Monday

Billionaire investor plans upgrades for Miami boatyard

John Spencer, left, and Rahmi M. Koç, at RMK Merrill-Stevens boatyard. Koç is a Turkish industrialist and philanthropist who last year bought the boatyard, one of the oldest businesses in Florida. Spencer is the CEO and a minority owner.
John Spencer, left, and Rahmi M. Koç, at RMK Merrill-Stevens boatyard. Koç is a Turkish industrialist and philanthropist who last year bought the boatyard, one of the oldest businesses in Florida. Spencer is the CEO and a minority owner. Miami Herald Staff

John Spencer still remembers that day just before Christmas in 2009, in the depths of the economic downturn, when Merrill-Stevens Dry Dock Co. sent workers home and suspended operations.

“After it closed, I went home and said, ‘Now what the hell am I going to do?’” said Spencer, 59, who at the time was a yard superintendent at the historic boatyard on the Miami River.

So Spencer stepped up.

He raided his retirement nest egg and leased the facility from the owner, reopening for business six weeks later. Initially the yard brought back 10 workers, about 20 percent of the staff, but as much as the work could support.

“I had one boat to paint, so I said, ‘Well, let’s paint a boat.’ Pretty soon, there was another one,” Spencer said. “That was the depths of what they call the Great Recession.”

But all that seems so long ago now.

Fast forward to November 2013: Turkish billionaire industrialist and philanthropist Rahmi M. Koç acquired the boatyard in cooperation with Spencer, who became the CEO and a minority partner at the business, which is reflagged RMK Merrill-Stevens.

With the marine industry showing slow, steady signs of recovering over the past two years after a dramatic plunge during the recession, Spencer said: “We’ve got a full order book for the fall, and we’re starting to take work for 2015.” The company now has 30 employees.

The new owners are weighing ambitious plans to modernize and upgrade the six-acre facility, whose history dates to 1923 in Miami, and even farther back to its founding in Jacksonville in 1885 by James Merrill and Alonzo Stevens.

“Thanks to John, we are working to bring back its old glory and prestige,” Koç said on a recent visit to Miami, where he keeps a vacation home.

The latest push to reinvigorate the aging boatyard stands out at a time when many sites along the Miami River have given way to condominium projects. With waterfront land in scarce supply, even at record prices, the river is drawing intense interest from residential developers.

The boatyard already works on megayachts of up to 250 feet in length in the water and and vessels more than 170 feet long out of the water.

Over the years, it has serviced yachts for a host of celebrities, including Malcolm Forbes, Ivana Trump, Nicholas Cage and Johnny Depp.

With yachts growing ever larger, a key goal of the modernization will be making room to accommodate larger vessels. One challenge is the narrow width of the river, but special ship-lifting equipment could help maximize the yard’s flexibility. “We want to be able to handle any boat that can navigate the river,” Spencer said.

“The yacht industry is coming back and people want bigger and newer yachts,” Koç said.

The boatyard has fallen into loving hands after a tumultuous decade in which it changed ownership several times. In 2004, the Merrill family sold the facility to Hugh Westbrook, a former healthcare entrepreneur, whose big plans for a megayacht operation were dashed during the economic downturn. That’s when Spencer began leasing it from Westbrook, his old boss, and operating Spencer Boat Company.

Spencer continued to lease it after Coconut Grove Bank took over the facility in 2011 and searched for a buyer, and he stuck with it after David Marlow, chairman of Marlow Yachts of Palmetto, bought it from the bank.

Koç — an avid yachtsman with a passion for boats — first became interested in the boatyard when the bank still owned it.

Koç, who spends several weeks a year in Miami, said a friend, Finlay B. Matheson, was taking him to lunch on the Miami River and pointed out the boatyard, saying the distressed property, which straddles both sides of the river, had been taken over by Coconut Grove Bank, which was looking for a buyer. “He asked if I would be interested, and I said I was,” Koç said.

The family-controlled Koç Holding, a diversified industrial giant based in Istanbul, owns RMK Marine, a much larger shipyard that makes megayachts and naval and commercial vessels. Koç spent more than two years — September 2004 to July 2006 — sailing around the world in Nazenin IV, a 124-foot sailing yacht that was custom built for him at RMK Marine’s shipyard.

But before Koç could act, boating entrepreneur Marlow, whose company manufactures yachts in China and elsewhere, purchased the real estate, equipment and name from Coconut Grove Bank for $6.6 million in June 2011.

While Koç was looking at the yard, he and Spencer became friends, and they kept in touch.

In 2011, Spencer visited Koç in Turkey. He was considering working for Koç’s shipyard there, but he decided against it. Still, the men continued kicking around ideas for teaming up on a boatyard in Miami.

They looked at several facilities in the Miami area. Merrill-Stevens kept coming back as their top choice, even though it wasn’t for sale. Marlow, who didn’t return phone calls seeking comment, was in the process of making improvements and reorganizing the facility, according to Spencer.

“It’s not easy buying something from someone who doesn’t want to sell,” Koç said.

But Koç prevailed, and in November 2013, he paid Marlow $7.7 million for the real estate and an additional sum for the business.

While Koç loves boats, he said any decisions for upgrades at RMK Merrill-Stevens will be driven by financial considerations.

“I didn’t buy it for charity: We must make money,” Koç said. “That’s why we’re investing — to have the full benefit of the land and property.”

Improvements would be concentrated on the boatyard’s facilities on the north side of the river.

One challenge is the narrowness of the river. RMK Merrill-Stevens is considering installing new equipment — either a larger travel lift or synchrolift — for hauling bigger yachts out of the water. That could entail relocating the boat-lifting capabilities to a different area, Spencer said.

“We’re doing engineering and cost-benefit analysis right now,” said Spencer, who has worked around boats much of his life.

Spencer, a Wisconsin native who grew up near Lake Superior, came to Florida to work as a boat captain. “I thought I’d stay one winter,” he said. “That was 1983.”

Although Miami-Dade’s marine industry has dwindled in recent decades, overshadowed by operations in Broward and Palm Beach counties, Koç and Spencer see signs it will make a comeback — with the Miami River playing a vital role.

Among other things, preliminary work has begun on a megayacht marina and resort at Watson Island in Biscayne Bay. While those plans were delayed for years — and now face a court challenge by nearby Venetian Islands residents — such a facility would draw larger yachts that currently have limited options for docking in Miami.

“The more activity here [and] the more that Miami is seen as a yachting destination, the better that is,” Spencer said. “The more yachts that come here, the better that is for this economy.”

Koç said the expansion of the Panama Canal and Miami’s emergence as a magnet for international wealth bode well for the future of its marine business. “Miami is going to be a big yachting center and cruising center,” he said.

Along the Miami River, plans are in the works for a megayacht marina at 1583 NW 24th Ave., the location of Brisas Del Rio Marina. The project would include 14 private, enclosed wet berths for megayachts of 150 to 250 feet with storage and living facilities for the captain and crew overlooking the water.

Plans call for selling individual berths as condominium units, said spokesman Frank Leon, who expects details of the project to be unveiled at the Fort Lauderdale International Boat Show set for Oct. 30-Nov. 3.

“Merrill-Stevens is very excited [about the marina plans], and we’re very excited with Merrill-Stevens’ plans,” Leon said. “It’s complementary.”

Besides boat maintenance and repair, the Merrill-Stevens facility provides a U.S. beachhead to market custom yachts made by RMK Marine, the Turkish shipmaker that is part of Koç Holding.

Koç and Spencer see an opportunity to sell new megayachts from RMK Marine at their Miami facility.

As a complement to its refitting and repair business, RMK Merrill-Stevens is launching a yacht brokerage operation — a line of business it had discontinued in 2008.

In June, RMK Merrill-Stevens signed a licensing agreement under which Paul Madden, a veteran yacht broker, is reviving the company’s brokerage brand. Madden, who had worked as a shipyard representative at CRN Yachts and Blohm+Voss, is marketing, among other things, RMK Marine custom yachts and Benetti yachts.

Merrill-Stevens officials see marketing advantages in offering buyers delivery of the new vessels in Miami along with a U.S.-based service center.

“American buyers like to have warranty and service locally,” Madden said.

Madden plans to invite boaters at the Fort Lauderdale show to visit the Miami boatyard and to promote it during the Miami International Boat Show in February.

“With Merrill-Stevens, I feel here’s a brand that can really be built — or rebuilt — into something great,” Madden said.

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